2005: $22.1 Billion In Investments Brought To You By The Letters V & C

Venture capitalists invested $22.1 billion in U.S. businesses last year — more than any year since the internet bubble went pop in 2001, according to VentureOne’s year-end report — but a scant 2.4 percent ($541 million) went to media and entertainment; IT took in nearly three times that amount. The Hollywood Reporter points out that not a single 2005 IPO came from the M&E sector. Danny Stein, who invests in entertainment as president of JDS Capital’s Dimensional Associates, says it would be too easy to think of it as SV VCs favoring their own. His theory: most traditional VCs can’t wait for entertainment start-ups to pay off. Harvard professor Josh Lerner told HR when companies do go public or sell, it spurs more investment. As our readers well know, 2005 was a year for internet acquisitions, which could make 2006 a bigger VC year.
For a cold shower, read Russell Beattie’s WTF 2.0: “… a few companies out there that seem to get it but just about every other new website I’ve seen lately is nothing but features parading as businesses. Sure, these guys get to be entered in the ‘Flip It Quick Acquisition Lottery’, but beyond that, none seem to be creating anything of any real value.”