The final results are in, and it looks as if venture capitalists
will have plenty of capital to invest over the next three to five years; new stats
from the National Venture Capital Association and Thomson Financial show that last
year's fundraising reached its highest level since 2001.
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Two hundred and thirty-five new vehicles closed
with $34.7
billion in 2007, an increase of 9.4% from the $31.6 billion in 2006.
Additionally, 2007 fundraising dollars reached the highest level since
2001 when venture capitalists raised $38.8 billion from 318
funds. Early-stage funds grabbed $9.7 billion, but balanced stage funds
raised the most with $10.6 billion. Later-stage vehicles secured $7.2
billion
while expansion-focused funds raised $4.8 billion.
Back in 2001, (the last time VCs had so much in their
coffers) venture firms received $38.8 billion for new funds before everyone
realized that the party was over, resulting in negative IRRs, returned capital and
shuttered funds for a number of firms. Although today there's no bubble approaching
the size of the one inflating at the turn of the century, venture capitalists
are once again looking at an iffy environment. With startups needing less money
than ever to get off the ground, an economic slowdown (hopefully without a
recession) and valuations in their most attractive industries - cleantech and
Web 2.0 - reaching sky-high levels, venture firms may once again have a tough
time deploying all the cash they raised. Still, venture capitalists have reason
to be optimistic even during a downturn, as companies like Google Inc., Facebook Inc., MySpace.com
and others that were funded after 2001 show there's still money to be made
even in tough times. - George White
See NVCA press release
See Deal.com story on TCV's $3 billion fund
Comments
Too much money - Limiteds would be smart to keep annual funding at $20B and below to keep the deal flow healthy