Where VCs Are Putting Their Money

According to Inc.com, the motto of the venture capital industry this year could be: Well, anything is better than 2008 and 2009.

Driving such a renewed sense of optimism is the relative resurgence in the IPO market and a strong pickup in mergers-and-acquisitions activity. That means VCs now at least have some hopes of exiting investments after an almost two-year drought in both areas.

Both biotech and software experienced large drops in fundraising, underscoring the still-skittish state of the VC industry. Dollars raised by the biotech industry fell 24 percent compared to the fourth quarter of 2009. Software funding fell 25 percent over the same time.

Digging a little deeper, there is evidence of one particularly hot area for investment: clean technology. That sector, which crosses many traditional industries and comprises alternative energy, pollution and recycling, power supplies, and conservation, saw an 87 percent increase in funding dollars over the fourth quarter, reaching $773 million.

The increase in clean technology investments was driven by several large rounds, including five of the top 10 deals, the MoneyTree Report noted.

Photo by ilco.

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