Venture Capital WatchBy Elizabeth Millard | Posted 2008-04-16 Email Print
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The economy may be tanking, but venture capitalists are still digging deep into their pockets to fund technology ventures.
Every day brings news about another corner of the economy crumbling ever-so-slightly into disrepair, but even doomsayers might be heartened by the optimism of venture capitalists.
Charged with trying to predict the next big trends, VCs are a compelling group to watch, since they telegraph the future of an industry -- and many times, shape that future -- long before products and services come to market. So what are the areas likely to boom in development? Just follow the money:
Anyone who's not living in a mountain shack has some sense of how mobile technology is shaping the tech scene, and VCs are hoping that the line between enterprise and consumer will continue to blur. Case in point: the Kleiner Perkins Caufield & Byers (KPCB) iFund, which will give developers financing to create applications for the iPhone and iPod touch platform.
"We've been more and more enthusiastic and confident about mobile going forward, and we're going to be more aggressive about investment in that area," says Matt Murphy, KPCB partner and manager of the iFund. "Clearly, we're seeing the rabid demand for devices, and the fund provides a way to provide capital to companies we thing are important."
Certainly, there's no lack of demand. Before the iFund was announced, the firm had an internal bet going about how many proposals would come in within the first 30 days. "We beat our highest estimate within 48 hours," Murphy says. "The enthusiasm around this platform is impressive."
Internet-based enterprise infrastructure
One of the areas that has seen under-investment for the past six years is Internet-based enterprise infrastructure, believes Vag Goel, partner at Norwest Venture Partners: "In the past few years, the Internet has become more a part of business communications, and we're looking to invest in ideas that help enterprises take advantage of what the Internet has to offer while delivering rapid ROI."
Goel adds that a few recently-funded companies that illustrate the trend include: LifeSize Communications, which does high-definition video conferencing over the Internet; Unisfair, creator of virtual events for enterprises; and Qumranet, developer of a virtual desktop infrastructure platform that enables employees to work off any PC in the company while Windows software is hosted in the datacenter.
The definition of "green" is as difficult to pinpoint in the tech industry as it is in other realms like building materials or household cleaning products. The area is still thriving, but there could be shifts ahead, according to Bart Greenberg, partner at Manatt/Phelps/Philips' Venture Capital and Technology Division.
"Investments in 'green' technology continue to be a hot area, though the initial furor seems to have tempered and the focus is back on basics," he says. "VCs are still weighing their decisions more heavily on what the value proposition is, as they have always done."