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VCs turn cautious from investing in networking sites
By siliconindia
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Bangalore: Venture firms have developed a cautious approach in their investments, with many of them of them turning away from websites which are free to the users and big ticket enterprises which develop expensive softwares. "Even Accel, an early investor in Facebook, might have turned that company away if it approached the firm today, as online ads have seen a downturn," Theresia Gouw Ranzetta, an Accel partner told New York Times.
Instead, venture capitalists (VCs) are more willing to invest in open-source software, Web-based software, Internet-based cloud computing and virtualization software that lets companies use less hardware to run applications. Moreover, the VCs also see opportunity in the mobile hardware makers instead of the mobile content developers like iPhone and BlackBerry, as carriers and makers of phones and accessories are considered to be under invested.
However, among all it's the clean technology which has become the craze, with nearly $3 billion being invested in the sector through September while it was $1.9 billion a year ago. The VCs are also eyeing Venture capitalists the personalized health care sector. For instance, Jennifer Fonstad, Managing Director, Draper Fisher Jurvetson, is looking at companies that use information about a person's genetic code to offer predictive medical advice or preventive health services or devices. Infact, even Internet companies that help patients, banks and insurance companies manage health savings accounts or help people find assisted-living homes for aging parents are preferred for investments.
So, as they turn cautious, VCs expect to find the hidden gem among the underhyped sectors. "Cisco was founded two weeks before a stock market crash. Oracle was founded during the Reagan recession. In bad times, that's when the best opportunities come up," said Paul Holland, the General Partner in charge of the clean tech practice at Foundation Capital.