Reply #72: New money flocks to VC funds

[54anickel]

Investors' $6.1 billion in 2nd quarter marks 88% increase from year ago

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/07/19/BUG3LDPTQ21.DTL&type=business

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"You'll see a lot of earlier-stage companies being funded over the next six months to a year," said Mark Heesen, president of the National Venture Capital Association in Arlington, Va. "At the beginning of a fund, you invest in earlier-stage companies which you want to shepherd through the next couple of years as they move through the food chain and get bigger and bigger."

Heesen predicted that more money will go into such energy sectors as clean technologies, efficient energy and fuel cells, as well as into consumer technology products in the wake of wildly popular devices like Apple's iPod.

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The amount of money flowing into buyout (purchase) and mezzanine (just before going public) funds also increased, with $22.1 billion raised by 38 funds. That was 32.5 percent more than last year's second quarter and 63.7 percent more than the first quarter of this year.

The combined amount invested in venture capital, buyout and mezzanine funds was $28.2 billion, the best quarterly showing since the second quarter of 2001.

About half of the money invested comes from public and private pension funds. The rest comes from banks, insurance companies, colleges and endowments.

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