Venture Capital Fundraising in 2006

It looks like venture capital fundraising this year will surpass last year, even though some people think the market is saturated.

For the first 9 months of this year, $19.7 billion was raised. For the first 9 months of last year, $16.7 billion was raised. This data comes from Dow Jones subsidiary VentureOne.

$25 billion was raised for all of 2005. The most since $49.7 billion was raised in 2001.

The interesting thing is that the increase has been from existing funds getting bigger, rather than new funds. 22% of the money raised this year went to funds of $500 million or larger. Last year, 8% of the money went to funds that big.

The percentage of capital going to funds less than $100 million is 29.2% this year, down from $44.2% last year, which was already the lowest percentage since 1992.

What this tells me is that venture funding is being concentrated in fewer firms. This may mean that the money may fund mediocre, copy cat, "playing it safe" companies.