Venture Capital / Angel Investors: December 2004

Chinese Venture Capital Booming

One of the hottest VC markets right now is China. Total VC investment in 2004 passed the US $1 billion mark for the first time at $1.27.

The number of projects that received funding grew by 43% over last year.

Venture Capital was booming in 1999 and 2000 during the dot com bubble and went into a major decline after the bubble burst. The area is once again extremely hot.

The key reason for the recent rise is that VCs want high growth and profit margins. With China's exploding economy there represents perhaps no greater opportunity for a return on investment anywhere in the world.

The rapid rate of companies being acquired in China also attracts VC investment as it provides a quick exit strategy.

There is currently over US $15 billion of VC money invested in China - a number which will only grow in the months and years to come.

Read more here.

For more information, visit www.EvanCarmichael.com.

Nanotechnology Attracting Angel And Venture Capital

Angel and Venture Capital investors are pumping billions of dollars into the emerging field of nanotechnology. Nanotechnology involves breaking down materials to the atomic level and manipulating them to produce new products.

Potential applications of nanotechnology are wide. There is interest from almost every industry - from clothing to semiconductors to cosmetics.

Nanotechnology is, however, becoming quickly overhyped. Most of the applications are years away from being practically implemented. One area that does show immediate promise is medical diagnosis - helping doctors accurately and immediately detecting and diagnosis diseases instead of waiting days to do a blood or urine test.

Some key questions that investors are asking nanotechnology companies are:

Does it make sense?
Why should it be better if it's nano?
How is it going to compete with what's currently out there?
If it requires an enormous leap of faith, think twice.

Medical Device Entrepreneur Raises $500K, Seeks Another $3-6M

Jud Carlson's Florida based company Intercept helps advance the way patients manage severe pain from failed back-surgery syndrome and from cancer.

Jud did not invent the technology but acquired it from a German based company because it was not part of their business model.

Angel investors put $500K into Intercept because:

They believed in the technology that was being acquired
Intercept was able to recruit the chief engineer of the company whose technology they had acquired

Intercept is now looking at raising another $3-6M for further research and development. Their eventual exit strategy is to be acquired believing that their larger competitors would rather acquire Intercept's technologies than try to develop it themselves.

eBay Entrepreneurs Raise $1 M Angel Capital

Steve Phelps and Vic Sibilla, co-founders of E-Bid Auction Express, started their business venture in June of 2004.

Their company is an eBay one stop convenience shop. E-Bid Auction Express allows sellers to drop off their merchandise and have it sold for them as well as have access to computers to do the selling themselves. They also hope to create an eBay community to bring traders together in a conference center.

They have successfully raised $1 million from angel investors to set up the first two superstores. Their plan is expand to 16 markets over the next 18 months.

Read more at http://www.eastvalleytribune.com/index.php?sty=33688

For more information, visit www.EvanCarmichael.com.

Angels Tougher To Please

Angel investors are getting a lot harder to please but they are making up for the gap that VCs made by leaving the early stage market.

In 2003, 42,000 Angels in the US put $18.1 Billion into early-stage companies compared to $304 Million by VCs.

Angels want:

Positive cash flow within 12 to 18 months
Already have a product or service
Have some paying clients
An exit strategy
The ability to double, quadruple, or increase an investment tenfold in five years

The Angel Capital Association (http://www.angelcapitalassociation.org/) is the first angel investor network. So far they have 60 members.

Read more at http://www.inc.com/magazine/20050101/getting-started.html

For more information, visit www.EvanCarmichael.com.