Venture capital fundraising remains in the doldrums as just 17 venture capital funds raised $1.6 billion in the third quarter, according to a report issued Monday by Thomson Reuters and the National Venture Capital Association (NVCA).

The paltry number of new venture funds in a quarter was the lowest since the third quarter of 1994 when 17 funds were also created. Venture capital has been drying up as the traditional ways for fund to exit -- recovering gains through IPOs and mergers -- have slowed dramatically along with the recession.

Hope springs eternal, however, as NVCA president Mark Heesen said gradual increases of venture capital commitments are expected to improve gradually beginning next year. "Anecdotally we are hearing that fundraising activity is accelerating as more firms that were waiting for economic recovery are beginning to formally seek commitments," Heesen said in a statement. "The reality, however, is that many limited partners are still determining their long term strategies in wake of the past year's financial crisis and that slows the process down considerably."

The newest large fund formed in the quarter was Andreessen Horowitz Fund I, L.P., which carries a new funding classification. A principal in the fund is Internet pioneer Marc Andreessen, who was a co-founder of Netscape. Andreessen was recently named a director of HP and his fund recently invested in the group of investors in the newly created Skype entity when the VoIP unit was spun out of eBay.

The Andreessen Horowitz fund raised $58.5 million in the third quarter while the largest amount recorded was by a follow-on fund, Khosla Ventures III. The Khosla fund raised $750 million.

Another venture research operation, Dow Jones' VentureSource, reported that just $8 billion has been raised this year through September from 83 new funds. That compares with 205 new venture capital funds that raised $30.5 billion in 2006.

VentureSource reported that traditional venture capital centers in Silicon Valley and the Boston area have been gaining market share in the category of new venture capital raised.

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