Latest VC stats

As reported by Dow Jones VentureSource, aggregate venture investment in the U.S. during the quarter was $6.9 billion in 622 transactions, compared to $7.4 billion invested in 657 transactions in the first quarter of 2008. Acquisitions of venture-backed companies in the second quarter decreased noticeably, with 56 transactions totaling $4.7 billion, compared to 86 transactions totaling $11.3 billion in the first quarter.

Intel Launches New China VC Fund

From today's WSJ:

Intel Corp.'s venture-capital arm has completed its first round of investment in China and plans to invest another $500 million in the country over the next several years, executives said.



Intel Capital, the Santa Clara, Calif., chip maker's investment unit, has created the new $500 million fund to focus on technology startups at varying stages, including companies working with wireless broadband, technology media and telecommunications, Arvind Sodhani, the unit's president, said in an interview Tuesday. It is the largest country-focused fund for Intel Capital globally.



Intel plans to fully invest the new fund in three to five years, and is betting China will continue to grow even as other economies slow. When the economy takes a downturn "the natural reaction of investors is not to invest in technology or entrepreneurship," Mr. Sodhani said. But "technology is not really driven by what the state of the markets are at any point in time," he said, adding that "China is on a track all its own. Its economy is growing at a spectacular rate."



Intel Capital has been investing in China for 10 years, and established its first China-focused fund, with $200 million, in 2005. The announcement of its new fund comes as China's technology market is rapidly expanding. The country is the world's largest cellphone market by number of accounts and, by some estimates, surpassed the U.S. this year as the largest Internet population. Personal computer sales are growing at double-digit rates annually, and online services like video-gaming are booming.

Seattle startup scene poised for a Cambrian explosion?

People like Jeff Schrock, now at Monster Venture Partners, believe that the slowdown at Microsoft may be the catalyst that sparks an explosion of new startups in Puget Sound.



Also, while many rightly note that Silicon Valley is sui generis in terms of scale, the diversity of successful startups in Seattle is remarkable. Starbucks, Costco and Amazon are just the most prominent examples.



In some important ways, these developments are highly complementary to the growth of venture capital and entrepreneurship in China.



The excerpts below are from today's Washington Post.

"Seattle has arrived in the big leagues," said Scott Darling, a general partner at Frazier Technology Ventures in Seattle. "We're not Silicon Valley, nobody is, but we're playing for real." Darling lived in Silicon Valley from the mid-1970s to 1990, when Andy Grove, one of Intel's founders, asked him to move to the Northwest to continue working for Intel. Darling said Washington state is now tied with Texas for third place in terms of VC money, behind Silicon Valley and Boston.



The recent boom in Seattle could be partly due to Microsoft's decreasing stature as a cutting-edge technology leader, at least according to one theory from an investor. Silicon Valley and Boston both boomed after a great company began to slow down -- in the valley, it was Fairchild, and in Boston, Digital Equipment -- leading bright minds to leave and start their own businesses, said Jeff Schrock, a partner at Monster Venture Partners in Seattle, who used to work for Yahoo in California.



"I think we're at an interesting stage in Seattle with Microsoft becoming more of a slow and steady growth company," he said. "For the first time, there are lots of people coming out of Microsoft looking for entrepreneurial opportunities."