Tech Investment Trends: Private Equity Bullish on Biotech, Clean Tech and Social Media

By: Jeff Fox
Submitted: 2009-07-17 14:57:53
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Venture funding has slowed considerably over the past year, but there are still opportunities for emerging  technology companies to secure funding. While VCs are unquestionably more selective and doing far fewer  deals, they will soon be ready to get off the sidelines to support companies in promising sectors.

So what sectors are stingy venture investors putting their money in? Biotech, which encompasses  pharmaceuticals, diagnostics, medical devises, and cleantech were hot sectors that slumped in the first  quarter of 2009, yet many still view it as a bastion of investment opportunity.

According to FierceBiotech.com, an online news site that follows the industry, biotech funding in 2009 has  already surpassed the total raised for all of 2008, fueled by a surge of deals in Q2.

“Biotech is a sector that we remain very excited about,” said Mouli Cohen, founder of private equity  innovation fund Voltage Capital. “This is an incredible time of new discovery in life sciences and the next decade should bring about unprecedented advances in diagnostics and therapeutics.”

Among the accomplished scientists Mr. Cohen brought onto the Voltage team, Danny Petrasek is helping drive these discoveries. He is currently on the research and teaching faculty in bioengineering and applied and computational mathematics at Caltech. “I'm not sure people have a sense of what “biotech” means today. What I do know is that in the study of Biology, the advances in two main areas, developmental biology  and neurosciences, hold great promise for the future, said Mr. Petrasek.

“The key is unraveling the 'holy grail' in cell biology which is cell differentiation. Once have a sense of that field, we can go directly after some of the biggest questions, like why we get cancer and why we age. In the area of neuroscience, the understanding of what is consciousness will begin to be revealed. Working to apply chemistry, physics, and computation to these fields make this an exciting time for advancement to  happen. We haven't seem these fields work together in the past, so to me that is the new Biotech.

The cleantech sector rode of wave of venture investment in 2008, raking in nearly 80 percent of all venture capital dollars. The sector has received a cold shoulder from VCs so far in 2009, but according to a National Venture Capital Association survey, more than 60 percent of VCs surveyed said they expect to increase their  investments in clean tech in the next three years.

"[Cleantech] is faring better than the rest of the venture capital sectors - that's driven by the sense that the  government policy thinking has changed radically with the new administration," said David Prend, a NVCA director and managing general partner at the venture capital firm RockPort Capital Partners (“Green Jobs Sector 'Poised for Explosive Growth,' Study Says,” The New York Times, June 20, 2009).

Rounding out the hot sectors, new media and social networking continue to grow in favor. The social  networking phenomenon has generated a new market for services and applications designed to interface  with Twitter, Facebook, MySpace, LinkedIn, YouTube and other sites. Most recently, Twitter, the  microblogging service, has spawned a host of VC-backed related services including search engines, URL  shortening services and micropayment platforms, which have been increased as these networks become  more ubiquitous on smart phones the the popularity of mobile applications explodes.

Facebook is fast approaching 200 million members worldwide and has become a favorite platform for  media sharing. It's not surprising that VCs view Facebook as a potentially game changing global  marketplace, and are moving rapidly to fund developers and entrepreneurs who can take advantage of this  new frontier.

Article source: Expert Articles