In addition, the macroeconomic environment now looks better than it has in years, with the U.S. economy growing and Europe slowly coming out of its slump.
The strong stock market also plays a part, creating an environment for a strong IPO market, which in turn gives VCs good possibilities for a return on their investments.
Major public tech companies themselves play a part in keeping the VC market strong for private software and Internet companies. But they are in the investment game for reasons that are different from VC companies.
Tech companies use investments "to acquire innovation" and gain access to new technology as the pace of innovation quickens, McCaffrey said.
Closing out the second full week of 2014, the Nasdaq Computer Index is up about 30 percent over its level of a year ago, and the IPO market continues to look strong.
"This year was the earliest start for the IPO market in over 10 years, according to the SEC filings," according to John Fitzgibbon, writing on the IPOScoop website. This week, "the SEC's filing window started spitting out deal after deal plus pricing terms after pricing terms. By week's end, the calendar had eight IPOs expecting to raise over $3.7 billion."
Of companies filing for IPOs, tech businesses were in third place, after financial and health care companies, with 14 filings in the pipeline, according to IPOScoop.
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