Thursday, January 28, 2010

Rising "Clouds" Attract Venture Funding

Smart Phones and related devices are clearly a hit within the investment community, as evidenced by the dramatic interest in yesterday’s iPad announcement from Apple. And anything with “Virtual” in its name was a magnet for VC funding last year. That said, can “Cloud Computing” be far behind?

Blogging on the PEHub Forum today, Joanna Glasner discovers "Rising “Clouds” Within The VC Downturn."

“Venture investment may have nosedived last year. But not for startups with the word “cloud” prominently featured in their company description.

“That was one of the findings of a late-afternoon database search hastily orchestrated to come up with something for a blog post. The search unearthed that, in the past 12 months, 39 cloud computing-focused companies got funded, up from 22 in the same period a year ago.

“It’s unclear at this point whether the funding uptick was due to heightened venture interest in cloud computing companies, or due to more companies saying they do cloud computing in the expectation it could help raise more money. Another possibility is that some companies had something to do with actual clouds, although this is unlikely as little venture investment historically has gone to the meteorological sector.

“Other buzzwords that seemed hot in venture circles over the past year did not result in higher funding volumes for companies whose business descriptions included them. For example, 87 companies with “virtual” in their description got funded in the past year, compared to 105 a year ago. And 72 with “analytics” raised capital, down from 89 a year ago.

“However, it’s worth noting this occurred during period in which overall VC investment got hammered even more severely. In 2009, VCs invested a total of $17.68 billion in 2,795 deals, according to the PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, which uses data from Thomson Reuters. That was way down from 2008, when VCs invested $27.99 billion in 3,985 deals.

“Currently, I’m wondering what the up-and-coming buzzwords will be for 2010. Private shopping clubs seem to be closing a lot of rounds lately. I could also see a resurgence in businesses with “location-based” in their company description.”

Note: I often post excerpts from other blogs, but I very seldom reproduce the post in its entirety. Joanna was so concise and witty here, I couldn’t figure out what to leave behind.  And I agree with her that “location-based” may be among the hot keywords in 2010. Check her blog.

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