What Venture Capitalists Are Investing in for 2009

As a new year begins, many companies and entrepreneurs are figuring out what to focus in 2009. But before you go to pitch your cool new idea, it might be good to pause and examine what venture capitalists are investing in for the coming year. An article in this week’s New York Times looks at what Silicon Valley investors are putting their money on.

What Venture Capitalists are NOT investing in

• Web 2.0: Because companies are investing less in ads, social networking sites and other ad-driven sites are harder to get funding for. They say that even companies like Facebook might have been passed up if it had been pitched in a similar climate.
• Mobile Software: In spite of the success of mobile devices like the iPhone, investors are reluctant to invest in mobile applications because companies are not ready to sell mobile ads. Businesses aren’t yet convinced that ads on mobile devices will be as lucrative as web ads have been.
• Large, clean energy projects: In 2008, investors pumped $3 billion in these projects, up from $1.9 billion in 2007 (according to the National Venture Capital Association). But in 2009, building large factories is seen as too expensive and risky.

What Venture Capitalists ARE investing in

• Mobile Hardware: Investors think there’s opportunity to improve mobile hardware. According to the article: Revenue from the iPhone and BlackBerry exceeds that of the entire mobile content market. Mobile accessories are also expected to do well in ’09.
• Enterprise software: Investors are turning from the individual consumer back to enterprise software. Though they’re reluctant to invest in corporate software package, they are looking at open-source, web-based software, cloud computing, and virtualization software.
• Clean Energy Software: Even though they’re not investing in clean energy plants, venture capitalists are looking for software that helps monitor energy consumption.
• Personalized Health Care: Investors see this as a wide open space that hasn’t yet been tapped. Software could range from applications that predict medical outcomes based on genetics, to software that helps manage health savings of companies or individuals.

Read the full article: In Silicon Valley, Venture Capitalists Turn Cautious and Focus on the Short Term

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