Technology bubble ten years later: The money’s not back

[Fiat Currency]

Re: Technology bubble ten years later: The money’s not back

EJ: The good news is that if you are a Biotech, Medical Devices and Equipment, Electronics/Instrumentation, or Energy – who could have known? – start-up company, 50% of the funds invested in 2010 are going into your industries.

That comment hit home. Historically we've always invested a percentage of our wealth in start-ups. As a basket of investments, they have been very good performers for us long-term, as we typically take an active role in coaching & governance.

4 months ago - we decided to double our VC/Seed Stage funding - which was a major decision. Last week we just completed a nice deal with a company who has a great product & patent in the Biotech/Medical Devices sector. The deal before that - was in Energy. We are still looking at several more - and they are almost all in the sectors you identified above.

Personally, I feel more comfortable taking educated bets in assisting others with their sweat equity, than I do with most of the other "financial product" alternatives out there.

[EricPhan]

Re: Technology bubble ten years later: The money’s not back

Paul Graham on the future of Startup Funding:

"Two years ago I wrote about what I called "a huge, unexploited opportunity in startup funding:" the growing disconnect between VCs, whose current business model requires them to invest large amounts, and a large class of startups that need less than they used to. Increasingly, startups want a couple hundred thousand dollars, not a couple million. [1]

The opportunity is a lot less unexploited now. Investors have poured into this territory from both directions. VCs are much more likely to make angel-sized investments than they were a year ago. And meanwhile the past year has seen a dramatic increase in a new type of investor: the super-angel, who operates like an angel, but using other people's money, like a VC.

Though a lot of investors are entering this territory, there is still room for more. The distribution of investors should mirror the distribution of startups, which has the usual power law dropoff. So there should be a lot more people investing tens or hundreds of thousands than millions."

The rest at

http://www.paulgraham.com/future.html

[EJ]

Re: Technology bubble ten years later: The money’s not back

Paul Graham on the future of Startup Funding:

"Two years ago I wrote about what I called "a huge, unexploited opportunity in startup funding:" the growing disconnect between VCs, whose current business model requires them to invest large amounts, and a large class of startups that need less than they used to. Increasingly, startups want a couple hundred thousand dollars, not a couple million. [1]

The opportunity is a lot less unexploited now. Investors have poured into this territory from both directions. VCs are much more likely to make angel-sized investments than they were a year ago. And meanwhile the past year has seen a dramatic increase in a new type of investor: the super-angel, who operates like an angel, but using other people's money, like a VC.

Though a lot of investors are entering this territory, there is still room for more. The distribution of investors should mirror the distribution of startups, which has the usual power law dropoff. So there should be a lot more people investing tens or hundreds of thousands than millions."

The rest at

http://www.paulgraham.com/future.html

Paul was early if he was investing two years ago. Many of the companies that were funded in 2008 ran out of money during the recession and either went out of business or are now being re-capitalized at a lower valuation. I waited until this year and recently made two early stage start-up investments after doing due diligence on dozens.

The data confirm my experience: very, very few capital intensive companies are getting financed. A Series A or B equipment deal is virtually unheard of. When is the last time a new semiconductor company got funded? The question this raises for me: Can our economy grow on a foundation of low capex medical device, and Internet and IT services companies? What happens to U.S. technology leadership five to ten years from now in those markets that are not receiving funding? One area I'm bullish on is companies that are commercializing technologies that reduce energy consumption.

[Rajiv]

Re: Technology bubble ten years later: The money’s not back

We are still looking for funding in the pharma space - We have been told confidentially by people who should know, that most VCs are in disarray.

[Chris Coles]

Re: Technology bubble ten years later: The money’s not back

Certainly brought it back to me, seeing the figures. We set out to create a Video-911 service 2001 and had to walk away early 2003, so this thread posits that my decision to sit it out has been vindicated. Not that that brings a smile.

[bill]

Re: Technology bubble ten years later: The money’s not back

One area I'm bullish on is companies that are commercializing technologies that reduce energy consumption.

Got your REC's and WC's ?
http://en.wikipedia.org/wiki/Renewab...y_Certificates
http://en.wikipedia.org/wiki/White_certificates

[Brooks Gracie]

Re: Technology bubble ten years later: The money’s not back

But, but, but, weren't all of Bush's tax giveaways to the top 10% going to create a boom in small businesses and startups? Wasn't that what we were told?

Oh, I forgot, those tax cuts did create a start-up boom. Unfortunately, it occurred in India and China. Well, that and a bond-market bubble.

[bill]

Re: Technology bubble ten years later: The money’s not back

[Five years later it still isn’t.

Today Thomson Reuters published its PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report and Data.

Investment by Development Stage

First the good news. In 2010, investment in pre-product or “seed stage” start-up technology companies is on track to return to 70% of 2000 levels and above 1999 levels.

Definitions

• Venture Capital - Money supplied by individuals or institutions to finance the losses of innovative new companies
• Seed Stage - Pre-product, pre-revenue
• Early Stage - Product but pre-revenue or minimal revenue
• Expansion Stage - Product and some revenue growth track record
• Late Stage - Rapid revenue growth but pre-profit

The bad news is that this growth reflects the desire by angel investors to avoid deals that require follow-on financing by venture capital firms. After two economic crashes in ten years that produced cram-down follow-on financings that reduced seed stage investors’ ownership in a company by as much as 95% in some cases, the chickens are no longer keen to dance with elephants. That means few capital-intensive start-ups are starting up. Further bad news is that Early Stage and Expansion Stage financing remains at 47% and 32% of 2000 levels respectively. Early Stage and Expansion Stage financing is finally back to levels first reached 11 years ago in 1999. Late stage start-ups are attracting twice as much capital in 2010 as in 1999, reflecting a tendency of VC investors to harvest investments made in the early 2000s rather than invest in newer and more risky ventures.

Capital-intensive start-ups are still finding it tough to locate the financing they need to get to the next stage of development, depending on the industry segment they occupy.

Investment by Industry

The good news is that if you are a Biotech, Medical Devices and Equipment, Electronics/Instrumentation, or Energy – who could have known? – start-up company, 50% of the funds invested in 2010 are going into your industries.

This does not help technology development in USA.
Arnold Schwarzenegger promotes Russia.

http://blogs.wsj.com/venturecapital/...ads-to-russia/