Inside VCJ: VC Heads South –

When you think of venture capital, the two places that usually come to mind are Silicon Valley and the Boston area. For as long as anyone can remember, these areas have been at the very center of VC activity. But as of late a number of other regions are finally getting their due when it comes to VC investing. This month’s issue heads south to take a look at a couple of these burgeoning areas: Brazil and the Southeastern U.S.

Latin America Editor Holly M. Werner examines Brazil’s investment climate in this month’s cover story. (story page 46) While in years past, Brazil hasn’t been one of the most stable countries to invest in, the country’s current economic policies and leadership under President Cardoso have helped to bring about some bullish sentiment when it comes to private equity/venture capital investment. In addition, its sheer size alone a population of 168 million and a buying power valued in the hundreds of billions makes it difficult for investors to ignore Brazil.

Traveling to a local southern hotspot, venture capitalists in the Southeastern U.S. are experiencing a boom time of their own. (story page 51) In just the past five years, VC disbursements have grown dramatically from about $27 million to a whopping $1.23 billion in 1999. In addition, the vast step-up in the size of homegrown funds coupled with robust deal flow have only helped to spur increased activity in the region. As one VC put it, people are beginning to recognize “redneck high-tech.” It’s fairly safe to say the Southeast will not rival Silicon Valley or Boston anytime soon. But for now, lots of activity, money, charm and good weather are the all the makings for a rising Southeast.

Lastly, this month’s issue takes a look back at M&A activity for the first half of 2000. Continuing venture capital’s record-breaking pace, M&A activity in the first half of the year set yet another record with a total 114 deals valued at $33.1 billion. However, one surprising discovery was that the usual inverse relationship between the number of M&A deals vs. the number of IPOs was not so inverse this time around. In fact, they seem to be running almost parallel, leaving investors with the best of both worlds.