The "MoneyTree Survey" results also show a renewed interest in software investing, despite a huge decline in investment-from 18.4 percent in 2000 to 10 percent in 2001-in retailing and distribution companies, which had been heavily involved in online retailing. "The majority of venture capital has always focused on high-tech-biotech, medtech, software and hardware," says Power, "[both] pre- and post-dotcom mania."
Still, the dotcom meltdown may have primed VC investors for opportunities outside perennial high-fliers. "Entrepreneurs need to screen venture capitalists by their investment parameters and look for those who say they will invest in areas other than tech, or who have actually invested in those areas," says Power, adding that most VC Web sites now contain lists of parameters.
Power and other experts agree the turnaround as far as VC receptiveness to new investments will be slow out of the gate, gaining momentum through 2002 and rebounding more fully in 2003. But fourth quarter 2001 numbers suggest that optimism won't be out of line. "To paraphrase Mark Twain, the rumors of venture capital's death are greatly exaggerated," says Walden. "The dotcom death, yes, but not all of venture capital."
C.J. Prince is a New York City writer who specializes in business topics and is the executive editor of Chief Executive Magazine.
- National Venture Capital Association
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