VCs bullish on Internet in 2007

The Venture Capital industry is confident in investment prospects for the Internet and New Media in the coming year, according to the National Venture Capital Association.

More than 200 VCs were surveyed earlier this month on their outlook for the venture investment climate in 2007. Key findings:

Average total investment level prediction: $28 billion,

Greater deal flow activity in China and India is predicted,

Energy investing momentum is predicted to continue,

No clear visibility on IPO market opportunities for venture-backed companies,

M & A deals predicted to offer attractive exit opportunities.

Michael Stark, General Partner, Crosslink Capital:

We are optimistic about 2007. The VC business is just fine. Crosslink is coming off its busiest year since inception in terms of new companies invested in. Our 2000 Fund is doing well, very profitable. IPOs are tough to come by, we had one exit with Omniture. Some deals are hot, but most are not. Nothing new, this is the investment business. Building good companies still requires much work. A little luck helps too.

VCs are bullish on Energy, Internet and New Media in 2007:

91% predict an increase in VC investments in energy,
70% predict an increase in VC investments in Internet companies,
69% predict an increase in VC investments in New Media.

Carl Eibl, Managing Director, Enterprise Partners Venture Capital:

Returns from biotech and digital media were disappointments over the last two years. That’s over. Both will lead returns over the next two years.

Chris Greendale, General Partner, Kodiak Venture Partners:

New York City will become more prominent from a geography standpoint; from an industry standpoint, digital media and alternative energies will continue to grow.

As I discuss in "Web 2.0 success metrics: Revenues, profits in 2007?" a productive New Year's resolution for Internet and New Media start-ups hoping to attract venture funding would be to commit to old-school “revenues” or “profits” as barometers for success, rather than user traction with "cool" apps.