Subtle changes are taking place in venture fund raising, and the news could be good for startups who have been starving for capital in the post dot-com boom days.
The three largest venture funds raising money between April and June were early-stage focused funds, and 53.5 percent of all money raised was earmarked for early deals, according to the National Venture Capital Association and Thomson Venture Economics.
Some $1.62 billion out of a total of $3.3 billion went to 21 early-stage funds.
“The weight towards early stage funds confirms that limited partners understand the value of long term investing in emerging spaces,” said Mark Heesen, president of the NVCA, in a statement.
The trend in fund-raising reflects that being seen in direct investments.
PricewaterhouseCoopers, the NVCA and Thomson reported that 229 companies received early-stage investments in the second quarter. That represented 30 percent of all deals, the highest number since the second quarter of 2002 and the highest percentage since the first quarter of 2001.
The quarter was a good one for fund-raising in general. Forty-eight funds raised the $3 billion — the second highest number in each category out of the last five quarters. Fifty-one funds raised $5.4 billion in the fourth quarter of last year.
Top early-stage fund-raisers were:
The year also could mark the third straight in which VC funding increases overall. Through six months the total is $5.8 billion for 82 funds.
Some $11.2 billion was raised in all of 2003, and $9.1 billion was raised in 2002.
But the new deals are far from the $106 billion raised in 2000 and $38 billion in 2001.
Funding for buyout and mezzanine round firms also spiked in the second quarter, hitting $13 billion in 23 deals. That was four times the total of the first quarter.