If you want to get ahead of the pack in placing your technology bets, following venture capital money is a good strategy. Venture capitalists spend months parsing pitches from eager young start-ups, trying to figure out which have the potential to be the next Facebook, Google or WhatsApp. Right now VC investors are particularly flush with investment ideas and dollars.
In 2013, VCs pumped $29.3 billion into private companies, up 44 percent from the $20.3 billion in 2009, according to data from the National Venture Capital Association (NVCA). Two niches dominated the flow of VC bets on tech—software, which was lavished with near-$11 billion in VC investments last year; and biotechnology, which received $4.5 billion from VCs. VCs also bet near-$2 billion on IT services companies in 2013. Health care–linked technology companies have also caught the attention of venture capitalists.