Numbers Behind the Trash Talking: Investments in Early Stage Funds Fall

Think all that smack-talking and behind-the-scenes tension between early stage VCs and so-called "Super Angels" is about competition for deals? It's also about competition for dollars. While roughly 100 venture capital funds have raised $9.2 billion over the first nine months of the year, investments in early stage funds are declining, according to numbers released by the Dow Jones today. That $9.2 billion is a slight increase over the same period last year when 105 firms raised $8.9 billion. But the pension funds, endowments and other limited partners that keep VCs flush with power and cash are voting with their wallets in favor of more diversified funds that invest at multiple stages. That's where roughly half of the money went so far this year. Capital raised by early stage funds on the other hand fell 12%, with 65 funds raising $3.4 billion. Here's where it got weird: Funding for later-stage funds skyrocketed up 71% with five funds raising $1.3 billion. Later-stage funds are typically the smallest category, in part because the returns are the least lucrative.

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