RESEARCH TRIANGLE PARK, N.C. – If you thought the economic slowdown hammering the world economy, and especially in the U.S., would affect private equity fund raising, think again.

With all the money flowing into these PE funds, startups at least know venture funding is available – even if a faltering economy overall might mean tighter due diligence and less favorable terms.

Investors hoping to capitalize on merger-and-acquisition opportunities as well as emerging companies increased their capital bets by more than 32 percent in the first quarter compared to one year ago. And the PE markets set a record last year at $309 billion.

Yes, as Wall Street stumbled and bumbled, private equity funds closed on a whopping $44.3 billion across 68 funds. While not nearly as huge, the venture capital markets also brought in new money beyond 2007’s totals by $1 billion to $4.9 billion.

The data is based on information compiled by Private Equity Analyst, which is part of Dow Jones.

Why is money flowing into private equity?

Better there than in the credit market game, an investment firm partner told VentureWire.

"If you’re a top-tier mezzanine, middle-market PE or VC player, you will be perceived as attractive right now, in part because you’re not quite as dependent on what’s going on in the credit markets," Jay Tannon, partner at DLA Piper, said.

Investments flowed despite a big slowdown in initial public offerings and M&A activity in the opening quarter of the year, as Dow Jones and other folks reported last week. However, the deal flow didn’t surprise the folks tracking the PE market.

“These figures aren’t really too surprising,” said Jennifer Rossa, managing editor at Private Equity Analyst. “The shakeup in the credit markets has slowed the pace of buyout deals.”
From January through March M&A and IPO deals generated only $8.2 billion inn action, the lowest quarterly total in more than two years, reported Dow Jones’ VentureSource.