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 Thompson Financial show that last year's fundraising reached its highest level since 2001.
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
Souce: The Deal.com, 1/14/08