VCs poised to raise more funds than '05.

(From AFX Europe (Focus))

PALO ALTO, Calif. (AFX) - U.S. venture capitalists don't seem deterred by what some say is a saturated market, as venture capital fund-raising through the first three quarters of this year is on pace to outdistance the total raised in 2005.

Through the nine months of this year, $19.7 billion has been raised by U.S. investors, compared with $16.7 billion during the same period last year, according to data released Wednesday from VentureOne, a research unit of Dow Jones & Co.

Ultimately, 2005 saw $25 billion raised by U.S. investors, the highest total since 2001 when VCs raised $49.7 billion, the data shows.

Much of the increase in fund-raising this year came from firms raising bigger war chests. Twenty-two percent of the capital raised so far in 2006 has gone into funds of $500 million or greater, the data shows -- that compares to 8 percent of the total in 2005, and is the highest percentage since VentureOne began compiling its data in 1992.

Meanwhile, the percentage of capital invested in funds under $100 million is a mere 29.2 percent so far this year. That compares to 44.2 percent in 2005, which itself was the lowest annual percentage since at least 1992.

The median size of funds raised this year so far is $195 million, on track to fall short of the 2005 median fund size of $201 million. Prior to 2005, however, the median U.S. fund size had not reached higher than the $155 million recorded in 2004 since VentureOne has been tracking the industry. Even during the Internet bubble year of 2000, when the total VC raised by firms in the U.S. reached $83.2 billion, the median fund size was still $100 million, the data shows.