Clean technology startups once again raised a record amount of venture capital in the third quarter, $2.6 billion, with 42 percent of it going to companies in California .... But problems with the U.S. financial system means the torrid pace can't continue, the report warned, potentially threatening one of the bright spots in Silicon Valley's economy. [San Francisco Chronicle, Oct 1]

[Fred Wilson at] Union Square Ventures has built its portfolio making small bets on young companies. .. readers of TheFunded.com, a social networking site for entrepreneurs, rated him their favorite venture capitalist in 2007 ...  the three-partner firm focuses on services that use the Web to change a market rather than simply make it more efficient. [Clair Cain Miller, New York Times, Sep 21]

European venture capitalists are investing less money in fewer companies, mirroring a trend seen in financing for American start-ups, according to a report Tuesday by Dow Jones VentureSource.  Venture capital firms in Europe invested in 167 young companies in the second quarter, 42 percent fewer than in the period last year. Venture dollars invested declined 35 percent, to $1.3 billion. The quarter was the worst since at least 2000, when VentureSource started tracking European data.  [Claire Cain Miller, Aug 26]

Google is working on plans to start a venture-capital arm ...  Corporate venture-capital arms have been hampered by challenges that traditional venture-capital businesses don't face. Venture capitalists invest in private start-ups at an early stage, usually in hopes of a big payout if the company is sold or if its stock goes public.  Many start-ups fear that taking corporate money limits their options and comes with strings that could turn away other potential investors -- such as a right to buy the company at a later date.  [Jessica Vescellaro, Wall Street Journal, Jul 31] 

Optimism Still Flowing. The pace of U.S. venture capital investments remained steady at $7.4 billion during the second quarter despite a wobbly stock market that has made it increasingly difficult for the financiers of new ideas to cash out of startups. [Michael Liedtke, AP, Jul 19]  The pace of such investment mocks the SBIR claim that government handouts are necessary to get innovation, especially when so much of the money winds up in the hands of life-style companies who can make no economic claim of success for the nation. Oh yes, they do claim that they are better off.

From April to June, venture investments around the globe in clean-tech reached $2 billion, an all-time record, said the study from the Cleantech Group, a San Francisco research and strategy firm. That's up 58 percent from the same period in 2007 and 48 percent from the first three months of 2008, said Brian Fan, the group's senior director of research. [San Jose Mercury News, Jul 8]

The first quarter in 30 years without an IPO prompted the NVCA and its fellow travelers on Wall Street to launch a lobbying campaign to reform post-Enron reforms that raised the financial hurdles for start-ups to go public. ... Todd Dagres of Spark Capital, in a press release, seemed dismissive of the NVCA's talk that the entrepreneurial world faced a "crisis": "The data is artificial. Facebook and several other privates could have gone public but chose not to. The issue is overall liquidity. If a private company sells to a public company - it's similar to going public with less risk." [San Jose Mercury News, Jul 2]  But then, if you want something from Congress , you need to talk "crisis" since they are so busy dialing for dollars.

Adjusting for population and focusing on seed- and early-stage capital revealed that several states, including Washington, the District of Columbia, Colorado, Maryland and Connecticut, are seeing impressive increases in capital opportunities for early-stage entrepreneurs, even though their achievements are often overshadowed by the sheer volume of dollars invested in California and Massachusetts. [SSTI, Jul 2]

The second quarter of this year is to be the first in more than 30 years without a venture-capital-backed IPO in the U.S., according to a survey by the National Venture Capital Association, [Wall Street Journal, Jun 30]

Procedural justice may be the reason why venture capitalists favor the entrepreneurs who communicate with them most; a willingness to observe the dictates of process is taken as a proxy for quality. [David Shaywitz, reviewing Brafman & Brafman' Sway, Wall Street Journal, Jun 24]

Kleiner Perkins is now laying a bet on a breakthrough technology surrounding stem cells derived from adult humans. ... backing a new Bay Area company, iZumi Bio Inc., which had its public premiere Monday with the announcement of a research collaboration with the J. David Gladstone Institutes, based in San Francisco. The nonprofit institute is a center of scientific work on novel methods of "reprogramming" adult cells to recover the versatile properties of embryonic stem cells, which can morph into any cell type in the body. [Bernadette Tansey, San Francisco Chronicle, Jun 17, 08]

Wisconsin is one of the venture capital “have-nots,” said Susan P. Strommer, president and chief executive officer of the National Association of Seed and Venture Funds, a network of 8,000 early-stage investment professionals and organizations.   A whopping 60% of all venture capital dollars go to companies in California and Massachusetts, Strommer said. Wisconsin companies pull in just 0.3% of all the venture capital invested in the U.S., she said.  That statistic, plus the fact that venture capitalists now put just 4% of their money into start-up companies, compared with 17% in 1995, shows why it’s so important for the state to build its own infrastructure for investing in young companies, Strommer said.  [Kathleen Gallagher, Milwaukee Journal Sentinel, Jun 11]  The idea of "have-not" empowers representative politicians to correct an "unfair" imbalance. Their problem is that we cannot have "fair" balance and a nationally efficient market-based innovation machine. The same argument applies to SBIR promoters who argue "fair share" as the basis for redirecting government investment in innovation to politically favored companies. 

Biotechnology companies in San Diego and nationwide had little trouble raising money last year, with venture capital, stock offerings and debt deals pumping a near-record $21 billion into the sector. But the biotech industry yet again missed a milestone it's been striving for over the past three decades – overall profitability – although it came closer than it ever has before. [Mike Freeman, San Diego Union Tribune, May 20]

"Blank-check companies" started off 2008 by outpacing the number of traditional IPOs listed in the U.S. But they have begun to lag behind as investors show signs of buyer's fatigue. ... empty shells that raise money through initial public offerings to eventually buy operating businesses, made up nearly a quarter of all initial public offerings in the U.S. last year, according to Dealogic. [Wall Street Journal, May 19]

Clean-tech venture capitalists have taken a shine to makers of LEDs and other bright lights, seeing a growing potential for these semiconductor-based light sources in streetlights and parking lots, in concert venues and gymnasiums ... VC investments in lighting technologies reached $100 million in the first quarter of 2008, ranking behind only biofuel and solar among clean-tech categories. [Matt Nauman, San Jose Mercury News, May 19]

Capital, Capital, Capital. Lightspeed Venture Partners, flexing its success in the ongoing shakeout of venture capital business, announced Monday it had closed a new $800 million investment fund. Issuing press releases in English, Mandarin, Hindi and Hebrew in the wake of two new funds - the $1.2 billion raised by Kleiner Perkins Caufield & Byers, including $700 million in its 13th early-stage fund, and $500 million in its new "Green Growth" fund. [San Jose Mercury News, May 13]

Kleiner Perkins will invest $500 M in green technology companies that have passed their earliest stages of growth and are maturing. The venture capital firm also will invest in green-tech startup companies as part of another investment fund it introduced Thursday, which will invest $700 M over the next three years in startups.  [San Francisco Chronicle, May 2]

Venture capital investments in New England companies fell 40% in the first quarter -- to its lowest level in a decade . [Mass High Tech, Apr 21, 08]

Venture capitalists sank $6.8 billion into U.S. companies in the first quarter, down 8% from a year earlier, according to data from Ernst & Young and VentureSource. [Tomio Geron, Wall Street Journal, Apr 19]

The credit crunch and economic downturn have some angels feeling skittish. But others see opportunity: Studies show that the best time to start a business is when the economy is down. That's because entrepreneurs with good ideas will find cheaper land, labor, supplier contracts, and other ingredients that go into starting a business. Angels that back such ventures can earn impressive long-term returns—one study cites a rate of return of about 27%, on average, or 2.6 times the investment in 3.5 years.  [Chris Farrell, Business Week, Apr 28]

As George Lipper noted for the National Association of Seed and Venture Funds, California claimed about 40% of national venture investment in 1995, a figure which had grown to about 47% by the end of 2007. [SSTI, Apr 16]

Sequential VC Partners. Terry McGuire, a partner with nearby Polaris Venture Partners, was familiar with BIND's nanoparticle technology to treat tumors and heart disease. He's also a friend, and frequent business partner, of Robert Langer, the decorated scientist who runs the MIT lab. That relationship often gives Polaris first dibs on cutting-edge medical technology developed there. Together, McGuire and Langer have launched 13 companies over the past 15 years and become a model for other venture capitalists scrambling to commercialize new drug and medical-device research.  [Rebecca Buckman, Wall Street Journal, Apr 14, 08]

[VC's Grandfather Georges] Doriot was as much focused on the personal qualities of the founding team as the soundness of the business idea. "His famous saying was, 'I'll take an A individual with a B idea over a B individual with an A idea,' " says Dan Holland, who began working for Doriot as an associate in 1969, helping identify and manage investments. [Scott Kirsner, Boston Globe, Apr 7]

With the economic downturn souring market demand for venture-backed start-ups, fewer were sold or went public in the first three months of 2008 than in any quarter in recent years, according to figures released yesterday by the National Venture Capital Association. [Boston Globe, Apr 3]

Angel investors are on track to be more cautious with investments in light of the recent volatility in the economy, according to a new study.  The 2007 Angel Market Analysis from the Center for Venture Research at the University of New Hampshire in Durham, N.H., showed mixed signs and exhibited little change from investment dollars the previous year.  Total investments in 2007 were $26 billion, an increase of 1.8 percent over 2006. However, a total of 57,120 entrepreneurial ventures received angel funding in 2007, a 12 percent increase from 2006. The number of active investors in 2007 was 258,200 individuals, an increase of 10.3 percent over 2006, according to the UNH study. [Dayton Business Journal, Apr 1]

venture capital is still rolling in. [NVCA] reports that 2007 saw the highest level of VC investments - $29.4 billion pumped into 3,813 deals - since 2001. But don't be too relieved by that last figure. As we know from those doomed 2001-era investments, ebullience among venture capitalists can be a very bad omen, if not a sure-fire sign of a market top. ... In other words, the Valley is probably going to have a difficult time keeping up its us-vs.-them mentality. [Adam Lashinsky, Fortune, Mar 20]  If VC, industry R&D, and capital investment all decline, look for the SBIR advocates to make the intellectually bankrupt that putting more government money into small high-techs would be good for America. Actually, it could be good if the government R&D agencies were capable of managing it intelligently. Which they have showed no sign of, and which the SBIR advocates wouldn't like anyway as the money went to an entirely different class of firm than supports SBIR politics. 

Silicon Wadi.  Land of milk and start-ups ... And, as in California, there are plenty of well-funded venture-capital (VC) firms providing cash. ... many entrepreneurs cut their teeth in the Israeli army, which has always needed to compensate for the county's lack of manpower and resources with cutting-edge technology, mainly in communications. ... The focus on innovation and technology, and a relative lack of interest in management and marketing, explain why Israeli entrepreneurs tend to sell out early, mostly to big foreign firms, rather than build up their companies. ... And one day soon, Chinese engineers, in particular, will be as good at building start-ups and developing intellectual property, warns Zohar Zisapel, a serial entrepreneur and chairman of RAD, a group of telecoms-equipment firms. After all, he says, “the Chinese mother is like the Jewish mother—quite demanding.”  [The Economist, Mar 19] 

Seattle was the third-fastest-growing U.S. investment hub of the past 10 years, according to a report by PricewaterhouseCoopers and the National Venture Capital Association. The study, known as the MoneyTree Report, indicated local startups raised some $1.25 billion in 2007, up 211 percent since 1997. Two other areas, New Mexico and Pittsburgh, showed even faster growth [rate] over the decade,  [Seattle Times, Mar 11]

Putting People First. Recent data indicate that early-stage start-ups are once again attracting venture capital. But that renewed interest may not necessarily translate into new local medical device companies, experts say. Entellus' story suggests that VCs are as picky as ever and that people -- not ideas or technology -- carry more weight with investors. [Thomes Lee, Minneapolis Star-Tribune, Jan 29]

Venture capitalists raised $34.7 billion in funds in 2007, an increase of 9.4% and the most the industry has raised since 2001, when it raised $38.8 billion. [eWeek.com, Jan 16]

Venture capital investment in renewable energy reached an unprecedented level of $3.4 billion in 2007, according to newly released data from Greentech Media Inc. [Boston Globe, Jan 16]

Clarian Health Ventures -- the venture capital firm quietly launched last year by Indianapolis-based hospital system Clarian Health -- is planning a schmooze-fest Jan. 29 at the Conrad hotel to officially unveil its new fund. It's an invitation-only affair expected to attract hundreds of physicians and scientists from Clarian and Indiana University School of Medicine, as well as local entrepreneurs, venture investors and others. ... hopes to build a portfolio of 10 to 15 companies  [Indianapolis Star, Jan 14]

Expensive Oil to Sustain Gusher of Energy IPOs.  Among the deals already queued up for this year are a host of midstream energy companies, which primarily operate pipelines to transport oil and gas in the U.S   [Lynn Cowan, Wall Street Journal, Jan 7]

The amount of money raised through IPOs in New York last year surpassed London for the first time in three years, reaching the highest levels since the internet boom. [Financial Times, Jan 3]

Yet it will still be good to be a venture capitalist in 2008 - at least for those who survive the Darwinian shakeout. [SD Harris, San Jose Mercury News, Dec 28]

Venture capital investments, which fund innovative businesses and technologies that can spark economic growth, are set to reach their highest total since 2001. The returns of VC funds for the years 2003-2007 have been 7%, 15%, 12%, 18%, 18%. Not the heady 40% of the dot.com era, but still US Treasuries.  SBIR's return on investment, by contrast, has been undetermined and likely to remain so.  The VCs invest in the good stuff and SBIR invests in (you name it).

Overall, seven of the nine IPOs that priced earlier this week ended their first day with gains, and five experienced double-digit percentage gains. [Wall Street Journal, Dec 15] The IPO of integrated circuit maker Intellon rose 13%.

Austin-based Santé Ventures is set to announce today that it has raised $130 M to invest in medical technology and health care services in Texas and the central United States. [Lori Hawkins, Austin American-Statesman, Dec 17]

In Silicon Valley's freewheeling start-up world, not a week seems to go by without a crop of companies sprouting up. ...  Boston venture-capital firm Spark Capital is starting a push to eliminate one barrier to the job-hopping and cross-pollination that is often credited as a factor in Silicon Valley's entrepreneurial culture, asking Governor Deval L. Patrick and fellow venture capitalists to eliminate the noncompete contract clauses that may prohibit an employee from moving to a competitor for months or years. [Carolyn Johnson, Boston Globe, Dec 7]

The amount of money raised through IPOs in New York is set to surpass London for the first time in three years as companies fuel a surge in IPO volume in spite of the turmoil in capital markets.  [Financial Times, November 25]  If the government wants SBIR to spur private capital investment, it should push its SBIR money toward companies with ideas that have the most potential for making money.

Angels Doing Well. The largest study on the financial returns of angel investors in North America, released in a new report today by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation, shows that angel investors participating in organized angel groups achieved an average 27 percent internal rate of return on their investments.  Overall, this set of angel investors affiliated with angel groups experienced exits that generated 2.6 times their invested capital in 3.5 years from investment to exit. [Ewing Marion Kauffman Foundation, Nov 12]

Venture funding for all industries has fallen by more than half since 1999, ...to $26B in 2006, according to the National Venture Capital Association. Funding for Internet startups is running at roughly $1B a quarter in 2007, down from a high of $14B in the first quarter of 2000. ...a few hurdles between Landy Ung and her dream of growing her startup into a household name. ...her only outside funding comes from her mom's fried chicken restaurant, her only full-time programmer is her boyfriend, who has a day job. [Ellen Simon, AP, Nov 10]

Elsewhere in the Valley, the dearth of IPOs today could contain the seeds of the next bust. Because relatively few venture-backed companies are going public, many start-ups are relying on mergers and acquisitions for cash. ... Josh Lerner, a Harvard Business School professor who studies venture capital (and SBIR), says the number of "me-too" tech companies is even greater than it was in the late 1990s. ... The demise of such start-ups won't be pretty for Silicon Valley, but the shock waves sent out by any new bust likely won't travel as far as they did last time. [Rebecca Buckman, Wall Street Journal, Nov 5]

Oregon startups, long starved for attention from the venture capital community, are again feeling the love. A... VCs have invested nearly $200 M in Oregon companies this year. [The Oregonian, Nov 2, 07]

 The U.S. venture and angel markets appear to have fully recovered from their slump earlier this decade. Pricewaterhouse Coopers' Moneytree Survey reports that as of the third quarter, 2007 is on track to become the most active year for venture investment since 2001. [SSTI, Oct 31]

Angel Dust. US business angels, many of them wealthy entrepreneurs who have sold their companies, injected $11.9 bn into 24,000 ventures in the first half of this year, [said] Jeffrey E. Sohl, director at the University of New Hampshire's Center for Venture Research. [Robt Weisman, Boston Globe, Oct 30]

Entrepreneurs visiting a venture capitalist to ask for money sometimes feel like kids asking Dad for an allowance. ...  But every few years, Dad has to hit up Grandpa for a handout. ... Battery Ventures raised a $750M fund this year - that's made it harder for them to invest small sums into fledgling companies, Andonian says. DACE's strategy will be to put about $5 million over time into each company, and then ideally sell it to a larger firm.  [Scot Kirsner, Boston.com, Oct 28]

the IPO of Chinese software maker Longtop Financial Technologies Ltd. up 85% yesterday on the NYSE, the second-best IPO debut of the year  [WSJ, Oct 25] 

Venture capital investing in New England reached a six-year high in the third quarter [Boston Globe, Oct 20]  Venture capitalists invested an average of $20B every three months during 1999 and 2000, emboldened by the soaring stock prices of young and mostly unprofitable Internet startups.  This time Wall Street has shown little inclination to embrace unproven startups, one of the factors that has caused venture capitalists to show more restraint.  [Albany Times-Union, Oct 20]  venture capital investing in Austin posted its strongest quarter in six years. [Austin American-Statesman, Oct 20]

Next month, the New England Venture Network, a regional social group for venture capitalists, is launching VentureNetwork.vc, an online social network for professionals looking for another channel to connect and talk shop. [Carolyn Johnson, Boston Globe, Oct 22]

Southern California's biggest venture capital firm has halted fundraising for its latest venture fund amid the departure of several principals who were spearheading the firm's push into life sciences investments. ... Since it was founded in 1985, Enterprise Partners Venture Capital has raised close to $1.1B through six venture funds, which invested to varying degrees in technology, software and life sciences companies. [Bruce Bigelow, San Diego Union Tribune, Oct 18]

a lot of large U.S. companies (some who were small startups just a little while ago) get new technology more by buying early stage companies that have developed their technology to the level where it is just hitting the market place, rather than by paying university researchers (or even internal research groups) to do the basic research. ... Those companies (perhaps products of IPOs only a few years before) pay a premium for new technology, but they avoid most of the early stage risk. The VCs get handsomely rewarded for their successful bets  [Rod Brooks, Xconomy.com, Sep 10] But as Brooks notes, the scheme depends on government funding university research from which the start-ups spring.  

The angel market may be showing the first signs of leveling off following four years of moderate sustained growth. Angel investment in U.S. companies fell 6% in the first two quarters of 2007, according to the University of New Hampshire's Center for Venture Research (CVR).

venture investment is most desirable when the industry of the start-up company aligns with an area of expertise for the VC firm ...Despite the visibility of the VC industry, only 10 percent of start-ups receive VC support. The remaining 90 percent turn elsewhere for outside funding, often from commercial banks. ... Purchase "Financing Entrepreneurship: Bank Finance Versus Venture Capital" at: http://www.sciencedirect.com/science/journal/08839026  [SSTI, Oct 3]

Money Seeking Ideas. Ignition Partners, a Bellevue WA-based venture-capital firm, raised $675 M of which $400 M will be for traditional VC in early-stage technology companies  [Seattle Times. Oct 2] Business prospects required, not just sweet technology. For support for really nice science, try the federal government. Unfortunately, though, for small firms, the Executive Branch sees no competitive advantage in small company science; only politicians push science money toward small business.  Actually, economics research has established a small business innovation advantage in a narrow slice - innovative technology in market-driven small firms under 20 employees.

A new Boston VC firm launched a $378M fund to invest in early-stage life science companies. Third Rock Ventures LLC is a team of former Millennium Pharmaceuticals Inc. executives  [Mass High Tech, Sep 14]

Venture Lending. Venture-capital funding may be an alternative for some startup companies. But many entrepreneurs don't want to give VC firms an ownership stake in their business, or they can't attract venture investments. Most VC firms shun staid businesses with established markets in favor of “fast-growth” startups with “disruptive” technologies that promise to revolutionize their industry. One solution is what Miller calls “venture lending,” a concept underlying the creation of Huntington Capital, a Carmel Valley firm he co-founded in 2001.  ... Huntington offers loans to well-established, privately held businesses with sales that range from $5 M to $50 M a year.   [Bruce Bigelow, San Diego Union Tribune, Sep 14]

As you hear the SBIR advocates bleat about a lack of VC funding for companies that wouldn't get it anyway, consider: $52M more VC for SolFocus (Mountain View, CA) atop the last tranche of $32M. [Matt Marshall, Venture Beat, Sep 5] ; Plextronics, a Pittsburgh start-up developing organic photovoltaic technology for solar power, said it has raised $20.6M in a second round  [Matt MarshallVenture Beat, Sep 5]  Spatial Photonics, a Sunnyvale CA start-up developing high-definition microdisplays that will compete with existing microdisplay technologies, has raised about $26 M in a second round [Matt Marshall, Venture Beat, Sep 5]; Kovio, a Sunnyvale developer of semiconductor products using thin-film technologies, or "printed electronics," has raised $19.5 million in the first part of a fourth (series D) round; Sunnyvale-based [Matt Marshall, Venture Beat, Sep 5]; FlowCardia, a medical-device maker building catheter systems that bore holes in blood clots, raised $30 million in a third funding round; Aryx Therapeutics, a Fremont biotech company that derives ostensibly safer versions of existing drugs, filed to raise an $85.3 M  IPO..  [Matt Marshall, Venture Beat, Sep 5]

Some top venture-capital firms eager to expand into new markets are twisting their investors' arms to get them to go along -- or so say the investors  ... In some cases, investors "have really felt like there's been a gun held to their heads," says Josh Lerner, a Harvard Business School professor [Wall Street Journal, Aug 28]

Technology start-ups are certainly back in vogue. ... VMware's flotation is a good example of how much has changed. It was able to list on the stockmarket in the teeth of a financial gale only because it actually has a business. ... Since the costs of building new technology services are still coming down, people will just keep coming up with new ones—even if they do not make a lot of money and reach only a small audience. [The Economist, Aug 16] Don't worry about SBIR; the advocates will still plead for more program mostly for companies and technologies that have zero market prospects. Need another rocket plume model?

Seeking Angels. Some tips from Knox Massey, executive director of Atlanta Technology Angels: ones who understand your business, be patient, network, prepare for a long term relationship, listen to their advice.  [Wall Street Journal, Aug 13]  

GUY KAWASAKI, venture capitalist, business pundit and Apple’s first “evangelist,” posited that it’s “easy” to become an Internet millionaire, as long as you have a good idea. You don’t even have to work hard: a couple of hours a day in your underwear should be enough.   No Plan, No Capital, No Model...No Problem (guykawasaki.com) Hot or Not? (hotornot.com) Plentyoffish (plentyoffish.com) Steve Jobs demos Apple Macintosh, 1984 (youtube.com) The Flip Side of Entrepreneurship (guykawasaki.com) Hidden Credit Card Charges When Charging Abroad (gadling.com) Guilt won't stop impulsive shoppers, researchers say (cbc.ca) Mr. Kawasaki was host of a panel discussion June 14 at the Churchill Club, the Silicon Valley public affairs forum, titled “No Plan, No Capital, No Model ... No Problem: Companies That Defied What V.C.’s Will Tell You.” Video and audio of the event are available on Mr. Kawasaki’s blog, How to Change the World blog.guykawasaki.com.   [Alex Eben Meyer, New York Times, Aug 11]

Web Site Puts the 'Vent' Into Venture Capital ... TheFunded lets entrepreneurs rate venture firms according to five different criteria (track record, operating competence, pitching efficiency, favorable deal terms and execution assistance) and also write reviews of firms and their individual partners. Posters can choose to be anonymous. [Rebecca Buckman, Wall Street Journal, Aug 7] Don't like capitalists in your pet business? There's always government funding where the money doesn't care whether your business succeeds and grows in value.

Fewer dollars, more deals. That was the venture capital snapshot in the second quarter, both in New England and across the nation, according to the quarterly MoneyTree report. [Robt Weisman, Boston Globe, Aug 7]

Accelerator, Seattle's souped-up biotech incubator, has raised $22M in its third investment round. The funds will help start up to six emerging companies over the next two or three years,   [Seattle Times, Aug 3]

National venture funding was $7.4B in the second quarter, up 8% from a year ago.  Not the kind of numbers that suggest such a dearth that government intervention in the form of SBIR, for example, is needed, even if it could be run economically intelligently by government bureaus.

Every Fool Deserves an Angel. Entrepreneurs looking to start or expand a business remain underserved by the conventional equity markets – in fact, since 2000, venture capital investment in startup and early-stage companies has declined by more than 80%. Chairwoman Nydia M. Velázquez introduced the Angels Nurture Growing Entrepreneurs into Long Term Successes (ANGELS) Act, which establishes a new program and tax credit to promote this kind of less-formal investment in small businesses through angel networks. [press release House SB Committee, Jun 25]  Politicians love to find a problem at which they can throw money to constituents without having to first raise the money. But to feed all the American inventors and innovators who think they deserve an investment of Other People's Money, there is not enough money in all of China's dollar reserves. Capitalism has a working mechanism for matching dreamy rich folk with dreamy entrepreneurs, and to judge by the amount of capital poured into the sub-prime mortgage market, there is no shortage of ready money for chancy enterprises. There is no obvious market failure in American innovation that needs government intervention; there is only failure of mediocre ideas to attract capital being directed to more profitable enterprises. Angels do not need tax breaks to do what they would do anyway. The larger problem is a steady accrual of government intervention in American life - anything bad should be illegal and anything good should be done by government. 

Sodhani is turning the chip maker's sprawling investment arm - one of the world's largest and most active corporate venture capital organizations - in a dramatic new direction. Once a back-seat investor that let others "lead," or structure deals, Intel Capital is displaying a new aggressiveness. It is stepping more nimbly, spending more money and shedding its reputation for slow decision-making. [Mark Boselt, San Jose Mercury News, Jun 28]

IPOs in Europe.  Solaria's IPO is the latest in a long string of initial public offerings from European renewable-energy companies, ... Interest in solar stocks and alternative sources of energy has climbed as governments have pushed companies to reduce carbon emissions and oil prices have climbed. The European Photovoltaic Industry Association estimates the global market for solar power, measured by sales, will grow by an average of 37% annually through 2010. [David Roman, Wall Street Journal, Jun 18, 07]

VC Going Where?   "Central and Eastern Europe are already a better play" than China and India, says Scott Maxwell, co-founder of OpenView, which has invested 30% of a $100 million global technology fund in the region. "The technologies are more sophisticated."  [Business Week, Jun 11, 07] The risks in Russia especially are compounded by the lack of any working rule of law. So, why not invest in Wichita or Spokane? Venture seeks its own risks and opportunities; only governments try to breed money at  home with whatever is available and with other people's money with no penalty for failure.

Sizing Up Solar-Power IPOs Two profitable Chinese outfits are going public, but sunstruck investors should remember last year's disappointing ethanol offerings  [Business Week, May 30]

As more technology companies go public, the dot-com bust of seven years ago seems to have become a distant memory on Wall Street.  Investors are once again scoring double-digit first-day "pops" on the stocks. Smaller companies, some in recently shunned sectors such as software, are seeking stock-market listings. But this time around, investors expect companies to be relatively mature and on a solid financial footing. At the height of the dot-com craze in 1999 and 2000, some investors appeared unconcerned with a technology company's business plan and lack of profitability. [Yvonne Ball, Wall Street Journal, May 29]  one of the hottest months in years for Massachusetts companies that want to go public. Five companies have already made it onto public markets and raised $459 million selling shares this month.[Boston Globe, May 30] But, not everywhere: According to the latest figures from the British Venture Capital Association, the average return on venture capital over five years has been minus 4.8 per cent a year and over 10 years minus 1.1 per cent per annum. That compares with an exceptionally good 27.3 per cent per annum over five years and 22.2 per cent over 10 years from large management buyouts. [The Independent, May 26]

"We've seen one of the heaviest periods of filings in the last couple of years," said John Fitzgibbon, an IPO analyst and founder of IPOScoop.com. "They seem to be priming the pump for the summer rush."  [Yvonne Ball, Wall Street Journal, May 21]

Venture-backed companies, the [NVCA] study estimates, accounted for 10 million jobs and $2.1 trillion in revenue in 2005  ... But some skeptics argue that the study, which is being released today, overstates the effect of venture-capital financing. [David Ranii, Raleigh News and Observer, Mar 21]

Southwest Opportunity, a new Austin buyout firm,  plans to invest in small to midsize companies.  

Venture-capital investment flooded into Chinese companies in 2006, rising 55% from the previous year, with more-mature start-up companies attracting money like never before.  [Wall Street Journal, Feb 13]

Exit to Sweden. A gaggle of VCs, that reads like a who's who list of Sand Hill Road heavies, exited their investment in Entrisphere, (Santa Clara, CA; no SBIR)  by selling it to the Swedish telecom giant Ericsson, a world-leading provider of mobile network equipment. Its 140 employees develops products for the next generation of IP-based network technology known as Gigabit Passive Optical Network, or GPON. [SFGate.com, Feb 12]

A group of Utah angel investors is willing to back your business idea with cash - if it's judged the best in a competition for seed capital that will be held during the Governor's Utah Economic Summit in Salt Lake City on March 22.     The winner will receive an equity investment of as much as $100,000 [Paul Beebe, Salt Lake Tribune, Feb 9]

Last year was the best for venture-backed IPOs since the bubble burst, and this year looks even better. [San Jose Mercury News, Feb 11] Of course if you are getting or seeking DOD SBIR, the don't expect getting venture money since DOD doesn't care about future investment.

Silicon Valley pundits are predicting 2007 will be the biggest year [for tech IPOs] since 2000 when 170 high-tech companies sold nearly $19 B in IPOs[Business Week, Jan 8]

A Central Texas angel investing group, started last year to fill a void in backing for startups, is beginning to pump money into young Austin companies.  The group has committed a total of $750,000 to companies, with two deals nearing completion: AccuWater Inc., which makes an irrigation monitoring system, and NaturallyCurly.com, a product and social network Web site for people with curly hair. [Austin American-Statesman, Jan 25]

Angels Are Out There. Ed Rudman is a cautious man. He has spent a lifetime steering wealthy clients away from risky investments, and carefully tending their fortunes for future generations. So his latest investment might come as a shock. At 69, Rudman is putting his own money into a start-up drug developer with eight employees in a tiny lab in Cambridge. ... One among the million, Rudman was diagnosed with Parkinson's in 1997. Suddenly, this man so accustomed to discretion in the financial matters of others -- clients like astronaut John Glenn and Philadelphia Eagles owner Jeffrey Lurie -- had a secret of his own, and he kept it for seven long years.  [Beth Healy. Boston Globe, Jan 16]

In Michigan, VCs .. RPM Ventures, are selectively putting money and counsel into technology-driven startups, including software and materials companies, that they believe offer the means of innovation to older, larger and perhaps less nimble manufacturing firms. RPM's strategy is to identify and invest early in companies with products or technology-based services that are sold to Midwest manufacturers and other customers to make them more competitive, allowing them to become more efficient internally and to react quicker. [John McClenahen, Rust Belt Rebound?, Industry Week, Dec 1]

"No one wants to write the first check. Everyone wants to write the second check," said Jordan Dolin, chief executive of Emmi Solutions, which produces Internet-delivered patient-education tutorials on common medical procedures.

U.S. venture investing is outpacing last year ... entrepreneurship is alive and well and growing as fast as ever. Also, VC has become a global phenomenon. ... seed and early-stage investments are on the rise ... Software was one area that saw a decline. Investments in software companies dropped 19 percent  [San Jose Merc Mercury News, Nov 12]  SBIR on the other hand is alive but sick. Most of the money goes to contract service firms with little taste for the vicissitudes of the market. In Jon Baron's words: SBIR dollars as an end in itself.

Charles River Ventures plans to roll out a funding program today meant to help a new generation of low-cost Internet entrepreneurs rapidly launch new ideas before raising venture funding. ... its new CRV QuickStart program, will offer such entrepreneurs loans of as much as $250,000, known as ‘‘convertible notes’’ — meaning the venture firm can convert them into equity if and when the start-up raises its first round of venture capital. [Robert Weisman, Boston Globe, Nov 1]

Central Texas companies raised the most venture capital in five years. Twenty-one companies raised $206.8 M a 126% increase over last year. [Austin American-Statesman, Oct 24, 06] None shows up in SBIR lists. Meanwhile, VC was down 25% in the Triangle area of North Carolina, says the News-Observer. And down 52% from a much smaller base in Maryland.

About 30 potential [accredited] investors got a sneak peek last week at some promising technologies coming out of Arizona State University. It was the inaugural meeting of the Arizona Technology Investor Forum, a group designed to introduce well-heeled investors to up-and-coming companies spawned by university technology. [Arizona Republic, Oct 6] Nice idea, won't do any harm except possible leaks of proprietary information. Not clear it does much good, but as long as ange,s show up, it's at least entertainment.

What trends do you foresee in venture capital investing? A. In the near term, Silicon Valley and conventional technology sectors, the Internet and biotech, will be where the bulk of the dollars will go. But there’s definitely a globalization occurring. And there is movement into new sectors. And within information technology and within life sciences, there is a shift in what kinds of companies are getting funded and their locations.  [Bob Higgins, New York Times, Sep 24]The technology sector hasn't been particularly kind to IPO investors this year. Offerings in the industry have posted an average one-day return of 5.6% so far this year, compared with 7.2% across all other sectors, according to data from Dealogic. Total volume for all technology stock sold to investors -- including IPOs and follow-ons -- is down 15% so far this year, compared with the same period in 2005, the data tracker says. [Wall Street Journal, Sep 18]

In-Q-Tel, the venture capital arm of the CIA and other intelligence agencies, has hired an Intel Corp. manager with a background in cyber security as its new chief executive.  Christopher A.R. Darby.  [Washington Post, Aug 29]

make no mistake [about cleantech], Mr. Parker said. “This is not the venture equivalent of socially responsible investing,” he insisted.  It’s about money, Mr. Parker said. And venture capitalists are clamoring to get in. In the first two quarters, venture capitalists invested $379 million in 30 cleantech companies, according to the National Venture Capital Association. That is up from $230.8 million in 27 companies in all of 2005. The fervor is so strong, some critics say, that the cleantech label is being attached to concepts that only marginally fill the bill [Matt Richtel, New York Times, Aug 25]

[New Enterprise Associates] announced a new $2.5 B venture fund, the largest in its 28-year history and the second-largest the industry has ever seen. More surprising is that NEA will spend up to half of it on high-risk deals most VCs spurn: mega-investments in money- losing businesses, many of which haven't gotten their technologies to work yet. Some of the money will prop up cash-burning public companies that can't otherwise raise capital. In other deals, NEA will acquire unproven drugs -- many with U.S. regulatory approval still years away -- from Big Pharma outfits and build startups around them.  [Business Weeek, Sep 4]

Venture capital infusions into Utah's economy plunged 80% in the second quarter, to $21M, but analysts insist that the state has lost none of its allure to investors. [Salt Lake Tribune, Jul 27]

VC investing in the Philadelphia region reached its highest level since 2001, driven by strong interest in biotechnology and life sciences. [philly.com, Jul 25]

More Angels. The number of organized angel investor groups has increased almost 60% in the last three years ...  in 2005, the average angel group invested $1.45M with each individual investor contributing an average of $33,236 per deal. [Melanie Brooks, Inc, Jul 21]

the second quarter helped Central Texas post its strongest venture capital quarter in two years. Twenty-one companies raised $170.5 million during the quarter, a 134% increase from the same quarter a year ago, according to a survey by PricewaterhouseCoopers, Thomson Financial and the National Venture Capital Association. [Austin Statesman-American, Jul 25]

Ignition. Ignition Partners..  raised $80M last month to top off its already-robust $320M fund, making it the largest information-technology fund in [WA]. ... Earlier this year, it raised $200M to invest in China. [Tricia Duryee, Seattle Times, Jul 24]

VC Yard Sale. most traditional venture investors are still searching for new start-ups that could bring them Google-like returns.  Still, the later-stage survivor companies are becoming more popular. That is partly because such firms are closer to staging possible IPOs and returning money to investors than tiny start-ups.  [Rebecca Buckman, Wall Street Journal, Jul 18]

Better Money Elsewhere. In-Q-Tel has lost three managing general partners over the past year. Gilman Louie's $800K a year couldn't keep him forever in what seems to have become a training ground for VCs general partners. until now, we've been surprised that In-Q-Tel had been doing as well as it has -- linking up with top-tier venture firms to invest in key intelligence technologies  [story from Silicon Beat]

VCs have raised $18B so far this year, 41% more than last year.

Swallowing a Pill Company. Since 2003, Bain & Co sees six buyouts for every IPO as The median value of biotech acquisitions last year nearly tripled to $170 M [from] the previous year. ...reflects a newfound hunger on the part of major pharmaceutical companies for drug candidates to fill their depleted pipelines. [David Hamilton, Wall Street Journal, Jul 13]

Venture capital firm DFJ Element has raised a record-sized fund [$284 M] for investing in green technology companies, the latest sign that this area is red-hot.  ... Limited partners in the new fund include CalPERS, Swiss Re, Coca Cola, ITT, Robeco, LA City Employees Retirement System, WP Global, and British Airways to name a few [siliconbeat.com, Jun 30]

In 2005, venture capitalists invested $2.54 billion in 301 deals in the San Diego area and in Los Angeles, Ventura, Riverside and Orange counties, a 17 percent increase in dollars over 2004. By contrast, the industry invested $2.67 billion in New England, a 13 percent decline in funds. [New York Times, Jul 2]

Intel Capital funded four more Chinese start-ups. Last year 60% of its start-up investments went abroad, up from 40% in 2004. [Wall Street Journal, Jun 27]

Worth More, Maybe. The median valuation of VC-backed companies rose 20% in the first quarter, says Venture One., to $18M.  [Wall Street Journal, Jun 6].

Company Buyers Are Lurking. Ignition Partners, which has a $320 M venture fund for investing in startups, said it has gathered $80M more to support acquisitions by the companies in its portfolio ... Last year, 379 venture-backed companies were purchased for a total of $28.9 billion in the U.S., according to Dow Jones VentureOne. [Tricia Duryee, Seattle Times, Jun 2] For money to support life-style science, look to angels and government (and an equity mortgage in the house boom).  

Profitability of Venture Capital Investment in Europe and the United States.  This research paper from the European Commission examines the profitability of venture capital investment in Europe and the United States. It highlights the unfavorable profitability differential of European venture capital investment in comparison with the United States. The investment performance measures used are the internal rate of return and investment multiples.  [SSTI, Jun 1]

For biotechnology companies, the IPO isn't what it once was. VCs and financiers say the so-called IPO window remains open. But only biotech companies with desirable, late-stage drug candidates and the right kind of deals with pharmaceutical companies will be able to sell shares to the public at high prices.

Twin Cities angel investors -- wealthy people who collectively have contributed tens of millions of dollars to [entrepreneur Doug] Pihl startups Lee Data, NetStar, RocketChips and MathStar. ... Two of his companies have sold for $300M each, and he's credited with creating numerous other Minnesota millionaires. [Steve Alexander, Minneapolis Star Tribune, May 7 http://www.startribune.com/535/story/415638.html ]

Angels Flying Again. The new angel activity is proving to be a boon for entrepreneurs ... Since February, Mr. Senkut, 36 years old, has put money into five Silicon Valley technology start-ups and has lined up several similar investments. Becoming suddenly wealthy, "at first I thought I'd have nothing to do with the Internet or high tech again," he says. "But I realized I knew nothing about retail or restaurants. I needed to come back to what I know."  [Pui-Wing Tam, Wall Street Journal, May 1]

A venture-capital trade group says government regulations and other market obstacles are hindering start-up companies from going public and driving others to consider listing shares overseas. But it is unclear what kind of relief, if any, venture capitalists will get from regulators. [Rebecca Buckman and Kara Scannell, Wall Street Journal, Apr 27] the National Venture Capital Association naturally wants lots of exit routes for their infancy stage investments.

cash is still cascading into the start-up world. Palo Alto venture capital firm, Norwest Venture Partners, today becomes the latest firm to defy any emerging skepticism in the industry. It has raised $650M  in fresh cash, from its sole investor Wells Fargo, to invest in technology start-ups, [siliconbeat.com, Apr 19]

And the money keeps rolling in. VCs gathered 21% more money last quarter in nine new and 42 existing funds, says NVCA.

The number of U.S. venture-backed companies staging initial public offerings in the first three months of the year rose 63 percent from 2005 levels, but the median amount raised by these companies has plummeted. According to newly released data from Dow Jones VentureOne, [John Letzing, Dow Jones Newswire, Apr 10 ]

San Francisco start-up Arch Rock got a first round VC injection of $4.5M for wireless sensor technology. No sign of SBIR money; great technologies with market potential don't need nor want government money. The founder is  David Culler, a computer scientist at UC-Berkeley and former director of the Intel Research Berkeley lab. [siliconbeat.com, Mar 26]

Plenty of money sloshing around as VCs raised another $22B last year, up 19% from 2004.

Renewable Money. The VC money is chasing technologies aimed at increasing the supply of renewable energy, as well as for making existing energy plants and other infrastructure cleaner and more efficient. Venture capitalists sank nearly $181 million into alternative-energy companies last year -- nearly double the $103 million invested in that sector in 2004, according to estimates by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association. In 1995, investment in the sector was a scant $2.95 million.  [Jim Carlton and Rebecca Buckman, Wall Street Journal, Feb 2]

Welcome to the latest venture capital lemming rush: investing in consumer electronics start-ups....particularly technology to allow video over home networks. .. also  Gilman Louie, chief executive of the CIA's venture arm, In-Q-Tel, announced his resignation. Louie is returning to Silicon Valley, and is hooking up with former journalist and venture capitalist Stewart Alsop. The duo, who have known each other since 1986, plan to raise a $70 million fund to invest in early-stage technology companies.Louie understands technology and has experience running companies, while Alsop is ``probably the best networking gadfly in the marketplace,'' Louie said. ``He knows everybody.''  [Matt Marshall, San Jose Mercury News,  Jan 6 http://www.mercurynews.com/mld/mercurynews/business/columnists/matt_marshall/13563241.htm ]

The first time Scott Shickler went to a gathering of "angel" investors, he came home with a stack of business cards from lawyers, accountants and others -- and no investors. ... finding and winning over local investors willing to put anywhere from a few thousand to hundreds of thousands of dollars into a start-up can be tricky and time-consuming. .. According to estimates from the Durham, N.H., center, angels invested $11 billion in start-ups in the U.S. in the first half of 2005 and $22.5 billion in all of 2004. Of the 2005 investments, about 20% went into health-care services, medical devices and equipment, and most of the rest went to technology-related fields such as biotech and software. [Aja Carmichael, Wall Street Journal, Jan 30 http://online.wsj.com/article/SB113825026006856795.html?mod=todays_us_the_journal_report ]

Valley Boom, Valley Bust. interesting graphic, though, from the National Venture Capital Association today (below). It shows how prone Silicon Valley is to boom and bust. Look at the venture capital profits. They're much higher than the rest of the market (see S&P) when things are good, and losses are deeper when things are bad. [www.siliconbeat.com, Jan 31]

New VC Blogs,  Raj Kapoor, partner at Mayfield Fund, the vc in me....  Mike Hirshland of Polaris Ventures Mike's blog

DOD would call it "relevance".  Applied Materials will bring its VC arm back in-house from life as an independent venture so it can be more aligned with Applied's strategic direction," said J. Christopher Moran, general manager at Applied Ventures.  The $25M fund will go for American, Chinese, and Indian ventures. [story from Donna Fuscaldo, Wall Street Journal, Jan 23]

VCs put $22B last year into U.S. companies last year, more than any year since 2001. Get yourself a credible competitive advantage and a story. No, the usual pabulum called "Commercialization Strategy" in SBIR proposals won't do.  If your story anywhere says "assuming we can get x% of the television market", you need a new story.

Lightspeed Venture Partners said it has finished raising $475 million to invest in new companies. ..it plans to invest directly into companies in China and Israel. So it is a sign of the times. Everyone is investing abroad.  [Siliconbeat.com, Jan 11]

Guy Kawasaki, founder of Garage Technologies, a Silicon Valley venture firm that invests in early-stage start-ups, has launched a blog. Garage used to consult for start-up companies, helping them do things like raise cash, but more recently became a full-fledged seed-stage venture firm.  Kawasaki recently wrote the book The Art of the Start, a good primer for those wanting to start their own company and have no idea how to write a business plan, pitch their company or put a team together.  [siliconbeat.com, Jan 11]  One advice from Guy: Think digital, act analog. Thinking digital means that companies should use all the digital tools at its disposal--computers, web sites, instruments, whatever--to create great products. But companies should act analog--that is, they must remember that the purpose of innovation is not cool products and cool technologies but happy people. Happy people is a decidedly analog goal.

Sunshine VCs. In the first three quarters of this year, U.S. venture-capital firms funneled $67.7 million into the solar-energy sector, up from $31.4 million for all of 2004, according to the National Venture Capital Association, an Arlington, Va., trade group. That's more than 30 times the amount invested 10 years ago and presents more evidence that record-high energy prices have incited a monumental push for cheaper forms of energy. The NVCA says solar investments for the first three quarters of 2005 represented more than a third of the $194.6 million invested by venture-capital firms in the entire U.S. energy industry.  [futurepundit.com, Dec 22, 05]

This year saw 202 IPOs with an average gain of 19.7%, a decline from 2004, says The Red Herring. There’s no question that 2004 was a better year than 2005. Nevertheless, the IPO market outperformed the underlying stock market in each year..

The Alliance of Angels, one of the largest networks of individual investors in the Puget Sound area, said 20 local startups this year raised $7 million, even more than in 1999, when the tech bubble was at its peak and the alliance was at its busiest.  [Seattle Times, Dec 22, 05]

Venture capitalists have recently encouraged high-technology start-ups to set up offices in India, where they can hire low-cost engineers and outsource basic programming tasks. Now some of those financiers are taking a different tack: investing directly in Indian high-tech companies.  The trend, still in its early stages, shows how India is slowly moving up the high-tech food chain. It is a development already seen in China, [Rebecca Buckman, Wall Street Journal, Dec 7]

Valuations for companies backed by venture capitalists soared to the highest level in four years during the third quarter, another indication of the large amounts of capital flowing into the venture industry and the frothiness now marking some investment sectors. The median valuation for venture-funded start-ups in the U.S. hit $16.8 million [Rebecca Buckman, Wall Street Journal, Nov 30]

The best estimate is that the total value of extant venture-funded companies is about $250 B (down from its peak of $450 B in 2000), vs. a value of $14 T in the US public stock markets and an equal amount in the rest of the world.   [SUSAN WOODWARD, J Economic Literature, Sep 05, reviewing Venture Capital Contracting and the Valuation of High-Technology Firms. Ed by Joseph McCahery and Luc Renneboog.]  OK, if VC isn't your route from idea to market, what is? Getting repeated SBIRs until the idea becomes obsolete?

New England got 16% more VC money than last year's quarter which is a little more than the 13% national growth. Nationally, venture firms poured $5.3 billion into 714 high-tech start-ups  [R Weisman, Boston Globe, Oct 25] Want to get some of that early investment? Have a technology with a market future. If you were a buyer/user of your technology, would you buy it for the price at which you hope to sell it?

Venture capital, to be sure, is a sport played best by risk takers who understand that the cost of getting into a deal doesn't matter nearly as much as the price someone else - whether a larger company or investors through an initial public offering - is willing to pay at the exit. There were plenty of V.C.'s who once declared absurd the $4 million that Kleiner Perkins Caufield & Byers paid in 1994 for roughly a quarter of Netscape. That, of course, proved to be one of the more lucrative venture investments of the Internet era.  [Gary Rivlin, New York Times, Sep 4]

venture capital turned in 19% returns last year,... Still, one well-known VC looked at these trends and got out of the business completely. Earlier this year, Howard Anderson, co-founder of Boston-area venture firms Battery Ventures and YankeeTek Ventures, was about to raise his ninth fund when he paused for a gut check. Anderson concluded that it would be nearly impossible to deliver attractive returns. Now he's quitting the venture business to teach and advise young companies. "We were, as an industry, funding too many companies that were nonviable," he says. "We were hoping the market would get irrational again and we would get bailed out."  [Justin Hibbard, Business Week, Jul 4] 

Want VC money? Hone your podcast pitch   Noteworthy post here by David Hornik of August Capital, soliciting funding pitches from entrepreneurs via podcasts. Its called the Postcast Elevator Pitch. As he notes, Feedburner's Eric Lunt has already tried it with venture capitalist Fred Wilson.  [Silicon Beat, The Mercury News, Jun 16]  

VC Tuition: $20M. there are hundreds fewer venture capitalists around today than just two years ago. The business of financing start-ups, it turns out, may not be as easy as it seems. ... John Doerr at Kleiner Perkins (his hits include Google, Amazon, Netscape and Sun Microsystems), used to say that training a new venture capitalist was not unlike preparing a fighter pilot for battle: it takes "probably six to eight years and you should be prepared for losses of about $20 million. [Mitch Kapor, inventor of fabulously successful Lotus]  failed to choose a single company that made him, his partners and their investors any money. He confesses he was 0-for-5 in the investments he made during his three years at Accel  [Gary Rivlin, New York Times, May 22] 

Venture capital is risky business in the hands of professionals. When done by the federal government it tends toward the disastrous, as the Small Business Administration is now admitting about its decade-long attempt to outsmart Warren Buffett. ... Republicans of all people should know better than to tax some Americans more so that the government can invest in businesses that couldn't raise enough private capital. Congress can't even balance the budget, much less pick a winning telecom or biotech stock. [Wall Street Journal editorial, Apr 13] But why would Congress kill a program that hands out money to small business whether in the  Participating Securities program (the one at issue that has estimated losses of $2.7B) or SBIR which is not allowed to report losses. 

There is even a new trade group, the Angel Capital Association, whose goal is to raise the public's awareness of angel investing (angels complain that VCs get all the glory) ... the Web site of the Angel Capital Association  is angelcapitalassociation.org, though if you couldn't discover that on your own, you have no business being involved in this world in the first place [Lee Gomes, Wall Street Journal, Apr 11] Angels are local rich guys who could be likened to a warm-up act for the VC that has serious money and a break-your-knees approach to company management of its money. 

It explains why VCs take so agonizingly long to make up their minds, and why their due diligence feels like a body cavity search. [2] With so much at stake, they have to be paranoid.  It explains why they steal your ideas. [Paul Graham] Thanks to AMT's Jeff Bond who helps manufacturing companies get government support (money, that is; you don't want anything else).  

Alarm:Clock -- Ventures in the Business of Technology. We've teamed up with Andrew Madden, a former Red Herring editor who now runs his own blog, alarm:clock, covering the business of technology startups. Each Wednesday, he will write an in-depth piece about one company exclusively for the TR, along with a brief synopsis of the week in VC and technology. 
http://www.technologyreview.com/articles/05/03/wo/wo_madden031605.asp?trk=nl [MIT Tech Review, Mar 17]

For technology entrepreneurs, the old line may be true: It's not paranoia if everyone really is out to get you. [Scott Kirsner, Boston Globe, Mar 14]  Brian Barth tells his story of bringing his SideStep to some VCs and then finding their funding a competing venture with the same idea. While it would clearly be unethical for a VC to hand over documents from one company to a second company she'd decided to fund, nothing prevents VCs from sharing with that second company what they've learned from the five or 10 companies they've had meetings with that occupy that same industry niche. Peabody and Ittycheria both say it's standard operating procedure.
 

Angels are flocking to biotech. And they're filling a critical financing gap. Venture capitalists are steering clear of startups, preferring to fund companies with drugs nearly ready for market. Stock investors are equally wary, since one biotech initial public offering after another has nosedived this year. So angels are stepping up, betting that biotech is poised to deliver major drugs for everything from cancer to brain disorders. They poured $1.98 billion into biotech last year, up 10% from 2003 and 52% from 2002, estimates Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire. [Justin Hibbard, Business Week, Mar 7]

IPOs have raised $8.4B, an all-time high for this early in a year, Thomson Financial says. but it's not 1999 all over. only about 20% of the companies in the IPO pipeline are techs, Killian says. That's below the long-term average of 35% as well as the 60% level during the tech boom. [USA Today, Feb 17]

Biggies Also Have VCs on Board. HP announced [Thomas] Perkins, a partner in the Kleiner Perkins Caulfield & Byers, would re-join the board,  Coming as it does after recent reports suggesting HP's board has been unhappy with the company's uneven performance under Fiorina, Perkins' return seems a bit more loaded than HP would have us believe. "Here is a guy who has deep, deep technology connections, has previous HP experience in his background, a long history in the PC industry, a guy who I think will vigorously review business decisions,'' said Harry Blount, a Lehman Brothers analyst who does not own any HP stock. [siliconvalley.com, Feb 8]

Tech Coast Angels invested $6.6M in 2004, a 53% jump from the year before and the highest level since 2000, the group says. The 250-member group also is announcing the opening of a Westlake-Santa Barbara network, its fourth chapter ... [they] funded 17 companies last year, including SpongeTech; Diver Entertainment Systems Inc. of San Diego,  and Altadena's LeisureLink,  ... [nationally] angels provided about $12.4 billion in financing to 27,500 entrepreneurial businesses through June 30, compared with $18.1 billion for all of 2003. [Josh Friedman, LA Times, Feb 7] 

Money Is Out There. Investments in venture capital continued to rise, as universities, endowments and pension funds committed $17.6 billion to 170 venture funds in 2004, up 67% from 2003.. The bulk of the money, 52.4%, will go into early and seed stage funds, which back the youngest start-up companies [Wall Street Journal, Feb 1]

Exit-poll companies find work doing VC surveys: If you track Silicon Valley venture capital trends, you have every right to be confused today. You spend the weekend depressed over a report that venture funding in the last quarter had fallen to its lowest point in seven years, only to hear on Monday morning that investment was not down 12 percent, but was in fact up 12 percent. The managers of the two surveys said they use different methods of reporting that tend to skew quarterly data (and investor digestive systems), but which generally converge over longer periods. [siliconvalley.com, Jan 24]

Money Available. Venture capital financing climbed 7% last year to beyond $20B. 

Applied Materials shut its VC operation after anticipating a 35% drop in orders next quarter. Some of the venture arm's investments include Infinera, Instant802 Networks, Grandis, Menara, M-Stream, FlexLight and Takumi. [San Jose Mercury News, Dec 17] Apparently risk taking is only for the very rich. Which is why government risk-taking should be a part of national innovation.  And for small high-tech companies, the cash-rich SBIR - $1B a year is big money for small nursery-scale projects - could seed a thousand innovations if intelligently done.  But not like it has been done for its life of funding mostly ordinary R&D for incremental advances in knowledge. 

... more capital could be on its way to small businesses in the Northwest. The Alliance of Angels, one of the largest networks of individual investors in the Puget Sound area, said yesterday 2004 will be its busiest year since 1999.The alliance, with about 110 investors, meets monthly to hear business plans from three companies, then decides whether to invest on an individual basis. This year, nine companies received $4M, more than any year since 1999, when 15 companies received $4.3M.  [Tricia Duryee, Seattle Times, Dec 21]

Fools rush in. With billions of dollars surging in from first-time investors, top U.S. venture-capital firms are demanding bigger fees, more of the profits and other concessions -- scaring off sophisticated longtime backers who fear the glut will depress returns. ...says Harvard Business School Professor Josh Lerner, who studies institutional investor trends. "The fact that the most sophisticated of them seem to be looking to get out hardly looks like an auspicious omen for returns going forward."  [Ann Grimes, Wall Street Journal, Dec 14] NVCA foresees $18B this year, a 71% jump over last year. When Sweden and New Jersey dabble, Harvard and CalPers find something else to do. 

Paul Gompers and Josh Lerner, in their influential 2001 book, “The Money of Invention”, calculate that over the years, “venture capitalists have created nearly one-third of the total market value of all public companies in the United States.” In 1999-2000, more venture capital was raised than in the entire previous life of the industry, stretching back to the 1940s. . ... venture-capital firms may raise as much as $25 billion this year, compared with only $11 billion in 1997 ... around 50 venture-funded firms are now said to be developing products to improve internet security, compared with the pre-bubble norm of 10-15 firms per sector. Clearly this is a recipe for many more corporate failures [The Economist, Nov 27]

Where's VC headed in 2005? Spam, for starters. Here's a noteworthy summary of where venture capitalists predict their money will be going in the coming year, published today by the National Venture Capital Association.   [siliconbeat.com, Dec 15] NVCA says: Venture capitalists will be searching for true breakthrough innovations and will be avoiding “me-too” deals.

How to Pitch a VC.  To get funding, different or original ideas proposed by unusual people are sometimes better than simply good ideas proposed by smart people. Sergey Brin and Larry Page had no business plan and no immediate prospect of generating any revenue, but they had an original idea that made me want to listen further. There is no hard-and-fast matrix that startups can follow to get Sequoia's attention. Factors like market size and intellectual property clearly play into our decisions, but there are no absolutes in the world of venture capital. The only thing that leaves me cold during a pitch from a startup is the use of the drop-dead words or phrases: "synergy," "no-brainer," and "slam dunk."  [Michael Moritz, Sequoia Capital, Business 2.0, Dec 04] 

The VCs Are Back; they never went away. The VC/BIO lobbyists hope the Congressional "Lame Duck" session will bless their SBIR opening to VC-controlled firms through SBIR law changes.  The big difference between the VCs and their opponents is that the VCs want the government to invest in R&D with an economic payoff, and the SBIR advocates want to protect the jobs that the government pays for in economically mediocre firms. Says Red Herring, The spin doctor is in. Entrepreneurship expert Scott Shane has a word of advice for university spinoffs that want to succeed: get a VC. “VC-backed companies do 100 times better than non-VC-backed companies.    The mediocre companies plead their case.

"Angel Investment Groups, Networks, and Funds" is targeted for those interested in forming angel groups and for entrepreneurial support professionals and community leaders looking to expand the financing resources available to start-up entrepreneurs. The guide also contains pointers for accredited investors interested in becoming angels. It is available at: http://www.kauffman.org/items.cfm/590  [SSTI, Nov 9]

"Venture capitalists follow the adage, 'Bet on the jockey, not on the horse.' They're looking for people who are dedicated, passionate, who have a high level of commitment. Knowing people counts for a lot. There's a notion that in today's world everything is governed by anonymous expertise. I question that. I think the world of techno-science is more like the premodern world."  -- Steve Shapin, Professor of the History of Science. Shapin also subscribes to the Scottish tradition where you can't call yourself an educated person unless you can reflect on the enterprise in which you are engaged."

a handful of venture capitalists have started opening up about their thoughts. And they're doing it democratically: with blogs. .. We've counted 11 serious VC blogs ... www.ventureblog.com,  one VC with SAP Ventures, a VC with the Pacifica Fund, Steve Jurvetson, a partner at Mobius, [Matt Marshall, San Jose Mercury, Sep 21]

New England Down, MN Up. VC investment dropped 26% nationally and 57% in New England in 2Q04 from 1Q04, normal drops say the experts for summer vacation time. Dave Furneaux, managing general partner at Kodiak Venture Partners said that New England VCs  now are more likely to break their financing packages into several rounds, offering start-up companies additional "milestone funding" when they have met certain targets or goals. [Robert Weisman, Boston Globe, Oct 26] But in med-tech rich Minnesota, it rose 16%, says the Star Tribune. Around Puget Sound the total dropped by about a third but the number of deals rose, in line with a trend to much smaller deals. 

IPOs picking up. Third quarter saw 65 US IPOs more than in any quarter since the dot-com boom burst. They raised $14B. For the near future, about 170 more companies have registered for IPOs  [Robert Weisman, Boston Globe, Oct 5]

David J. Muchow, President & CEO, Skybuilt Power, will describe SkyBuilt’s innovative garage size unit that can produce, condition and put to immediate use, a wide variety of renewable and other power sources. The Center for Economic and Environmental Partnership, Inc., will sponsor its next Washington, DC Energy & Environmental Funders’ meeting on Friday, November 5, 2004.  online registration

Angels Flying Again. Once again, angel investors -- wealthy individuals who advise start-up companies at their earliest stage -- are returning. So are "emerging" venture funds, in many cases backed with big bucks from public pension funds eager to get into the next hot venture-capital firm. New state-backed venture funds are popping up around the country, targeting local entrepreneurs. So are venture firms run by corporations, which are usually the first to dive in during an up-cycle and the first to jump out when things get rough. And there are tourists of a different stripe: foreign investors who were bit players during the last boom. ... At least 200 more venture firms are in the marketplace trying to reel in investors, called limited partners.  [Ann Grimes, Wall Street Journal, Sep 8]

ARISE and Renew.  The Center for Economic and Environmental Partnership, Inc., will sponsor its next Washington, DC Energy Environmental Funders’ meeting on Friday, September 15. Speakers will be Ian MacLellan; CEO of ARISE Technologies on US Solar Energy Products and Projects, and Michael T. Eckhart, President of the American Council on Renewable Energy on the mushrooming market for solar equipment and services. Info from Gelvin Stevenson at gelvins@earthlink.net. Money will be there looking for investment opportunities. 

When Nanosys pulled its IPO, one hedge fund manager said, If this company couldn't make it, no one else can, especially companies without any profits and vague product plans. ...  Overall, the IPO market has been edgy. More than half the companies than went public in July, for instance, were forced to sell their shares below expectations, according to data from Thomson Financial in New York.  [Wall Street Journal, Aug 5] Nanotech and biotech are two fields with great promise for the future of humanity but not for investors looking for outsize returns in the short or medium term. Unless, of course, the dot.com-style frenzy repeats itself. 

When John Jaeger set out to raise $3 million for his year-old tech start-up in January, he skipped right past Silicon Valley's top-tier venture-capital firms. "It might be difficult for somebody who has an $800M fund to take an active role" in such a small investment, Jaeger says. His company, telecommunications gear maker OnSite Systems, got the money from the $330M Woodside Fund, which specializes in nurturing embryonic companies. [Justin Hibbard, Business Week, Jul 19]  So you would like some of that newly free-flowing VC money that does not come with management oversight from your new part-owners?  Sorry, only the government gives away money without meddling in your company, because the government only cares about your contract performance and not about your survival after the contract ends. 

It's Better With VC, even if only eventually.   National Venture Capital Association.says that VC-backed firms do better than others. VC-backed firms had a 6.5% employment growth 2000-2003 versus a 2.3% loss for total US employment.  While that sounds great, The study, which counted 26,494 companies, includes the performance of 9,924 start-ups that received funding in 2000 to 2003. But it also reflects the recent employment and revenue growth of 59 industry leaders -- such as Microsoft Corp., Apple Computer Inc. and Cisco Systems Inc. -- that received venture capital decades ago. The study doesn't break down which category of company accounts for how much job or revenue growth. But  Josh Lerner, a Harvard Business School professor who is an expert in venture capital, said employment and revenue probably would have declined from 2000 to 2003 if only recently funded companies were included.  [Ann Grimes, Wall Street Journal, Jul 20]

Anxious and Idle Money. Sevin Rosen was inundated by would-be investors. On July 8, the firm announced a new $300M fund, but Mr. Jaggers said it could have raised at least five times that much. Potential investors, many from Europe and Asia, called out of the blue; some even provided references in the hope of persuading the partners to take their money. "We were just swamped with interest from new investors," Mr. Jaggers said. [NY Times, Jul 18]  When interest rates are dirt-cheap and stock markets merely quiver, hot money seeks action elsewhere. 

An IPO. Phase Forward after market price rose to the range where it originally tried to price the IPO. The Waltham MA software company makes a package of products that automate many of the processes used in drug research, such as data capture of patient information, data management, and monitoring of drug safety. SBA's two-year lag records shows no SBIR history.  

Bye Bye Dot.com, Hello Nano. The chief executive of Nano-Tex LLC warned about the mounting hype around his company and other nanotechnology startups at a recent investor conference. But the first question from the audience showed how his message had been digested. "When is your IPO?"  ... a closely watched startup Nanosys  is expected to go public this year. [AP, Jul 13]  Like in biotech and dot.com, hype is not profits, and without profits the bubble will burst. 

Tech Stock Fun Coming? hedge-fund managers may take on more risk to try to make up the lost ground. Mr. Boldt-Christmas thinks that means they may start piling into technology stocks. When hedge funds start chasing performance like that, the rallies that result can be powerful -- particularly as mutual-fund managers join in.  Such moves usually end in tears, but at the outset they can be a lot fun. [Justin Lahart, Wall Street Journal, Jun 25]

Ol' Man Ribber just keeps flowing along. VC investing in New England start-up companies dipped 9.7% to $743.5 million in the first quarter .. But the venture outlays climbed 9%  in the last three months of 2003. For the nation as a whole, venture investments ... were 9.5% higher than a year ago, but 11.5% below the fourth quarter. says the quarterly MoneyTree survey. [Boston Globe, Apr 27] Although the $4-5B is a lot less than the flood of $28B at the height of the IT bubble. 

Seven Keys to VC: Find the right VC; It's all about the team; Bring more than just an idea; PowerPoint with a point; Be specific about the opportunity; Master the basics; Don't promise the moon.  [Business 2.0, Apr 04]  The sine qua nons: management, profitability, competitive advantage.

Money is Money, But .... A sure sign of springtime for the economy, particularly in Southern California, is that venture capital investors are eager to back technology start-ups for the first time since the 1990s boom went bust. And there's a new twist this time: globalization. Money and companies are coming here from all over the world to invest in software, Internet communications and biotechnology.  [James Flanigan, LA Times, Apr 4] If you are planning on dazzling the government with your private sector investment, be careful how you tell the government about foreign money. SBIRs have some uber-nationalist reviewers and deciders, especially in DOD, and could well mark down your story as un-American and a security risk. You'll never know it happened since the law does not permit them to decline a proposal on that basis. 

Ever the optimists, venture capitalists are starting to return to their investors to raise new funds, an indication that a new generation of start-up businesses may again begin to get backing. ... Nearly 53% of U.S. venture firms have said they planned to raise new funds in 2004.  [Ann Grimes, Wall Street Journal, Apr 1]  VC money is good at finding the best business opportunities among new technologies. Unfortunately, the SBIR advocates quake in fear that the government might actually use such information in deciding which SBIR proposals have an economic future and which are merely service contracts for government knowledge. 

New Enterprise Associates has assembled its 11th VC fund, $1.1B for start-ups in IT and health care. Everyone will need IT and health care for a long time. Want some of it? Get yourself a technology with an economic future; that's ECONOMIC future, not technical sweetness. And maybe get some SBIR for openers just to gain more maturity for the technical aspects. SBIR will NOT help you with showing economic value; the government simply does not do that.  

VC flowing. Last quarter (4Q03) VCs put in the highest since 2Q02, $5M of which 27% went into the Bay Area. It could be characterized that VCs are investing rather than throwing money at fantasy business models. If you're an SBIR company with a product with a competitive advantage you can compete for such investment, or perhaps better still, get an industry wanting to partner. Face it, industries have the structure to put your product into play. Not the government, which has almost no capacity to put a product into competitive play. But industries are driven by economics and profit potential with little regard to the sweetness of your technology. Governments can be beguiled but sweetness but are subject to politically whims on money to spend on your technology. With deficits looming, there will be pressure for government to spend less (or at least relatively less) on almost everything, even health care for the growing population of seniors with an attitude. 

Venture Blog  www.ventureblog.com  A group effort begun by partners in the eight-year-old Silicon Valley venture-capital firm of August Partners, this particularly well-organized blog launched in the spring. It offers a useful window into the minds of folks who put their money on technology that may, or may not, change the economy as we know it.  [Wall Street Journal, Dec 4, 03]

$16B To Get Organized.  Angel investors, acting alone or in the 170 angel capital groups, sunk $16B into new businesses in 2002. Now they will have an organization, IF they want one. the Ewing Marion Kauffman Foundation has got up an  Angel Capital Alliance to collect data about how and where it is done well. About 10% of  start-up or early-stage companies in the U.S. get equity capital from angels. [SSTI, Nov 14] 

How much venture-capital funding still sits on the sidelines?   billions, but in the Northwest, companies haven't been able to grab much of it — especially not in the third quarter, when the amount of money raised by local companies dipped to seven-year lows.  It's been estimated that there is $55B waiting on the sidelines in the United States,  ...   how come there aren't more bets being placed? Some doubt $55B is an accurate figure, while others say it's not the right time in the Seattle area's business life cycle to be investing.     [Tricia Duryee,  Seattle Times, Oct 27]

Rising Cash, Falling Courage. Not even $84B can buy courage. Venture firms have a staggering $84 billion in their coffers to invest, a near-record amount. And institutional investors are eager to give them more dough.  ... "Even today, after all the problems the business is having, there are tons of institutional investors clamoring to get into the venture business," says Joshua Lerner, a professor at Harvard Business School.  ... too much caution could be costly. If the VCs focus their time and money on later-stage deals, they may not have the resources for big, new ideas. Experts say some of the most innovative, swing-for-the-fences business plans could suffer significant delays or, worse, never get off the ground.  [Linda Himelstein, Business Week, Sep 29] OK, if the VCs won't invest in new ideas, who will? Ah, the government with start-up starters like SBIR. Hah! Those guys are even more gun-shy than the $84B. Congress's big talk about little business and American innovation and blah, blah, blah, come to naught because Congress gave the money to the gun-shy federal bureaucrats with no demand for accountability.  

James Bond Meets John Doerr. Herman Louie answers a few questions for Wired (Sep 03), such as "What's the goofiest idea you've heard?", from the "wingnuts". Perpetual motion, zero latency, putting an idea into someone else's brain. "We keep them in a 'best of' collection." Why didn't I think of that in the 80s and 90s. Because there is sometimes a closer line than many government people think between madness and genius. They tend to reject "different" just because it is different. Louie says ideas from 2% of 3400 companies are off-the-wall technologies. If you have an off-the-wall revolution, re-calculate where your physical assumptions have carried you too far. Then make a convincing case of the merits in some frame that appeals to whomever you going to address it. "A new world order" is not a convincing case. 

While other segments of the venture industry are slowly returning to historical norms, the market for start-up and seed money continues to lag, despite the better performance in the second quarter. In 2002, seed money represented less than 2 percent of U.S. venture capital investment, a stunning reversal from the 1980s and 1990s, when it regularly represented anywhere from 15 to 25 percent of overall investment. ... The problem isn't a lack of venture money. In fact, the market is awash in money. .... When you've got that much money, it's hard to invest it in small chunks. ... Venture capitalists also got burned on emerging companies during the crash ... Start-up companies are job engines. ... [Rick Brimacomb and Mark Sides, Minneapolis Star Tribune, Sep 21, 03]  So, if start-up companies are engines for what politicians most want - jobs - why doesn't the government do something to get start-ups started? Actually, it did try in 1982 with SBIR that was supposed to shovel money to promising tech start-ups. But the program was hijacked by the federal agencies for their usual R&D as revenge for the money having been robbed from those programs in the first place. The result has been a lot of ordinary R&D done by a lot of ordinary small companies and no measurable job growth that wouldn't have happened anyway. 

Corporate venturer sells out (for what it can get). Corning said it sold most of its venture capital arm to Saudi Arabia-based Scimitar Capital Partners, moving to exit a non-core business.  Corning, (which has a marvelous glass museum at its Corning NY HQ) didn't disclose the terms of the transaction. Greg Smith, president of Corning Innovation Ventures, said the sale included 16 portfolio companies involved in optical communication technology. The company said in January that CIV had invested more than $50M since founding in 2000 but that it took $47M in write-downs as valuations declined in the technology meltdown. [Reuters, Sep 15 (thanks to Leslie Aitcheson for noticing)]  At least three BMDO SBIR supported companies were acquired by Corning's venture: Intellisense, NZ Applied Technologies, and OCA Applied Optics. BMDO (in its former venture mode) supported those companies because they were good candidates for taking new technology to some market that would develop the technologies without gobs of government money (which SBIR did not have anyway and which mainline BMDO developers were too timid to invest). 

raising money successfully is amazing," he said . Seattle-based venture capitalist Jon Staenberg has joined forces with a Los Angeles-based venture-capital company to raise a new fund and connect Seattle to the broader West Coast. Staenberg and Rustic Canyon Group have raised about $130 million for a new investment pool to fund storage, wireless and e-commerce companies .... The fund also has received a SBIC license which provides $2 in government funding for every $1 raised from other sources.  [Tricia Duryee, Seattle Times , July 19, 2003 ]. 

Finally! Venture Capitalists have crawled out of their bomb shelters and are funding startups again. ... America needs startup companies. ...  They are our economy's secret sauce, the only thing that distinguishes the still-dynamic U.S. economy from those of sclerotic Europe and J