Platt, Gordon, Global Finance
US venture capital firms raised a record $12.4 billion in the first quarter of 2000, a rise of 85 % over the same period a year earlier, according to the National Venture Capital Association.
"The future bodes well for entrepreneurs because venture capitalists continue to be well funded," says Mark Heesen, president of the association.
"The venture capital community is wellequipped to continue investing in new companies, as well as focus on the growth of existing portfolio companies," he says.
The biggest deal closed in the first quarter was the $600 million raised by US Venture Partners VII.
The NVCA, which represents more than 370 venture capital and private equity firms, says the record pace of fund-raising is being driven by the huge returns afforded to venture investors in the past year, even amid the fl fluctuations in the stock market.
Buyout funds had a strong quarter as well, raising $13.2 billion through 36 funds.TPG Partners III drew in $4 billion for the quarter to lead the pack, which included five funds of more than $1 billion.
The PricewaterhouseCoopers Money Tree Survey tallied a record $17.22 billion in venturebacked investments in the first quarter of this year. This total far exceeded the previous record of $14.68 billion in the fourth quarter of 1999.
"Investments in each of the last two quarters exceeded the $14.2 billion invested in the full year 1998," says Tracy T. Lefteroff, managing partner of the US venture capital practice in the Global Technology Industry Group at PricewaterhouseCoopers.
"Only a protracted downturn in the public markets would dampen venture capital investing. And it's far too early to determine if that will be the case, Lefteroff says.
Technologybased companies, including Internet-related businesses, accounted for $16 billion, or 93% of all investments, in the first quarter. "Technology investments are the driver. For the most part, nontech is a nonstarter," Lefteroff says.
Silicon Valley, New England, and the New York metropolitan area all set new records in the first quarter.
Venture capital investment will double or triple over the next couple of years as Internet usage and electronic commerce become more common in Europe, predicts Forrester Research.
The research firm estimates that 16 million European consumers began using the Web last year, doubling Internet home penetration, to 49 million.
Increasing competition from successful US Internet companies moving into Europe, as well as Internet companies from Scandinavia moving south, are encouraging European companies to make the leap into e-commerce, Forrester says. …