The current financial and economic crisis, which a large part of the world is still enduring, has resulted in something of a rethink regarding the road ahead for many businesses, not to mention banks and venture capitalists. Quite a number of them seem to have come to the conclusion that the secret to economic recovery does not lie in mega-corporations, but in smaller companies that can adjust to changes in the business environment more rapidly, particularly technology companies. It is too early to predict another dot com boom, but there is suddenly a great deal of interest in internet-based businesses once more.
Venture capitalists are well aware that it is only a matter of time before the next big technology firm springs up in a small, nondescript building somewhere and that it might well be called Zoosk, Chegg or Xactly.
The Wall Street Journal recently published their list of the top 50 venture-capital backed companies and there are quite a number of technology firms on the list.
Xactly Corp develops web-based software; Zoosk Inc. develops social services sites and Chegg Inc develops e-commerce sites; they all feature prominently on the Wall Street Journal top 50 list.
To qualify for a place on the list, a company must have received financial backing during the last three years and it has to be valued at less than $1bn, which of course disqualifies giants such as Groupon, Twitter and Google.
Many of these companies are in the well-established IT category, a favourite of venture capitalists for a long time. Xirrus Inc, a company that manufactures Wi-Fi technology devices, takes the number two spot. Its founder, Dirk Gates, is also the former owner of another high-technology start-up, Xircom, which he sold to Intel Corporation.
Xactly, another software development company, takes the number three position on the WSJ list. Xactly develops sales compensation software and its future prospects looked so bright that it managed to obtain financial backing from giants such as Salesforce.com, Oracle and Microsoft Corporation.
The renewed popularity of internet start-ups amongst technology firms can be seen from the large number of these companies on the WSJ list. At number eight, we find Glam Media, which publishes lifestyle websites. Etsy Inc takes the number 12 position with their online craft market. At number 29 is an online dating site, Zoosk, and the number 31 position is taken by Chegg, a company that provides textbook-rental services.
A number of companies on last year’s list managed to gain sufficient financial backing from investors to make this year’s list again. For example at number 26, we find Jive Software Inc. They received backing from Kleiner Perkins Caufield & Byers, the same people who invested in Twitter and Facebook.
Suniva Incorporated, a company that produces solar cells, is on the list again this year, although it dropped from the number 15 spot to 38. Another technology company, Silver Peak Systems Inc, is in 44th position this year, after appearing at number 20 on last year’s list.
