Venture Capital Hits Highest Level Since 2008

America is getting its entrepreneurial groove back, and it’s mostly thanks to the technology and health care industries.

According to BusinessWeek, venture capital investors coughed up $7.7 billion in the second quarter of 2010 for startup companies, which is the most in nearly two years. In total, more than 700 companies received money last quarter from venture capital deals.

Where did all that money go? “Information technology won the second quarter's highest deal count with 231 deals worth $1.9 billion, while healthcare drew the most money, $2.7 billion in 201 deals,” BusinessWeek reports. Much of that is going to companies developing new drugs and technology businesses producing software.

Besides funding American innovation, the increase in venture capital is also a sign that investors see reason to feel confident about the economy as a whole. As one venture capitalist told the Wall Street Journal, “When nobody was sure what would happen, people were very concerned about follow-on investments they had to make with companies in their portfolios. Those have stabilized and now it makes sense to look for newer deals to put more money to work.”

If you’re looking to invest in a new business or raise money for a startup of your own and can’t afford to operate on the scale of the multi-million-dollar investments made by large venture capital firms, you might want to take advantage of a few great websites that allow users to raise money in smaller increments.

Kickstarter

Kickstarter is the king of venture capital sites. Aspiring startups can pitch their idea to this online community and list the amount of money they would need in order to actually get the project off the ground. At that point, Kickstarter users can decide whether and how much they would like to invest – the individual investments are often as little as $10, but can add up fast. Those who invest are only charged for the money if the project reaches its target fundraising goal, otherwise the transaction does not go through. The people behind the project get to dictate what kind of rewards investors get in the long run, be it a monetary stake in the company or a complimentary sample of whatever the product is that the company makes.

Kiva

Kiva is a microfinance tool that focuses on raising money for entrepreneurs outside the country. Lenders can browse through a list of loan requests on the site to find the project that speaks most to them. And like Kickstarter, the loans can be small amounts like $25. Not only can your loan help create a new business, but in many areas that new business will have ripple effects on the entire community. Eventually, when they are able, the entrepreneur will repay the loan to Kiva, who will offer it back to you.

Lending Club

The Lending Club is a peer-to-peer lending site that allows users to invest and loan money to individuals and startups. The promise of the site is that investors can earn an excellent rate of return (on average, it’s 9.65%). Those borrowing the money meanwhile can accept up to $25,000 depending on their credit rating and end up with a lower average APR of 7.93%. Consumers really seem to be diving into this option as the site recently passed $1 billion in lending requests from users.

Quirky

Quirky functions a little differently than the others on this list but it’s still worth including. Basically, users can submit an idea they have for a product they’d like to develop. Then members of the Quirky community get to vote and offer suggestions for how to make the product better. Every week, the Quirky administrators will pick out the most popular product and front the costs for manufacturing it and marketing it online. Meanwhile, each of the users who contributed an idea to make the product better get a small part of whatever profits it ends up making.

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