The Pulse of Venture Capital

Tomorrow’s big-idea builders can feel encouraged by optimism on the venture-capital front.

The sectors and projects that are most attractive to today’s entrepreneurial-seed lenders: green ventures, web technology and health care. Those voted thumbs down for 2010 and beyond: enterprise software and the supply side of clean tech.

“The technology side [is where venture capital sees much potential]. We see a lot of effort on social media,” said Terry McGuire, co-founder and general partner of Polaris Venture Partners and chairman of the National Venture Capital Association. “It is an evolution on how you take social media and monetize.”

Paul Holland, general partner in charge of the clean tech practice at Foundation Capital, a $2.5 billion firm, said the future is about putting green toward green.

“Certain aspects of the consumer market place are growing,” said Holland. “We have a company called CHEGG-shorthand for chicken and the egg. They rent textbooks to college students and it is like a Netflix for college text books. Companies like that are growing really rapidly.”

Holland said venture capital is buckled up and in good shape to ride out the end of the economic storm.

“VC [has been] shrinking in the face of a difficult investing environment in the last few years. At the same time, over the next 18 months, the outlook for companies going public is as bright as it has been in ten years,” said Holland. “Our firm has no less than nine companies [that] have the opportunity to go public.”

Holland said to expect to continue to see more and more investments in companies specializing in next-generation green building and online living.

Two such companies funded by Foundation Capital -- Silver Spring Networks, a company that provides smart meter technology for smart grids, and SunRun, the leading provider of residential solar systems in the U.S. -- were indeed present last week at the White House’s Jobs Summit, which focused on the future of job creation and expanding the economy.

McGuire said he hopes the government recognizes the power venture-capital funding has in rebuilding the economy and doesn’t go through with a potential tax-break pullback that could cripple the industry.“At the time when we need [government] to stimulate the economy, it would be a shame to change tax policies [that support] venture capital,” he said.