Crazed Internet Investing Could Continue In 2011, But Cleantech May Face Tough Times

The “crazy” pace of investing in Internet companies may continue next year, but cleantech fundings could lag.

On the other hand, life sciences could turn in a solid performance. There is no shortage of interesting companies.

This was the conclusion of a panel of VCs Thursday night at an investment forecasting event held by the Silicon Valley Association of Startup Entrepreneurs.

There is little disagreement that this year was a steady-the-ship improvement over 2009, when the global financial crisis cut into confidence and capital become expensive.

Internet and software investing were two of this year’s big beneficiaries and the updraft should continue. The market is seeing “a slightly crazed pace of investments,” admitted James Cham, a principal at Trinity Ventures. People are making rash moves.

The pace may be higher in 2011, added Bipul Sinha, a principal who focuses on Internet and software startups at Lightspeed Venture Partners. The cost of starting companies is down while online spending on advertising is increasing.

In cleantech, however, investing may not increase next year, says Todd Kimmel, a partner at Mayfield Fund. Companies that need money could have a tough time raising it. “I think 2011 will be a very difficult year,” said Kimmel (pictured).

In health care, conditions could lead to a better year than in 2010, said John Steuart, a managing director at Claremont Creek Ventures. Capital is available, and, when times are stable, it will be invested.

In addition, there is no shortage of good companies, he said,

Let’s hope so.