A vastly overheated market for high-tech shares is decidedly unhealthy, but what of venture capital? The excitement surrounding everything to do with electronic technology has spilled over into the venture capital world, and while too much money chasing too few genuine prospects is not a good thing, since it causes venture capitalists who get their fingers burned away from the sector for many years, it is not yet clear that that is the case, although a lot of Internet and multimedia hopefuls will plainly come a cropper over the next few years. According to the San Jose Mercury News, 100 companies in Silicon Valley received a record $566.7m in the paper’s survey for last quarter, easily eclipsing the previous record of $457m in the second quarter of 1995, it says, adding that Silicon Valley drew more than a quarter of all venture capital invested US-wide, according to a separate national venture capital survey by Price Waterhouse LLP. No question about it, the ’90s will be the best decade ever for venture capital, says Institutional Venture Partners’ general partner Sam Colella, who projects that venture capitalists will invest $30,000m in the 1990s, up from $20,000m in the 1980s and only $2,000m in the 1970s, when the whole thing began – mind you $2,000m was worth rather more 20 years ago. David Gold, a general partner at Indosuez Ventures in Menlo Park, warns that too many venture capitalists are putting too much money into some areas, especially Internet companies. Other markets attracting investor interest include microprocessor-based medical devices, are also surging forward. Another factor fuelling the market is the number of software and communications companies that buy firms with what they want rather than develop it.
