VC market set for strongest year since dot-com era

Last quarter, venture capitalists spent $27.3b in US

Venture capitalists are spending cash at levels not seen since the dotcom era, and they’re raising money at a pace to match.

Last quarter, VCs spent $27.3 billion in the US, according to a report set for publication Tuesday by research firm Pitch Book and the National Venture Capital Association, a trade group. That’s the most in any second quarter since the group began tracking quarterly data more than a decade ago. Combined with a record-setting first quarter, the VC market had its strongest first-half-year performance since 2000.

The $57.5 billion invested in start-ups so far this year has already surpassed the full-year total for six of the past 10 years. This year is on track to exceed the $81.9 billion invested last year, which was itself a record since the dot-com boom.

VCs have no shortage of cash to invest. Venture funds raised $10.8 billion last quarter. That doesn’t include a stockpile raised by Soft Bank Group Corp. The Japanese conglomerate, which is looking to spend $100 billion in the technology business, is a driving force behind the VC fundraising frenzy.

Competition from Soft Bank’s Vision Fund is helping inspire long-established venture firms to raise larger funds. Last quarter, those included Foresite Capital’s $668 million health-care fund and Meritech Capital’s $630 million fund”. Both were much larger than the firms’ previous funds.