What Capital Crunch?

The latest fundraising figures from the National Venture Capital Association and Thomson Reuters suggest that the economic slowdown is not deterring VC investment.

Here’s a snippet from the story I wrote today for BusinessWeek Online:
“There’s no capital crunch in Silicon Valley.

Despite turmoil in the stock market, jitters about mortgage financiers Fannie Mae (FNM) and Freddie Mac (FRE), and the worst market for initial public offerings in decades, big investors continue to pour money into venture capital funds

Some 71 venture capital funds raised $9.1 billion in the second quarter of 2008, up 3% from the year-ago quarter, according to a survey released July 14 by Thomson Reuters (TRI) and the National Venture Capital Assn. Investments in information technology, life sciences, and environmental technologies continue to drive the market. As the venture capital market becomes more global, Asia is emerging as an attractive location for investments.

The latest numbers signal that big investors are confident in the long-term future of the venture capital business. There does seem to be a flight to quality, however. The number of funds raised in the quarter fell 14%, down from 83 in the year-ago period. ”

Check out the rest of the story here. It is based on several interviews with VCs and limited partners.


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