Whether you're a software start-up that sells to Fortune 500 companies or a Web 2.0 business, chances are you're raising eyebrows. Technology companies of all kinds are attracting willing investors, but the darlings of this trend are Internet-related companies. Propelled by the success of Facebook and Google ( GOOG), this sector is soaking up 2/3 of all technology dollars, says Tracy Lefteroff, global managing partner of the venture capital practice of PricewaterhouseCoopers.
Bessemer Venture Partners. BVP invested in Wikia, an early-stage company that hosts wiki communities. Companies peripherally related to the Internet, such as Wayport, which provides Internet access in hotels, have also attracted dollars. Lastly, clean technologies, such as companies that provide alternative fuel, take up to 10% of venture capital money, says Lefteroff.
Companies that can increase the quality of video transition or converge cable, satellite and Internet will draw dollars because of their growth potential, he says. Cochran invests in
Broadcast Technology, which allows for video transmission of content in real time. The company has grown significantly and recently signed a two-year agreement with IBM ( IBM). Tipping Point Partners, looks for companies that have garnered interest from family members. This shows the entrepreneur has a more personal commitment to the company, he says. When dealing with sophisticated investors, always know the net present value of your customer, says Cochran. "Most entrepreneurs will never think about their customers in those terms but the astute investor always will," he explains.