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Fewer VCs in U.S. Raise More Funds in First Half of 2011

Printed sheet of 100 dollar bills (Photos8.com)

(Photos8.com)

According to Thomson Reuters and National Venture Capital Association (NVCA), the number of venture capital companies raising money in the first six months of 2011 dropped sharply, but the amount of funds collected also rose sharply compared to the first half of 2010.

Venture capital (VC) companies are often sought out to invest in early-stage science and engineering-based enterprises. Thomson Reuters and NVCA sample VC companies based in the U.S. for these reports.

The number of VCs raising funds dropped from 93 in the first half of 2010 to 76 in the same period this year. However, these 76 companies raised some $10,242 billion, a 67 percent increase over the first six months in 2010.

NVCA says this number of VC companies (76) is the lowest recorded for the first half of a year since 1995. A similar pattern was recorded for the second quarter of 2011 alone, where the number of companies raising money dropped compared to Q2 2010, but the amount of funds raised increased.

The report distinguishes between new and follow-on funds. A “new” fund is defined as the first fund at a newly established firm, while follow-on funds are those that have raised funds before. In the second quarter of 2011, Thomson Reuters and NVCA counted 23 follow-on funds raising capital compared to 13 new funds, a ratio of 1.8 to 1.

To illustrate the increasing degree of concentration in the VC industry, about half of the second quarter’s $2.7 billion raised by VCs was collected by only two funds in the same company, Accel Partners in Palo Alto, California.

Read more: Global Venture Capital Volume Up in Q1, Deal Number Down

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