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Venture Capitalists See Energy as Hot Investment in 2007

Venture capitalists, which found energy an attractive investment during 2006, are expected to look favorably upon the sector again in the New Year, according to the results of a survey released by the National Venture Capital Association (NVCA) Monday.

The momentum in energy investments is likely to continue in 2007, with 91% of the more than 200 venture capitalists surveyed anticipating increases in this sector next year, said the Arlington-VA-based association, which represents approximately 460 venture capital and private equity firms in the United States.

"Alternatives will drive venture capitalists in 2007," said NVCA President Mark Heesen. "This industry has built itself on finding alternative approaches to existing infrastructure issues. The 2006 investment momentum in sectors in need of or receptive to such changes, including energy, Internet and media/entertainment, will accelerate next year," he noted.

Areas of lower investment growth in 2007 include semiconductors and software where only 9% and 23% of the respondents are predicting growth, respectively, according to the association.

An estimated 69% of the surveyed venture capitalists predict investment levels between $20-$29 billion in 2007, the association said. However, one-third of respondents project higher levels of investment ($30-$39 billion) for the coming year. The average total investment prediction for 2007 was $27.6 billion, it noted.

The NVCA survey was conducted in early December.

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