For Venture Capital It Is the Best of Times, It Is the Worst of Times

Dead fund walking

Earlier this week Betabeat reported on some findings from the National Association of Venture Capital, which showed that while the number of firms raising capital was shrinking, the amount of dollars put into VC the first half of 2011 was actually up 70 percent over the same period in 2010.

More positive data was released today by local analytic firm CB insights, which found that VC dealflow and funding were at an all time high for the 9 quarters they have been tracking the numbers. Of course, that time period includes some of the darker days in American economic history. But much of the nation isn’t out of the woods yet, so the fact that venture capital is exploding says something about the unique climate in the tech sector.

For those who want to cry bubble, however, there are some strong contrary indicators worth noting. As we pointed out on Monday, the fact that fewer firms are raising that capital is a sign that the herd is still being culled from the heady dot-com days, with many of those funds finally reaching the end of their 10-year life cycle. While a number of new funds have recently appeared or raised in New York–like Level Equity, which just raised $120 million–the number of firms raising funds nationally is at a 16 year low.

We also may have seen the peak for seed stage funding. CB Insights found that early stage deals had dipped to a five quarter low, and some high profile investors like Chris Sacca have publicly declared that they are sitting out the seed stage game until valuations come down a bit. Expect a reckoning in New York over the next year as a number of companies that raised seed capital exhaust their funds and try to raise a series A. For Venture Capital It Is the Best of Times, It Is the Worst of Times