The first keynote dinner event of the year on January 31, 2008 and sponsored by TiE-Boston featured Ajay Agarwal, Managing Director, Bain Capital Ventures; Bob Hower, General Partner, ATV Capital; Paul Maeder,  Managing General Partner, Highland Capital Partners;  and Hemant Taneja, Managing Director, General Catalyst. The panel was moderated by Scott Kirsner Columnist, Boston Globe. The event was sold out with more than 200 people in attendance.

Areas of current investments

Last year was a great year to start a new business. The startups raised more than $30B with nearly $3.7B of that in New England, the highest amount since 2001. In its 5th fund, General Catalyst has $700M, which it has primarily been investing in the areas of wireless and clean energy technologies. However, risk profile of these companies is very high, said Taneja. When asked about the effect of recent rate cuts, neither Maeder nor Hower anticipates any effect of it on early stage VCs. Some of the recent areas of investments include conversion if low quality coal into natural gas along with sequestering of carbon dioxide by ATV Capital and a virtualization company based in Bangalore by Bain Capital Ventures. It is important that startups be ‘capital efficient’ for the next 6 – 12 months in order to weather the current market conditions.

Areas for future investment

According to Hower, some of the areas ripe for investment in 2008 include communications and performance marketing. Maeder sees strong potential in the financial services. The retail end is very inefficient and there is much scope in improvement. He thinks the VC monopoly in US is over as the world has now figured it out. “The focus is now on multilocal business rather than global business,’ said Maeder. We are currently in post IR/health care convergence bubble, but the time is right for IT/hardware convergence including detection of dangerous bacteria and application will help people and not kill people. Agarwal is bullish on companies which provide traffic info for automobiles and restaurant chains in India. However, Agarwal strongly feels that the spirit of first-time entrepreneurs and entrepreneurship in the Boston area is on the decline, and we all need to embrace them to keep the momentum going.

Areas with overinvestment
 
Even though VCs are generally optimistic and don’t see too much of anything, there was a general agreement that some of the areas which are currently over invested include mobile advertising and advertising based businesses.

So as the saying going “No country with a McDonald has declared war on another country with a McDonald”, countries such as Singapore and Dubai which are investing $3B and $5B, respectively, should be kept in mind!

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