U.S. venture capital firms just gathered up the most money they’ve raised in a decade

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Many in Silicon Valley may be worrying more and more about how to transform their startup stakes into cold, hard cash. But that’s not stopping institutional investors from writing out some very big checks to venture capital firms.

Somewhat astonishingly, U.S. firms just closed on more capital commitments than they have since the second quarter of 2006, according to new data from the National Venture Capital Association and Thomson Reuters. In hard numbers, 57 U.S. firms raised $12 billion in the first quarter, a 59 percent jump in dollar commitments over the first quarter of 2015.

Institutional investors aren’t necessarily spreading the wealth, with the number of funds raised down 17 percent from this time last year.

Indeed, as you can see from this downloadable fund list, roughly half the new capital commitments in the first quarter were locked up by just four firms: Founders Fund, which announced a new $1.3 billion fund; Norwest Venture Partners, which closed on $1.2 billion; Accel Partners, which raised $2 billion across two funds; and Lightspeed Venture Partners, which sealed up two funds totaling $1.2 billion.

Close behind them, by the way, were General Catalyst Partners, Battery Ventures, and Index Ventures, which raised $845 million, $950 million, and $550 million, respectively.

If you’re confused about what’s happening — particularly given the dearth of IPOs we’ve seen, along with the middling performance of the tech stocks that have gone out in the last couple of years — join the club. We have our suspicions, though.

One very likely factor is a public market that has done very well in recent years and fattened the bank accounts of institutions like universities and pension funds that invest in venture firms.

When these institutions have more money, that means they have more to invest on a percentage basis in VC. In fact, some institutions currently have so much capital to invest that for them to see a meaningful return on an investment, they have to write out larger checks, which is why you’re seeing some firms securing such enormous amounts of funding right now.

Another factor, presumably: interest rates, which remain low. Though the Fed raised short-term interest rates in December for the first time since the 2008-2009 financial crisis, it ruled against raising them again last month and reportedly won’t seriously consider raising them again until June.

There are also many more foreign investors looking to park their capital in the U.S., including from China. One source who attended Founders Fund’s most recent annual limited partner meeting said he was approached by numerous investors from China, almost all of whom were either looking for other fund introductions or the direct contact information of certain founders.

Some Dealogic data underscores the trend. As of mid-March, Chinese companies had announced 36 purchases of U.S. companies valued at $39 billion, eclipsing 2015′s full-year record of $17 billion through 114 deals, as well as the $14 billion Chinese investors spent on U.S. acquisitions in 2014. (That number includes transactions where Chinese firms took big stakes in U.S. firms, including the 5.6 percent stake that Alibaba took in Groupon in February.)

Of course, another reason that VCs are likely pulling in so much money right now could owe to the countercyclical nature of venture investing. No doubt many investors think they’re being smart by ploughing money into the startup industry now, presuming a wave of IPOs will take place because of pent-up demand.

It makes as much sense as anything, we suppose.

As venture capitalist Mike Volpi of Index Ventures noted in February when his firm closed on its newest early-stage fund, downward pressure on private markets is often both good and bad news for investors. While some later-stage companies may get squeezed, history shows it can be a good time to make new startup bets. “It’s part of the natural course of the business we’re in. So it hurts us, and it creates opportunities.”

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