U.S. venture capital firm fundraising torrid in Q1

NEW YORK (Reuters) – The U.S. venture capital community is on a tear, raising more than $7 billion during the first quarter for its best annual start since 2001, just before the dot-com crash.

The fresh capital marks a 76 percent increase from the first quarter of 2010, when venture capital firms raised $4.0 billion, according to data released on Monday by Thomson Reuters and the National Venture Capital Association.

The January-March period of this year is the strongest quarter for raising capital since the third quarter of 2008.

While the fund-raising efforts hit some new highs, the number of firms involved is fewer than a year earlier. During the first quarter of 2011, 36 venture capital firms raised money, compared with 44 in the first quarter of 2010.

“While it is encouraging to see the increase in dollars this quarter, much of that was driven by several larger, established funds,” NVCA President Mark Heesen said in a statement.

Bessemer Venture Partners led the pack, raising $1.6 billion during the quarter, followed by Sequoia Capital at $1.3 billion and JPMorgan Chase & Co’s (JPM.N: Quote, Profile, Research) Digital Growth Fund at $1.2 billion.

There has been a rush of investor interest in hot Internet companies with hefty valuations, such as Twitter, Facebook, Groupon and Zynga.

Indeed, venture capital-backed acquisitions and IPOs climbed to $7.3 billion during the first quarter of 2011, boding well for a strong year.

(Reporting by Jennifer Saba, editing by Gerald E. McCormick)

U.S. venture capital firm fundraising torrid in Q1