If the Venture Capital model is broken in the U.S., companies that invest VC funds in China don't seem to have figured it out yet; they're investing faster than ever, according to sources like Red Herring.

From Ken Schachter's report:

Venture capitalists poured $964 million into 59 funding deals in China in the third quarter, breaking the yearly record set in 2001, according to a new study.

Through three quarters, venture capitalists pumped $3.29 billion into Chinese companies, smashing the full-year record of $2.88 billion set seven years earlier, Dow Jones VentureSource reported.

While VC funds are still spending what they have on hand at an amazing rate, Schachter's Red Herring article points out a recent report by Zero2IPO showing VC fund raising down. Way down.

So if that trend continues, the VC people will eventually run out of money to spend - regardless of their own optimism...


Photo courtesy of iStockphoto, david franklin