Start-ups take advantage of venture capital hot money

As investors seek to take advantage of a hot market for start-up funding and initial public offerings (IPOs), the money raised by venture capital firms reached its highest level since 2007 last year, increasing by 62 percent to $32.97bn.

Venture Capital is financial capital provided to early-stage, high-potential, and growth start-up companies. The venture capital fund earns money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology and IT.

Eight venture funds of $1bn or more accounted for $11.84bn of the 2014 total, with the largest being Tiger Global Private Investment Partners IX, at $2.5bn,while Growth Investor Technology Crossover Ventures VIII closed at $2.23bn.

Tiger Global Management, the $15bn US alternatives investment firm founded in 2005 with “seed capital” from hedge fund titan Julian Robertson raised a $1.5bn fund that specialises in private equity and venture capital investments.

Fund raising was up across the board, with venture firms focused on early-stage investing showing an increase of 33.1 percent, late-stage up 41.1 percent and multistage up 157.2 percent, according to Dow Jones LP Source. Multistage VC raised the most, with $13.52bn, followed closely by early-stage fund raising, with $13.04bn.

Xiaomi Corporation in Q4, 2014 raised more than $1bn in its latest round of funding, valuing the fast-growing Chinese smartphone maker at more than $45bn and making the company one of the most valuable technology start-ups in the world.