2007 US VC fundraising hits highest level since '01

SAN FRANCISCO, Jan 14 (Reuters) - U.S. venture capital fundraising in 2007 reached its highest level since 2001, spurred by investments in red-hot sectors like environmentally friendly technology that require more capital than traditional technology start-ups, according to a report released on Monday.

Venture capital firms raised $34.7 billion for 235 funds last year -- the most since 2001 when VCs raised $38.8 billion for 318 funds -- according to the report, issued jointly by Thomson Financial and the National Venture Capital Association, a trade group.

NVCA President Mark Heesen said in the report the numbers reflect a trend where VCs are investing in "many capital- intensive industries such as life sciences and clean technology, where the dollars required and time spent with the companies are both very high."

The 9.4 percent increase from 2006 also indicates a faster fundraising cycle, where VCs are deploying the money raised quickly enough to go back to the market to raise more dollars or larger funds, Heesen said.

But, he said, "We are nowhere near the unsustainable fundraising levels of the 1999 to 2001 period when the industry raised more than $200 billion."

Many venture capitalists are concerned that there may be too many dollars chasing too few start-ups in "cleantech," especially in solar energy and biofuels.

One recent NVCA survey found that 61 percent of VC respondents think the cleantech sector will be overvalued this year. (Reporting by Anupreeta Das; Editing by Brian Moss)