Is your business venture in a good position to qualify for venture capital?

Like the rest of the economy,  Venture Capital firms have been relatively lethargic since the bubble burst in late 2007. If you weren't the next Google or Facebook, VC money has been hard to come by.

The good news is Venture Capitalists have finally become optimistic about growth in the general economy and highly optimistic about growth in the Retailing/Distribution sector. The bad news is lackluster investment growth in the Financial Services and Medical Devices & Equipment sectors; not to mention a significant pullback on investment in the Networking & Equipment sector.  Nationwide, VC’s invested $29.5 billion in all sectors in 2013.  In the first quarter of 2014, VC’s invested $9.5 billion up $3.5 billion (57%) from the $6 billion first quarter of 2013.

Why does it matter? Venture capitalists tend to make their decisions with one eye on the road ahead and the other eye on the rear view mirror. If you know the industries where they have achieved the most success, you have some insight as to where they are open to make new investments. If you’re looking to start or acquire a business, this is also an indicator for where to aim your guns.

.                          TOTAL VC INVESTMENT*  USD $ (000,000)
.                                                                                                         Qtr 1
INDUSTRY                              YEAR 2013    Qtr 1 2013    Qtr 1 2014      % Delta

Biotechnology                            4,655             871            1,062           22%
Business Products & Services         218               27                 86         222%
Computers & Peripherals               517               68              188           176%
Consumer Products/Services      1,259              366              525            44%
Electronics/Instrumentation         326                73                78              7%
Financial Services                        566                71               269           278%
Healthcare Services                     193                22                 77           245%
Industrial Energy                       1,491              218               518           138%
IT Services                                1,965              258               816           215%
Media & Entertainment              2,963             534               743             39%
Medical Devices/Equipment       2,102              562               588              5%
Networking & Equipment              673              376                 21           -95%
Other                                            98                11                   3           -75%
Retailing/Distribution                  237                17                251        1,338%
Semiconductors                           601              142                172             21%
Software                                11,074            2,333             4,009            72%
Telecommunications.                  644                 63                 63              0%
Grand Total                            29,508           6,014             9,469            57%

*Represents only the value of deals where the purchase price was disclosed.

Business sectors which should be hot for 2014:
Retailing/Distribution                up 1,338%
Financial Services                      up   278%
Healthcare Services                   up   245%
Business Products & Services      up   222%
IT Services                                 up   215%

The Software sector while up only 72% is still more than a safe bet. The reason? It’s huge. It represents 42% of all the 1st quarter 2014 capital investment by VC firms.

Business sectors experiencing a pullback in VC investment:
Networking & Equipment        down 95%
Other                                     down 75%

Mapping trends is one example of the insights and tips for starting or expanding  your own business that I teach in my online Bizar Financing course. Check out my free online video Getting Rich Your Way and see how other entrepreneurs are using my methods and strategies to start, buy or expand their own successful businesses using little or no cash of their own.

Gordon Bizar

Gordon Bizar - Expert Business Buyer and Finance Coach Gordon simplifies business purchasing and financing. He makes understandable the use of financial leverage to start, buy or build any business with little or none of your own cash. His unique expertise and success track record has led to his appearances on NBC's Today Show, PBS's Late Night America along with segments on more than 120 other radio and TV news and talk shows. He has been featured in articles in more than 25 of the nation’s leading newspapers including the Los Angeles Times, New York Times, and Wall Street Journal. Gordon personally bought and built companies in fields as diverse as manufacturing, financial services and business education. He also served as Chairman of the California Task Force on Taxation and Regulation of Small Business during the Brown administration and is sought after as a consultant by businesses large and small and government agencies such as NASA for their technology transfer program.

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