Venture Capital: New Fund-Raising Plunged 35%

New funds raised by U.S. venture capitalists dipped 35 percent from last year to $4.88 billion in the first quarter, the National Venture Capital Association reported.

While a 12 percent gain over the first quarter of 2010, the year-over-year drop may indicate venture capitalists are turning to other interests or haven't finished their 2012 plans.

The NVCA said the number of new funds created dropped 15 percent and follow-on funds by established venture firms dropped 9 percent.

"While the first-quarter fundraising numbers represent a slower start than last year, venture firms appear to be more optimistic about the fundraising environment in 2012," said NVCA president Mark Heesen.

The venture capital survey is a contrast to the stock market, where the Nasdaq Index, which contains many technology companies, has already gained 15.6 percent this year. The first-quarter gain was 18.7 percent.

The association president said he's aware of many new and follow-on funds seeking to raise additional cash. "For these firms, it will be do or die," he said.

The technology industry has historically been nourished by venture capitalists whose gambles on startups from Cypress Semiconductor Corp. (NYSE: CY) to Intel Corp. (Nasdaq: INTC) to Apple Inc. (Nasdaq: AAPL) created hundreds of successful companies.

Marc Andreesen Raises Cash

Besides technology, venture capitalists have also backed successful companies in retail, biomedical, health and service industries.

The biggest fundraiser in the quarter was Andreesen Horowitz Fund III, run by the firm in Menlo Park, Calif. A partner, Marc Andreesen, was the inventor of Mosaic, the Web browser that helped popularize Internet applications and became Netscape, which was ultimately acquired buy AOL Inc. (NYSE: AOL) for $4.2 billion in 1998.

Andreesen Horowitz raised $1.5 billion.

Besides serving as a director of Facebook, Andreesen also sits on the boards of Hewlett-Packard Co. (NYSE: HPQ) and eBay Inc. (Nasdaq: EBAY).

Two smaller funds, Canaan Partners and Bain Capital Ventures, both raised $600 million.

Canaan, also in Menlo Park, Calif., previously backed high-fliers like Kalpana, DoubleClick and Oni Systems -- all subsequently acquired -- while Bain Capital, a member of the group founded by Republican presidential candidate Mitt Romney in 1984, has previously backed LinkedIn Corp. (Nasdaq: LNKD); Kiva Systems, which was just acquired by Amazon.com Inc. (Nasdaq: AMZN) for $775 million, and Vonage Holdings Corp. (NYSE: VG).

A small fund in Boulder, Colo., Fraser McCombs Ventures, raised $16.9 million for its first fund, the NVCA reported. Its manager, Chase Fraser, previously ran MarketQuiz Inc., a marketing company in the automotive business. It was acquired by SCI Ltd., of Markham, Ontario. That was the largest amount raised by any fund's initial round, the NVCA reported.