If you´re new to the world of venture capital, one Web site you should bookmark is that of the PriceWaterhouseCoopers MoneyTree report. Since 1995 the Big Four (then Big Five) accounting firm has been publishing the quarterly report in conjunction with the National Venture Capital Association based upon data from Thomson Financial.
In the relatively short time it´s been in existence the report has become the bellwether of U.S. venture capital data in terms of amount of investments being made each quarter, in what regions and in what specific industries.
The industry definitions include biotech, business products and services, computers and peripherals, consumer products and services, electronics/instrumentation, financial services, healthcare services, industrial/energy, IT services, media and entertainment, medical devices and equipment, networking and equipment, retailing/distribution, semiconductors, software, telecommunications and "other."
While the latest report will come out shortly (and be covered here), the previous report is good to review as it compares investing in 2005 vs. 2004. The report found that venture investing in 2005 matched that of 2004 with $21.7 billion in 2,939 deals (2004´s $21.6 billion marked the first increase in venture investing after three years of consecutive declines).
Funding in 2005 for later stage companies rose to $9.7 billion, while the number of companies securing venture capital for the first time increased to 901. Both figures were four-year highs. The wireless sub-sector of telecommunications jumped to a four-year high of $1.3 billion. First time investing in Internet-specific companies across all industry categories nearly doubled to $840 million.
One of the values of monitoring the PWC MoneyTree report is to watch for trends delineating which sectors are receiving venture money. For instance, the 2005 report indicated that the software industry attracted the most first-time activity with $1.2 billion going to 238 companies. Life Sciences followed with $1.0 billion going to 176 companies. First time telecommunications investing reached a four-year high with 72 deals (reflecting interest in wireless arena).
Whiles it´s invaluable to follow reports like the MoneyTree, I like to think taking a more historical look at business in the U.S. is just as advantageous. Earlier this month I read an eye-opening book "The Island at the Center of the World," by Russell Shorto, which told the story of the first wave of commerce in the U.S. by the Dutch on the island of Manhattan.
We all like to think these are difficult times, but reading about merchant life under the authority of the West India Company, in the face of native American unrest, the threat of disease, and the possibility of the British over-taking the island, makes the hurdles contemporary business people, particularly, entrepreneurs must face.
So, if you´re feeling like the weight of the world is crushing down on you take some time off from the Wall Street Journal, quarterly earnings and business plans and pick up Shorto´s book.