As funding organizations start investing more in venture capital funds, VCs will have greater ability to and confidence in investing in early-, mid- and late-stage companies -- great news for technology and web startups, who have typically seen fewer zeroes behind their funding figures in recent years. This small renaissance could make partners who avoided early-stage funds a bit less risk averse when considering early-stage investment. Multi-stage funds are still raising significantly more money than those that focus exclusively on early-stage companies, however.
Although we're seeing slow increases in VC funds, we need to put these numbers in perspective. In 2004, VC funds raised around $20 billion. That number rose to $36 billion in 2007. Since 2007, both the amount of funding available to VCs and the investments they make have, to use a hackneyed but appropriate metaphor, fallen off a cliff. More time will tell if the remainder of 2010 will show continued growth in VC funding and whether that funding will trickle down to startups in the technology sector.
Image courtesy of iStockphoto, tforgo