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Story URL: http://networks.silicon.com/webwatch/0,39024667,39169747,00.htm

'Clean-tech' grabbing a slice of venture capital
…and software investment slowing

By Dawn Kawamoto

Published: Monday 21 January 2008

IT venture capitalists are investing in clean-tech and internet-specific businesses, according to results of the 2007 MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association.

Green IT from A to Z

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A is for Abroad
B is for Blades
C is for Carbon footprint
D is for Data centres
E is for Energy sources
F is for Freecycle
G is for Government
H is for Homeworking
I is for Ice caps
J is for Jobs (Steve)
K is for Kilowatts
L is for Landfill
M is for Mercury
N is for Nanogeneration
O is for Offsetting
P is for Paperless office
Q is for Queen
R is for Recycling
S is for SmartPlanet.com
T is for Travel
U is for Upgrade
V is for Virtualisation
W is for WEEE
X is for Xmas
Y is for You
Z is for Zero emissions

Clean-technology companies attracted $2.2bn in investments last year, a 47 per cent jump over the prior year. And the number of clean-tech deals rose by 58 per cent to 202 venture financings last year, compared with 2006.

Internet companies, which rely on a business model that is largely dependent on the internet, also attracted a substantial slice of venture funding last year, according to the report. This sector attracted $4.6bn in funding, accounting for a 12 per cent increase over the previous year.

But the software sector, which historically grabs the largest slice of venture funding, had a less than spectacular year in 2007. Funding levels for the software sector remained virtually flat, rising to $5.3bn with 905 deals, compared with $5.1bn for 920 deals in 2006.

Deepak Kamra, a venture capitalist with Canaan Partners, said: "Software is still the largest segment for funding, even though it is flattening out. Within software, software as a service and open source are doing well. Open source is a cheaper way for companies to develop applications."

Venture capitalists get their investment back through an IPO or sale of their portfolio company.

Kamra said: "The market was good for IPOs in 2007 but now we're concerned about the IPO market shutting down. Ultimately, the IPO market will come back."