VC Fallout

During the dot com era more than 1,000 venture funds were established but many of those funds have either shrunk, gone out of business or have been absorbed by other funds. By the end of the day we will see somewhere between 500 to 600 funds survive.

According to Ernst & Young, U.S. venture firms have raised $230 billion in venture capital worldwide since 2001 — with $40 billion coming last year.

However, as the economic slump drags on, venture firms are more closely scrutinizing their investments, funding only meaner-and-leaner start-ups.

“The goal is to build real companies,” says Matt Trevithick, a partner at Venrock Venture Partners in Menlo Park, Calif. “Successful companies in good or poor markets will remain successful companies.”
Moreover, as the U.S. economy and industries mature, Venrock and other venture-capital firms are stepping up the search for new investments in faster-growing sectors.

For the past three decades, VC have concentrated on the technology and bio science sectors. Now, though, global warming becoming a central issue venture firms also are investing more in energy, clean technology, alternative fuels and green related products and services which includes start-ups developing new environmentally friendly technology.

Last year, VCs poured a record $3 billion into more than 200 clean-tech deals in the USA, China and Europe, says Dow Jones VentureOne. “This is very much the beginning of a long-term trend”.

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