Venture Capitalists Looking For Profits in B2B for 2013 | Green Key ...

New York?s venture capital community, second only to California, is retreating from early stage funding just at a time when many of the seed-funded startups will be looking for A-round investment. Crain?s New York Business calls it a ?collision course?; seed money is still flowing into startups, but when they?re ready to move to A-funding, they?re finding it difficult to interest anyone.

?A seed-stage company funded 12 to 18 months ago, with traction but not breakaway growth, will have a more difficult time getting series-A funding,? said Brian Hirsch, co-founder of Tribeca Venture Partners. ?There?s still a fairly short list of venture funds in the local market that will fund traditional series A, and there are hundreds of seed-funded companies. Something has to give.?

Deal volume in 2013 is expected to be as strong or stronger than in 2012, which, though the third quarter, was running 15% higher than in 2011. Jonathan Sherry, co-founder of the venture tracking firm CB Insights, said it was seed money investing that boosted the volume. and there?s no sign of its slowing down.

Crain?s says that whether at the seed or A stage, what interests VCs most are companies focused on business-to-business and with a clear path to profitability. Healthcare and financial services are particularly attractive.

?The financial services market is so vast and segmented that even solving a prescribed problem can be a gargantuan business,? said Roger Ehrenberg, managing partner of IA Ventures.

The picture nationally is not as tight for A-funding rounds, but the shift to business-to-business plays is equally pronounced. A survey by the National Venture Capital Association and DowJones Venture Source found 61% of the VCs predicting increases in funding for business IT and 57% for healthcare IT. Only 35% thought it likely consumer IT would see increased funding activity this year.

Decreases were predicted by 61% for clean technologies. medical devices (53%) and biopharmaceuticals (49%).

According to 45% of the venture capitalists, the hardest funding round to obtain in 2013 will be
Series A; 28% cite Series B as the hardest round to raise followed by Seed / Angel funding at 13%.

Source: http://blog.greenkeyllc.com/2013/01/venture-capitalists-looking-for-profits-in-b2b-for-2013/

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