Despite bubble talk VC’s are still bullish

Venture capitalists in Silicon Valley are feeling increasingly bullish despite all the bubble talk, according to a new survey from industry analysts at Fenwick & West. Meanwhile, angel investors continue to make their way up the food chain as internet and software companies become ever cheaper and easier to invest in. The current wave of Internet IPOs should soon swell their ranks as well as lock-up periods expire and the newly liquid try their hand at investing.

According to the release:

We also note anecdotally that we are seeing an increasing number of early stage companies being funded in a more substantive way by angels, and accordingly delaying their first venture capital round, especially in the internet/digital media space. For a copy of our initial angel/seed financing survey, please go here.

The Silicon Valley law firm analyzed the terms of venture financings for 122 Silicon Valley companies that reported raising money in the first quarter of 2011 and found investors increasingly enthusiastic about the companies they’ve invested in. During the first quarter of 2011, up rounds exceeded down rounds , 67 percent to 16 percent, with 17 percent of rounds remaining flat. This is a significant boost from the first quarter of 2010, when the industry was still recovering from the slough of 2009. For the first quarter last year up rounds routed down rounds 49 percent to 39 percent, with 19 percent flat.

This was the seventh quarter in a row in which up rounds exceeded down rounds.

Meanwhile,this was also the seventh quarter in a row in which the survey’s price barometer showed positive growth. The barometer, which measures the average price increase of companies raising money this quarter compared to their prior round of financing, showed an average price increase of 52 percent in the first quarter of 2011, less than the 61 percent increase registered in the forth quarter of 2010, but,  “still a very healthy increase,” according to the law firm.

And while software and internet companies are getting the biggest boost and highest valuation increases, all industries appear to be benefiting as the chart below shows.

So for startups, a bullish VC community is good news as well as having more sources of funding as angels fly higher. Let’s hope it lasts.