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January 3, 2010 11:19 PM
by Erick Schonfeld

Venture Funding Roared Back In the Fourth Quarter To Nearly $15 Billion

After a year when venture funding was in the doldrums, it roared back in the fourth quarter of 2009 to nearly $15 billion, according to a tally of the venture rounds in CrunchBase. The total value of disclosed fundings for the quarter was $14.85 billion, up 113 percent from a year ago (when the total was $6.96 billion), and up 78 percent from the third quarter of 2009 ($8.35 billion).

One of the big funding rounds of the quarter included Zynga’s $180 million, but clean tech cleaned up even more, with Horizon Wind Energy bringing in $318 million in financing, Silver Spring Networks adding $105 million to its coffers, and Sun Run Generation raising $90 million.

While the quarter saw a robust return to higher levels of investing, it was not enough to counterbalance the previous three quarters of tepid investing. The total amount of capital deployed over the full year of 2009 was $32.6 billion, which was lower than the $38 billion total for 2008. The first two quarters of 2008 were relatively healthy, with $11.5 billion and $11.8 billion raised in venture rounds, respectively. It wasn’t until third quarter of 2008 that the bottom really fell out. Venture capitalists kept their purse strings tight until the third quarter of 2009, when they started to ease them open

The total number of funding rounds increased 51 percent sequentially between the third and fourth quarters to 1,078. The number of fundings in the third quarter of 2009 was 715, and the year before it was only 618. So venture activity definitely picked up in both dollars and deals. Will these new levels set the tone for 2010?

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Take the article below into consideration if you are considering bank financing.

The New Entrepreneur – BusinessWeek
December 30, 2009 4:15 PM
by John Tozzi

Negative Trends: Why Lending May Not Pick Up In 2010

Small business owners expecting an easier time getting a loan or credit line in 2010 should watch out for two words: Negative trends.

Bankers look at a business’s past two years of financial statements when evaluating credit applicants. The average business owner walking in with financials from 2008 and 2009 simply doesn’t look like a good credit risk.

That’s why Tony Wilkinson doesn’t expect conventional credit to ease until the beginning of 2011, when borrowers can prove that they’ve hit bottom and have begun to recover. Wilkinson is president and CEO of the National Association of Government Guaranteed Lenders, the trade group representing SBA lenders. Here’s how he put it in an interview today:

The typical small business has a 25% to 35% decline in revenue. The profit they made in 2008 is probably gone. [They hit] break even if they’re lucky. Small businesses are walking in with financial statements that show negative trends. … Before we get back to a truly normal credit environment for small business, we’re going to be in the first quarter 2011.

That’s part of why there has been stronger demand for SBA-guaranteed loans, and Wilkinson expects that to continue through next year.

Not every business has negative trends. Some regions and industries are healthier than others. Some companies managed to sustain their earlier level of sales, profits, or even growth despite the recession. But 2008 and 2009 have been bad and worse years for many firms. Until they have a better one in the books, they shouldn’t expect to find bankers eager to make loans.

Small Business Financing