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US venture capital overhang reaches $68bn

US venture capital firms have yet to invest a substantial portion of committed funds. The capital overhang has now reached $68bn, according to the latest research from VentureOne.

The survey found that funds raised prior to 2000 have been almost entirely drawn down. But 25 per cent of funds raised in 2000, the largest fundraising year on record, have not yet been invested. Funds raised in 2001 remain approximately 54 per cent unspent, funds raised in 2002 remain 64 per cent unspent and funds raised in 2003 remain 83 per cent unspent.

'The fact that a tremendous amount of capital is available for new investments bodes well for the future innovations and new development that will emerge from venture-backed start-ups,' said John Gabbert, vice president of worldwide research at VentureOne.

Overall venture capital fundraising in 2003 reached $8.25bn, about 37 per cent lower that 2002's fundraising activity and reminiscent of mid-1990s levels. A significant portion of this fundraising total was accounted for by New Enterprise Associates $1.1bn fund but, in fact, less than four per cent of the funds closed in 2003 were larger than $500m and around 50 per cent were less than $100m.

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