Orange County Register

If you want a hint about the next big bet in investing, consider where venture capitalists are putting their money.

Clean tech will be 2008’s darling, and initial public offerings will be back in fashion as exit strategies, according to a new survey by the National Association of Venture Capital.

The association surveyed more than 170 venture capitalists in early December.  

“For venture capital firms, 2008 will be the year we begin to see larger funds raised at a faster pace, as many firms in the industry will focus on sectors that have increasing capital requirements, such as life sciences and clean technology,” said association President Mark Heesen. “These sectors will not be exclusively U.S.-based but have a worldwide platform, which will require more time and more capital than ever before. That said, the other end of the spectrum - seed and early stage investments and smaller, regionally focused (VC) firms - will also be very active, particularly in the Internet and new media spaces.”

Among the findings:

• Moderate growth in investment with 71% predicting total VC investments in 2008 between $20 billion and $29 billion. (this year’s investment will come in at about $27 billion)
• 81% think clean tech will be the investors’ darling in 2008. Perhaps not surprisingly, 61% think clean tech companies will be overvalued.
• 65% predict higher investments in media and entertainment (good news for Los Angeles, and because of proximity, Orange County)
• 55% expect higher investments in biotech and Internet-specific companies
• 49% predict declining investments in medical devices (bad news of Orange County) 
• 59% expect the IPO market to continue to improve
• 57% say the VC industry will shrink as funds end their life and fewer starting.

Read the entire summary here (Adobe Acrobat Reader required) and go to the association’s Web site here to see a Power Point presentation of survey results.

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