VCs Shift to Expansion-Stage Funding

 

Fewer venture capital firms raised more funds over the second quarter, with a record-high amount shifting towards expansion-stage funding, Thomson Financial and the National Venture Capital Association reported Tuesday.

A total of 68 venture capital firms raised $7.2 billion in the April-June quarter, compared to the 71 firms that raised $5.6 billion over the first quarter, the report said. The second-quarter gains were driven by 10 large VC firms, which together accounted for 70 percent of the total.

More than a third of the funds went into expansion-stage funding, hitting a seven-year high of $2.8 billion. By contrast, 39 early-stage funds raised just $2 billion, the report said.

"Venture capital firms may be seeing opportunities in established companies with proven traction in the marketplace," Alex Tan, a researcher at Thomson Financial, said in a statement. He added that early stage companies "will always be a cornerstone for venture capital."

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