Venture capital investment soared last month, according to CrunchBase. Venture capitalists poured $5.8 billion in new companies in January compared to only $3.5 billion invested in the same period in 2013. The figures seemed to show that venture investors are set to make 2014 a very hectic year, the report said.
The top investment category was software which secured little over $1 billion in deals, representing an increase to the $597.3 million committed in 2013. However, the data revealed that companies focused on hardware, e-commerce, mobile technologies, financial services and health-related technologies lured substantially more cash, the report said.
Although the total funds that investors gave increased in majority of the categories, the number of investments they made went down in six of the top 10 sectors by capital committed when viewed side by side with the figures in 2013. This supports the belief that price tags for companies are steadily rising, the report said.
The rate at which venture capitalists are making their commitments have led industry observers to wonder if the market is going towards a certain kind of bubble. The report quoted one unnamed investor in a multi-billion-dollar venture capital fund as saying, "As soon as people start pouring money into a sector, that's when we say we better slow down."
Venture capital investments continue to increase even if the money secured by venture investors from limited partners continues to decline. Citing data from Thomson Reuters and the National Venture Capital Association, the report said this amount has gone down to $16.7 billion last year from $19.6 billion the year before.The NVCA figures also showed that investments made to startups increased last year to $29.4 billion from the $27.3 billion made in 2012.
Despite the comeback of hedge funds and increasing valuations, investors still don't want to call the market a bubble, the report said.
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