Why It’s Pouring VC Cash

Business2.0:

In fact, the first half of 2005 could usher in the biggest flurry of financing the technology world has seen in years. Remember all that money raised in 2000? Most of those fat funds will be closed to new investments after 2005, so VCs have to use that money now — or lose it. According to Keith Benjamin and Pascal Levensohn, managing directors at Levensohn Venture Partners, a huge chunk of the $13.5 billion in VC “overhang” will pour into startups in the next four to six months. If VCs can’t spend the rest of it this year, they must return the unused portion to investors. Even worse, they’ll have to relinquish the 2 percent management fees they’ve collected over the years. That means passing up tens of millions of dollars — unless, as one VC puts it, “I can shovel money out the door.”

via The Small Business Blog.

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