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US venture capital funds have big ($68 billion) ‘overhang’-report

U.S. venture capital firms have yet to invest a substantial portion of their funds and have earmarked much of that uncommitted money for companies already in their investment portfolios, industry research firm VentureOne said on Monday.

The so-called venture capital overhang of U.S. funds started in 2000 and is estimated at $68 billion of the $155 billion raised in that period, according to a new survey from VentureOne.

http://www.reuters.com/newsArticle.jhtml?storyID=4690818

About 83 percent of the money raised in 2003 has yet to be invested, compared with 64 percent in 2002 and 54 percent in 2001. About one-quarter of the money raised in 2000, the biggest fund-raising year on record, has not yet been invested.

According to active venture capital investors participating in the VentureOne survey, an estimated $26.7 billion of the uncommitted money is available for investment in new companies.

"The fact that a tremendous amount of capital is available for new investments bodes well for the future innovations and new development that will emerge from venture-backed start-ups," John Gabbert, vice president of worldwide research at VentureOne, said in a statement.

VentureOne said U.S. venture capital fund raising reached $8.3 billion in 2003, down about 37 percent from 2002.

Thomson Venture Economics and the National Venture Capital Association, which use a different method for measuring fund raising, in February said venture capital funds raised $10.8 billion in 2003, compared with $9.05 billion in 2002.

© Reuters 2004. All Rights Reserved.

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