Chart of the week: TMT funds beat targets

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Private Equity International this week reported that venture capital firm Founders Fund had closed its sixth fund on $1.27 billion – Founders Fund VI was backed by 197 investors and gathered $270 million above its $1 billion target.

Founders Fund’s previous investment vehicle, Founders Fund V, fundraised in 2014 and closed on $1 billion, having targeted $750 million.

As Founders Fund focuses on investing in technology companies, PEI’s Research & Analytics team have taken a closer look at the targets set by funds focused specifically on the TMT sector, to discover how total capital raised compares with the original targets.

Since 2011, TMT-focused funds have consistently raised more capital than targeted year-on-year. The difference between total capital targeted and raised increased steadily until 2014, when $3.77 billion was gathered above targets set.

Despite a fall since then, it is unlikely that the investor appetite for TMT is in decline. As a growing industry with a large number of investment opportunities, the potential for strong returns on capital invested remains. Therefore, the data suggest that the firms raising these funds are simply setting more realistic targets and sticking to them.