U.S. venture firms raise $8.9 bln, most in six years

SAN FRANCISCO, April 14 Mon Apr 14, 2014 2:46pm EDT

SAN FRANCISCO, April 14 (Reuters) - U.S. venture funds raised $8.9 billion in the first quarter, the most in six years and almost double the amount raised the year before, underscoring the growing enthusiasm of investors for start-up companies.

It was the strongest showing since the 2007 fourth quarter, when venture firms raised $10.4 billion, according to the report from the National Venture Capital Association, based on Thomson Reuters data.

Venture-capital research firm CB Insights reported last week that investments by venture-capital firms into start-ups hit $9.99 billion last quarter, more than any quarter since 2001.

Some 58 venture funds were raised during the first quarter, 10 more than a year earlier, the NVCA said.

A hot market for initial public offerings and acquisitions is likely bolstering investor appetite for the sector. Earlier this month, the NVCA said venture capital-backed companies held 36 initial public offerings in the first quarter, more than any quarter for at least five years.

TCV, a late-stage investor based in Palo Alto, California, raised the largest fund of the quarter, the $1.38 billion TCV VIII. Founders Fund raised a $1.01 billion fund, Founders Fund V. Both firms backed social-networking company Facebook.

Despite the big offerings from a few funds, the NVCA described the fund-raising environment for its members firms as difficult. Although venture-capital performance has recently improved for the 10-year time horizon the industry views as its sweet spot, for years it lagged the stock market, making it hard for firms to attract money. (Reporting by Sarah McBride; Editing by Leslie Adler)