The latest figures from Thomson Reuters and the National Venture Capital Association (NVCA) indicate that venture capital fundraising activity dropped significantly in the fourth quarter of 2008. As against $11.7 billion raised in the fourth quarter of 2007, forty-three venture capital funds raised merely $3.4 billion this time around, depicting a 71 percent plunge.

In fact, the fourth quarter figures of $3.4 billion also indicate an almost 61 percent drop from the third quarter of the year when total of $8.4 billion was raised.

The full-year data for 2008 indicates a drop of 21.4 percent – with $28 billion raised for 211 funds - from the previous year when $35.5 billion were shored up by 247 funds.

According to the NVCA president, Mark Heesen, the anticipated dearth of fundraising in the fourth quarter of 2008, results from uncertainty in the market and fundraising cycles. He added that, apart from a few notable exceptions, this slower rate would continue well into 2009.

Heesen said: ‘The market uncertainty has compelled firms that were planning to raise funds in late 2008 or early 2009 to hold back on fundraising efforts until economic conditions improve and institutional investors can recommit with confidence.”