Venture Capital 2010: Hot (and cold) sectors to watch

As we mentioned in a recent column, 2009 wasn’t as bad as advertised for the venture capital industry. The first half of the year was rocky; however, growth stormed back in the latter half of 2009. The 2010 IPO and M&A markets are shaping up to be the strongest in years and early- and mid-stage venture capital firms with cash have good reason to be optimistic.

2010

Normal consolidation occurred in our industry this year. A number of prominent firms went quiet or declined to raise new funds. As the capital markets thaw a bit more in the coming months, we expect the strongest of these firms to reemerge, though probably in scaled-down fashions. Others will manage their current investments to fruition and new funds and models will be born.

2010 should be the ultimate buyers’ market for investors with cash to spend because entrepreneurs who tightened their belts last year cannot do so indefinitely. In early 2010, many will begin looking for funding to grow and continue operations. We expect these companies to come out lean, mean and with ramping revenue.

The improving exit markets will increase confidence and appetite for risk, which is a necessary ingredient for startup prosperity. Also, the recession has encouraged a substantial amount of innovation from otherwise unemployed entrepreneurs. VCs with good reputations and cash on hand will have plenty of prime cuts to choose from in 2010.

The best time to buy is when confidence in the economy is growing, but prices are still low. The trick is hitting that timing on the nose. The few big names will continue recent acquisition sprees, but we also expect mid-sized companies to look to M&A as a strong option for growth in 2010. The pace of private-to-private mergers amongst venture-backed companies will also increase.

A leading indicator of activity in the venture-backed ecosystem is job creation. There are more than 10,000 job openings at venture-backed companies listed on StartUpHire.com (disclosure: Steve is an advisor to StartUpHire). So, while companies have tightened their belts, they continue to hire at a meaningful level and nothing shouts confidence in the future like rapid team building.

In terms of hot 2010 sectors, we expect social media to move from promising to prime time. This category, especially sites like Twitter, Facebook and LinkedIn, has already gained a strong foothold in the global consciousness. But despite this progress, there are still many questions about how to monetize the conversational and real-time nature of social media.

We expect social media to move towards profitability in 2010. One of the biggest measures of success will be enabling people and companies to work more collaboratively and more efficiently.

We also expect to see more money flow to the cloud in 2010. Cloud computing (and other operations) provides startups with an operational trifecta: cost savings, infrastructure savings and productivity enhancement. To date, many companies have been reluctant to move into this space because of security concerns, but these fears are rapidly easing as security offerings mature to address this risk.

One formerly hot area that we expect to fizzle in 2010 is the prosumer technology space. Users expect mobile devices to be great at specific tasks, rather than serving every need in a marginal fashion.

The quintessential example is the iPhone. While it achieved phenomenal market acceptance in 2009, professional use is stymied by a lack of reliable nationwide coverage and the challenge of email integration at many enterprises. Competitors are taking note and the re-separation of consumer and professional devices is coming. This will have a trickle-down effect on the plethora of startup companies developing for the iPhone and competitive platforms.

The freemium model is also worth watching. While it works in some sectors, overall, the gap between free and paying customers is widening. This is happening because buyers can be very fickle. As their attention spans shorten, their brand loyalty diminishes as well.

In the mobile space, for instance, a game or app that’s hot today can easily be forgotten tomorrow. Users have little or no incentive to upgrade, so they just move on to the next trendy, free offering. Providers must innovate at an incredibly rapid pace in order to keep pace with market demand. But they can’t be careless – offerings must be thoroughly tested before they go public, since most people won’t give something a second chance if they’re unhappy the first time. And these providers must have a clear and compelling upgrade path to entice a larger percentage of paying customers.

While 2009 was a bumpy ride, we are eagerly anticipating the opportunities that await in 2010. We expect to see many significant deals early in the New Year across many different sectors, and we are heartened by the brave souls who are moving towards IPOs

(Editor’s note: Steve Fredrick and Don Rainey are general partners at Grotech Ventures. They submitted this story to VentureBeat.)

Venture Capital / Private Equity Associations World Wide

REGIONAL GROUPS IN CANADA
Venture Capital Association of Alberta
www.vcaa.ca

Réseau Capital
Réseau de capital de risque du Québec
www.reseaucapital.com

AFRICA
Africa Venture Capital Association
PO Box 11838
Yaoundé, Cameroon
Tel: +237 223 1898
Fax: +237 223 1911
Email: avcasecgen@avcanet.com
Website: www.africanvca.com

AUSTRALIA
Australian Venture Capital Association Limited (AVCAL)
Level 5
88 Phillip Street
SYDNEY NSW 2000
Tel: 00 612 9251 3888
Fax: 00 612 9251 3808
e-mail: katherine.woodthorpe@avcal.com.au
website: www.avcal.com.au
BRAZIL
The Brazilian Venture Capital and Private Equity Association (ABVCAP)
Av Rio Branco, 123 sl 806, Rio de Janeiro, Brazil 24220-091
Tel: 55 21 3970 2432
Fax: 55 21 2292 5607
e-mail: abvcap@abvcap.com.br
website: www.abvcap.com.br
BELGIUM
Belgian Venturing Associations (BVA)
15 bd St Michel
1040 Brussels Tel: 00 32 2743 4421
Fax: 00 32 2743 1550
e-mail: bva@associationhq.com
website: www.bvassociation.org

BRITAIN
British Venture Capital Association (BVCA)
Essex House
12-13 Essex Street
London, WC2R 3AA.
Tel: 020 7240 3846
Fax: 020 7240 3849
e-mail: bvca@bvca.co.uk
website: www.bvca.co.uk


CZECH REPUBLIC
Czech Venture Capital Association
c/o Fond rizikoveho kapitalu, spol. s r.o.
Na Stahlavce 2
CZ - 160 00 Prague 6
Tel: 00 420 2 3332 6330, 3332 6340
Fax: 00 420 2 3332 6295
e-mail: riskfund@notesnet.cz
website: www.cvca.cz

EUROPEAN VENTURE CAPITAL ASSOCIATION (EVCA)
Keibergpark
Minervastraat 6
B-1930 Zaventem
Belgium
Tel: 00 32 2 715 0020
Fax: 00 32 2 725 0704
e-mail: evca@evca.com
website: www.evca.com

FINLAND
Finnish Venture Capital Association (FVCA)
PO Box 329
Uudenmaankatu 16B
SF-00121 Helsinki
Tel: 00 358 9 61 899266
Fax: 00 358 9 64 5072
e-mail: peter.borg@sitra.fi
website: www.fvca.fi

FRANCE
Association Francaise des Investisseurs en Capital (AFIC)
76 Avenue Marceau
75008 Paris
Tel: 00 33 1 4720 9909
Fax: 00 33 1 4720 9748
e-mail: info@afic.fr

GERMANY
Bundesverband Deutscher KBG's (BVK)
Reinhardtstrasse 27c
10117 Berlin
Tel: 00 49 30 30 6982-0
Fax: 00 49 30 30 6982-20
e-mail: bvk@bvk-ev.de
website: www.bvk-ev.de

GULF VENTURE CAPITAL ASSOCIATION
web site: www.gulfvca.org
email: gvca@batelco.com.bh

HONG KONG
Hong Kong Venture Capital Association
Room 34, 3/F, New Henry House
10 Ice House Street
Central Hong Kong
Tel: 00 852 2845 6100
Fax: 00 852 2526 2713
e-mail: enquiry@hkvca.com.hk
website: www.hkvca.com.hk

HUNGARY
c/o Rona & Tarsai Rt., Pf. 906/82
H-1386 Budapest
Hungary
Tel: 00 36 1 235 62 21
Fax: 00 36 1 235 62 70
e-mail: vzombory@rona.hu
website: www.hvca.hu

INDIA
Indian Venture Capital Association
Saurabh Srivastava , Chairman, saurabh@srivastava.info
Jaswinder Kaur, Executive Director, jaswinder@indiavca.org
www.indiavca.org


INDONESIA
The Venture Capital Club for Indonesia
c/o PT Malindo Ventura Nusantara
Graha Iskandarsyah
5th Floor, Suite 504-505
Jl. Iskandarsyah Raya 66-C
Jakarta 12160 Indonesia
Tel: 00 62 21 720 6119
Fax: 00 62 21 720 6059

IRELAND
Irish Venture Capital Association (IVCA)
C/o Smurfit Ventures Limited
Clanwilliam Place
Dublin 2
Tel: 00 353 1 260 0966
Fax: 00 353 1 260 0538
e-mail: infor@smurfit-venture.iol.ie

ISRAEL
Israel Venture Association
Eliahu House 12th Floor
2 Ibn Gvirol St
Tel Aviv 64077
Tel: 00 972 3696 8224
Fax: 00 972 3695 3847
web site: www.iva.co.il

ITALY
Association Italiana Inv Istit Cap Risco (AIFI)
Via C.O. Comaggia 10
1-20123 Milan
Tel: 00 39 2 721.08.41
Fax: 00 39 2. 805.59.26
e-mail: aifi@betacom.it
website: www.aifi.it

KOREA
Korean Venture Capital Association
Room 1201
Ssangma Building
24-5 Yoido-dong, Yongdupo
Seoul 150-010 Tel: 00 82 2 785 0602
Fax: 00 82 2 785 0605

THE NETHERLANDS
Nederlan. Verenig. Van Part. Mijen (NVP)
Bezuidenhoutseweg 12
Postbus 93002
2509 AA Den Haag
Tel: 00 31 70 349 0411
Fax: 00 31 70 349 0450
e-mail: nvp@vno-ncw.nl
website: www.nvp.nl

NORWAY
Norwegian Venture Capital Associat (NVCA)
c/o Stradec Bygdoey Alle 5
N-0257
Oslo
Tel: 00 47 22 55 52 30
Fax: 00 47 22 55 52 58

PHILIPPINES
Philippine Venture Capital Investment Group
G/F Torre de Salcedo Building
184 Salcedo St, Legaspi Village
1229 Makati City, Philippines
Tel: 00 63 2 818 5606
Fax: 00 63 2 817 7158
e-mail: elop@info.com.ph
website: www.philvencap.com

POLAND
Poland Equity Investors Association Assoc.
c/o Enterprise Investors
Al. Jana Pawla II 25
00-854 Warsaw
Tel: 00 48 22 653 4500
Fax: 00 48 22 653 4555
e-mail: info@ei.com.pl
website: www.ei.com.pl

PORTUGAL
Portuguesa de Capital de Risco (APCRI)
Avenida Casal Ribeiro 18 - 2
1050 Lisbon Tel: 00 351 1 355 71 46/7
Fax: 00 351 1 357 99 00

RUSSIA
Russian Venture Capital Association
PO Box 33
St Petersuburg 194156
Russia
Tel: 00 7 812 326 6180
Fax: 00 7 812 326 6180
e-mail: rvca@rfntr.neva.ru
website: www.rvca.ru

SINGAPORE
Singapore Venture Capital Association
331 North Bridge Road
# 05-04/06 Odeon Towers
Singapore 188720 Tel: 00 65 339 9090
Fax: 00 65 339 8247

SLOVAKIA
Slovak Venture Capital Association (SLOVCA)
c/o Slovak American Enterprise Fund
PO Box 100
Obchodna 58
810 00 Bratislava
Tel: 00 421 752 7313 17
Fax: 00 421 752 7313 23
e-mail: sulekova@saef.sk saef@saef.sk

SLOVENIA
Slovenian Venture Capital Association (SLEVCA)
c/o Small Business Development Centre
Steifanova 5
1000 Ljubljana
Tel: 00 386 61 21 7827
Fax: 00 386 61 21 7846

SOUTH AFRICA
South Africa Venture Capitalists Association
33 Scott Street, Waverley, Johannesburg
Tel: (011) 885 2666
Fax: (011) 885 3640
Email: savca@worldonline.co.za
Website: www.savca.co.za

SPAIN
Asoc. Espanola de Capital Riesgo Inversion (ASCRI)
c/o Josefa Valcarcel 8-3°
28027 Madrid
Tel: 00 34 91 320 2884
Fax: 00 34 91 320 8438
e-mail: ascri@mad.servicom.es
website: www.ascri.org

SWEDEN
Swedish Private Equity and Venture Capital Association
Grev Turegatan 14
SE-114 46 Stockholm, Sweden
Tel: +46 8 678 30 90
Fax: +46 8 678 40 90
email: info@vencap.se
website: www.vencap.se

SWITZERLAND
Swiss Private Equity & Corporate Finance Association
Lowenstrasse 32
8001 Zurich
Tel: 00 41 1 210 3379
Fax: 00 41 1 210 3375
e-mail: infor@seca.ch
website: www.seca.ch

TAIWAN
Taipei Venture Capital Association
10th Floor
115 Min Sheng E Road
Section 3, Taipei
Taiwan
Tel: 00 886 2 719 1010
Fax: 00 886 2 719 1019

THAILAND
Thailand Venture Capital Association c/o Prudential Asset Management Asia Ltd
Maneeya Centre Building
10th Floor, 51815 Ploenchit Road
Bangkok 10330
Tel: 00 662 255 6816/7
Fax: 00 662 253 9110

USA
Emerging Markets Private Equity Association (EMPEA)
2001 Pennsylvania Ave. NW,
Suite 1100, Washington, DC 20006
Tele: 202.587.3242
Fax: 202.331.9250
E-mail: empea@empea.net
website: www.empea.net

National Venture Capital Association (NVCA)
1655 North Fort Myer Drive
Suite 850, Arlington, Virginia 22209
Tel: 00 1 703 524 2549
Fax: 00 1 703 524 3940
e-mail: lturner@nvca.org
website: www.nvca.org

Gulf Coast Venture Forum Meeting Dates for 2009

Naples, FL, January 28, 2009 --(PR.com)-- The Gulf Coast Venture Forum (GCVF) schedule for monthly membership meetings for 2009 are set for Thursdays on the following dates: March 12, 2009; April 9, 2009; and May 14, 2009. These meetings will be held from 4p.m. to 6 p.m. at Tiburon Golf Course Clubhouse, 2620 Tiburon Drive in Naples, Florida.

The purpose of the Gulf Coast Venture Forum is to promote the success of Southwest Florida's new and emerging businesses by bringing together the best entrepreneurs, early stage venture capital firms and Angel Investors. They promote the success of the region's new and emerging businesses by bringing together entrepreneurs, educational resources, capital providers, and service providers. The group also offers informative educational programs presented by seasoned, recognized professionals and business people, providing a place for the sharing and exchange of business and technical experience. Members of the GCVF meet monthly to hear about local investment opportunities, and they also offer informative educational programs presented by seasoned, recognized professionals and business people, providing a place for the sharing and exchange of business and technical experience. To encourage capital investments in Southwest Florida businesses, the GCVF seeks to identify sources of private equity investment and venture capital. Gulf Coast Venture Forum is always open to new members. Monthly meetings are scheduled October through June each year. GCVF is also available to provide speakers to local organizations who want to learn more about the purpose of the GCVF and local investment opportunities.

The Gulf Coast Venture Forum is open to new members. Interested parties must qualify as an accredited investor as defined by the US SEC and are encouraged to view www.gcvf.com or call 239-262-6300 for more information.

Obama Pro-Venture Capital Policies Could Damage Middle Class Economy

PETALUMA, Calif., March 3 /PRNewswire-USNewswire/ -- President Barack Obama is expected to support legislation or policy that will allow wealthy venture capitalists to dominate federal programs designed to assist small businesses. If he is successful, it will force thousands of small businesses to close their doors and cost countless American jobs. (The Small Business Act requires that a small business be "independently owned." Firms that are owned and controlled by venture capitalists are not considered small businesses in federal small business contracting and grant programs.
The venture capital industry, led by the National Venture Capital Association (NVCA), has spent millions of dollars lobbying members of Congress to change the current definition of a small business to allow even billionaire venture capitalists to own a controlling interest in a small business and still qualify as participants in federal small business programs. Small business advocates are concerned that such a change would set a dangerous precedent for venture capital participation in all federal small business programs, and lead to the diversion of billions more in federal small business contracts to wealthy venture capitalists.
The American Small Business League (ASBL) is concerned that President Obama may attempt to sell federal small business programs to the venture capital industry by pushing Congress to add language to the omnibus spending bill, making changes to existing Small Business Administration policy or by issuing an executive order.
According to MAPLight.org, the venture capital industry contributed more than $1.2 million to President Obama's campaign. Additionally, the venture capital lobby has focused its campaign to buy political influence on key democratic leaders like Speaker of the House Nancy Pelosi (D - CA) and Senator John Kerry (D - MA).
Small business advocates point to the appointments of venture capitalist and Tootsie Roll heiress Karen Gordon Mills to run the Small Business Administration (SBA) and Julius Genachowski of Rock Creek Ventures to head the Federal Communications Commission (FCC) as further indications that President Obama may support the interests of the venture capital industry over small businesses.
"Small businesses are the engine that drives this nation's economy in the car that takes Americans to work. That 'car' is responsible for nearly all-new jobs. President Obama needs to consider America's 27 million small businesses before he facilitates the wholesale diversion of billions of dollars in small business grants and contracts to some of our nation's wealthiest investors," ASBL President Lloyd Chapman said. "Legislation or policy that will allow venture capitalist-owned firms to participate in small business programs would damage our nation's small businesses, cost America's middle class billions and push our country further towards a depression. It is just not reasonable."
Two questions for President Barack Obama from the American Small Business League (ASBL):
How much longer will you allow Fortune 500 firms to take federal small business contracts?
Why didn't you push congress to allocate some of the stimulus bill spending to small businesses, the firms that create 97 percent of net new jobs?


SOURCE American Small Business League

Michigan Based Venture Capital Fund Set to Support Struggling Michigan Economy

New $15 million "Seeds Fund" will bolster local VC community

Detroit, Michigan (PRWEB) February 13, 2009 -- Building on the momentum which it first established in 2008, venture capital firm CNP AKAMA Ventures LLC announced today the successful close of its inaugural $15 million Seeds Fund. The Fund's core focus will be on companies that exhibit strong revenue, growth and management, but are seeking additional capital to expand. A significant portion will also be earmarked for early stage companies that offer innovative business models or paradigm-shifting, new technologies.
The concept for the Seeds Fund was derived from the economic and structural challenges currently facing Michigan. Jay Apsey, the Fund's conceptual founder and a Director of CNP AKAMA Ventures, viewed the Fund as a means with which to spur transformational change in Michigan away from traditional manufacturing and into new areas such as advanced materials, alternative energy and information technology. "There are a large number of business investment opportunities that can provide a substantial return within the State. The Seeds Fund will seek to identify these opportunities, and in doing so, fuel the new Michigan economy," stated Apsey.

"Michigan's venture capital market has started to gain momentum over the past several years; we have more funds located here and more investments infusing important capital and funding into Michigan businesses," said Adam Tracy, Managing Director of CNP AKAMA Ventures. "CNP AKAMA is eager to leverage the Seeds Fund within the Michigan economy and elsewhere," he continued.
A licensed attorney, securities principal, and a veteran of capital markets and securities transactions, Tracy has advised many private and publicly traded companies on capital markets strategy. His previous experience also includes time spent with Accenture, British Petroleum, Philip Morris and the United States Department of Justice.
About CNP AKAMA Ventures
Michigan-based CNP AKAMA Ventures operates in the U.S. heartland providing funding and guidance to help companies achieve sustainable prosperity. The company and its subsidiaries invested in over 30 companies in 2008 and its management team brings over 50 years of experience in venture capital investing and consulting. For additional information in regard to CNP AKAMA Ventures and the "Seeds Fund"

Structure of venture capital firms

Venture capital firms are typically structured as partnerships, the general partners of which serve as the managers of the firm and will serve as investment advisors to the venture capital funds raised. Venture capital firms in the United States may also be structured as limited liability companies, in which case the firm's managers are known as managing members. Investors in venture capital funds are known as limited parners. This constituency comprises both high net worth individuals and institutions with large amounts of available capital, such as state and private pension funds, university financial endowments, foundations,insurance companies, and pooled investment vehicles, called fund of funds or mutual funds.

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Venture Capital is an invesment in the form of defrayal in the form capital into a private enterprise as couple of effort ( investee company) for a given time period.

Generally this invesment is done in the form of capital delivery in the cash determined with a number of share of couple company of effort. This venture capital invesment generally own a high risk but give high gain result also.