Venture capitalists predict growth in ‘green,’ media, biotech industries

The National Venture Capital Association has released its 2008 predictions for the industry. The findings are encouraging. 
   
2008 should be an active year for VCs. In particular, 80 percent of NVCA members foresee growth in the cleantech sector, those innovative products and services that enhance performance, productivity and efficiency while protecting the environment and reducing energy consumption. Many predict that this sector, in its quest to solve pressing energy and water issues, will attract the best and brightest entrepreneurs. 
   
Other areas slated to experience growth, according to the NVCA, include media, entertainment, biotechnology and Web-based companies. However, most VCs predict a decline in the semiconductor and software industries. 
   
Members of the industry also believe that fund sizes will become larger in 2008 but the number of firms will decrease. At the same time, smaller, more regionally focused VC firms will become more active, particularly in the Web-based and media industries. 
   
In terms of geographic focus, most investors see VCs continuing to have an interest in more global markets, but many are concerned about the quality of some international deals, particularly those in China. Areas of some promise include Brazil, Russia, Vietnam and Poland. And some respondents indicate that green technology will be a growing area for many global firms in rather unexpected locales.  
   
Some respondents indicated they expect angel investors to gain in importance and to become more professional in establishing their organizations. The important role they play in advising and seeding early-stage companies is expected to grow in prominence. 
   
Respondents to the survey—117 venture capital firm managers—said they were optimistic about the long-term prospects for the industry, with 80 percent predicting improvements through the next 5-10 years. They are not, however, as optimistic about the state of the U.S. economy, with 60 percent anticipating it will decline and another 21 percent predicting it will remain the same. Sixty percent of VCs responding said they believe the subprime crisis will be contained within the next year.
   
Several VCs believe that corporate venture capital will grow in 2008. In addition, more corporate organizations will become engaged in providing management support and guidance to firms in their portfolios, as well as access to their large corporate funds’ network of partners. 
   
In terms of energy prices, 55 percent of the respondents expect the price of oil to be more than $92. In addition, the majority (61 percent) believe the value of the U.S. dollar will remain the same.
   
And not to be left out of the political speculation, 39 percent of the VCs responding predict Hillary Clinton will be elected president, followed by 21 percent for Rudolph Giuliani, 16 percent for Barack Obama and 11 percent for Mitt Romney. v
   
Jim Gann is a Small Business Development Centers counselor at the University Center for Innovation and Entrepreneurship at the University of Missouri-Columbia.