The Fifth Wave Rolls On

VC activity is picking up again. :)

Venture capitalists are raising more cash this year than they've seen in quite some time. According to a study by the National Venture Capital Association, investments in U.S. venture capital firms jumped 62 percent in the first three quarters of 2005, compared to the same period a year ago. Over that stretch, VCs raised some $17.3 billion, surpassing the total for all of 2004 in just three quarters.

At the current pace, the industry will raise more than $27 billion in 2005. Astonishing, really, considering it raised just $3.8 billion in 2002 as it searched for solid footing in the aftermath of The Great Dark Time. So does this mean we're headed toward another era of me-too investment? Not really, says Mark Heesen, president of the NVCA. "We continue to see discipline on the venture side, with firms keeping close to their original targets despite ample opportunities to raise much more," he said. "We could have easily seen a $50 - 75 billion fundraising year had the venture industry not exercised this prudence and accepted more money than could be invested successfully."