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Saturday, February 07, 2015

Which sectors are attracting VC funds?

The United States has defined the words ‘innovation’ and ‘entrepreneurship’ for the rest of the world to follow. So what’s the latest score when it comes to raising funding? In the first half of 2013, according to the ‘Innovation Report’, San Diego had raised over $580 million from venture capital resources. 

While more current figures are not available, below is a bird’s eye-view of the industries that raised all that money, and from whom, in the ecosystem.  It’s a good indication of what is on VCs' radar.

Surprisingly, going green is getting a lot of attention. Clean technology companies (52%) raised more than vanilla IT/media/Software/SaaS startups (8%).  Life Sciences got 30% of the funds.  Wireless Health, another recent area of high interest, got 6% of the greenbacks.

The Defence/Cyber/Robotics sector got a meagre 3% funding. If more weapons of war have civilian application, I think the interest might shoot up in this area. After all, Google and Amazon are testing drones for making shopping deliveries. So having a dual purpose might be a good way to lure money. It also helps the VCs look good in the media, with regard to their choices.

Consumer products and sports innovation evened out at 1%.  But most consumer product giants have huge R&D budgets in-house to support innovation. So this might actually be the reason, why they were not able to raise much from the open market. 

Suggestions for startups in these areas: Pitching to a P&G or Unilever might be a good idea too.

Sports entrepreneurs: Approach those wealthy sports clubs who pay millions to players. They certainly seem to have the dough.

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