What's Hot in Venture Capital in 2013
At Tuesday's "State of the Union" Venture Capital Lunch Club, an annual panel discussion at law firm Chadbourne & Parke LLP in New York, investors said they hadn't been put off by 2012's lukewarm initial public offerings (including Facebook's), and see plenty of new ventures that are ripe for investment.
The sectors the panelists deemed "buzzworthy" for 2013 aren't as consumer-focused as Facebook or other flashy names whose stocks have dragged, including Groupon and Zynga. Also off the list was clean technology, once the darling of the venture world. Panelist George Pataki, former governor of New York and a proponent of renewable energy, deemed the sector "a disaster" because of government subsidies, although he noted optimism in areas like wastewater treatment.
Here's a rundown on where the panelists said they were investing:
Advertising Technology (aka Ad tech).
Marc Michel of Metamorphic Ventures, which invests in early-stage media companies, is looking at companies that support the sale and delivery of online advertising, a hot space in the VC world. One startup in his portfolio is Tapad, which provides a real-time advertising platform for smart devices.
B-to-B applications, such as human-capital management software.
While no panelists mentioned the term "Big Data," most said they were interested in products or services designed to help businesses run more efficiently. Ed Goodman of Milestone Ventures Partners, an early-stage VC fund, has invested in Kindling, which makes "collaboration" software designed to help an organization's employees generate, share and discuss ideas.
A number of panelists mentioned the online retail sector, particularly tech startups that help support the growth of e-commerce. Laura Sachar of Starvest Partners, a technology VC firm, says she's watching RetailNext, which analyzes shopping trends in retail chains and provides in-store retail analytics. She also noted that software as a service or SaaS remains in demand.
While not an investor, Ann Li, managing director at the New York City Economic Development Corp., who recommends policies to strengthen New York's position as an entrepreneurial ecosystem, says she'd like to see more VC interest in enterprise technology. Startups that make enterprise software -- whether that's customer relationship management, online payment processing or business intelligence -- are the most efficient and "long-term sustainable."
Financial technology (aka Fin tech).
Bob Greene of Contour Ventures, which invests in companies focused on information technology, says he's interested in the application of technology in the financial-services industry. One of his portfolio companies is Estimize, an open financial-estimates platform.
The space is not an easy one, with regulatory pressures and a new Affordable Care Act-tax directed at medical device makers. But Goodman predicts more investment, especially in health technology that solves a problem, such as software that speeds up the digital transmission of lab tests to hospitals.
Pataki, who serves on the advisory board of renewable-energy investor EnerTech Capital, says he's looking at "all things nano," particularly nanopharmaceutical and nanocosmetics, two industries that use the science behind molecules to create new products.
Related: The Rise of Big Data