VCs Cautious in new Funding Schemes

If you have an old tie or skirt, chances are that tie or skirt will be back in style one day soon. The same holds true for venture capitalists who fund businesses. These angels are finding that they are returning to the old days of funding companies with a solid infrastructure versus the latest dot.com craze.

The rules certainly have changed over the last six months--mostly since technology stocks took the famous nose-dive last spring. VCs were notorious for funding start-ups that didn't even have a business plan, and as a result, are much more cautious now than they used to be.

However, technology still is 'in' for investors. According to a survey of second quarter 2000 investments by PricewaterhouseCoopers, VCs are most interested in software ($4.7 billion), telecommunications ($4.4 billion), business services ($3,7 billion), new media ($1.4 billion), and networking and equipment ($1.2 billion).

This isn't to say that every investment failed, because that's certainly not the case. Along with funding comes the risk associated with the investment, and VCs are certainly one brand that likes to take a risk. Sometimes the risk pays off, and sometimes it doesn't.

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