Red Herring reports on a new study released by the National Venture Capital Association that found that venture capital and private equity funds are raising money at a torrid pace.
Forty-three venture capital funds raised a total of $6.07 billion for investment in startups during the second quarter. Last year, during the same three-month period, venture firms raised $3.23 billion for 55 funds, according to a study by Thomson Venture Economics and the National Venture Capital Association.
Although the number of venture funds has dropped, the total amount raised has nearly doubled. The average fund size has increased to $141.3 million, up from $58.8 million a year ago.
This is remarkable given the near death of IPOs since Sarbanes-Oxley became law, making reporting requirements too costly for smaller public companies.
The outcome that venture capitalists are betting on is buy-outs of funded ventures by large, public companies.
Inc.com says that more money continues to go to earlier stage ventures.
This influx of cash has enabled VCs to put more of their money in start-up and seed capital. Over 50% of the money invested in new funds will be used for early-stage investments, which accounted for around 45% from 2002 to 2004, said Daniel Benkert, a senior analyst at Thomson.
