Venture capitalists raised more money from investors last year than in the previous two years combined, raising concerns in some quarters that too much money will once again threaten investment returns.
However, the $17.6bn that was put into new venture funds last year was still a small fraction of the $106bn that poured into the industry at the peak of the dotcom boom in 2000.
The contrast between the amount raised (more than the previous two years combined) and the paucity of investments we still see is explained by the overwhelming contraction of the VC market since 2000. Basically, it’s very like the employment market. Yes, more people have jobs than a year ago, but far fewer people have jobs than normal economic growth would have provided since 2000.