California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

Dow Jones VentureSource has released its review of venture capital activity for 2008.
In total, 2008 saw 2,550 deals completed and $28.8 billion in venture capital invested
in U.S. companies. The activity is down 8% from 2007 as $31.4 billion was invested
 in 2,823 deals but still ahead of the $28.2 billion invested in 2006.

BY THE SECTORS
Information Technology (IT) industry posted its weakest quarter since 1998 with just
$2.2 billion invested in 266 deals in the fourth quarter of 2008, down 39% from the $3.6
billion invested in 355 deals over in the same quarter of 2007. In total, the IT industry
saw overall investment drop 15% to $11.6 billion invested in 1,237 deals from $13.6
billion invested in 1,430 deals in 2007.

The health care industry saw venture investment slip to its lowest point in three years
in the last quarter of 2008 with more than $1.5 billion invested in 137 deals, down 42%
from the $2.6 billion the industry garnered in 190 deals in the fourth quarter of 2007. For
the year, health-care venture investment fell 22% to $8.2 billion put into 623 deals in 2008
from the record $10.5 billion invested in 709 deals in 2007.

According to the data, 2008 proved to be a very good year for going green specifically for
renewable energy, as it saw annual investment more than double to a record of nearly $3.6
billion put into 124 deals from $1.7 billion in 101 deals in 2007. Eighty-six renewable energy
deals accounted for 86%, or $3.1 billion, of the industry's annual investment total.

Overall, the median round size in 2008 reached $7 million, down from the record $7.4 million
seen in 2007, according to VentureSource. Seed-and first-round deals accounted for the largest
slice of deal activity with 947 deals, or roughly 38% of the total U.S. deal count for the year,
and attracted $5.7 billion in investment. However, later-stage financings attracted far and away
the most capital with some $14.4 billion (roughly 51% of all capital invested) put into 901 rounds
in 2008.

CALIFORNIA
According to the report, California was once again the leading destination for venture capital in
2008, accounting for 44% of all deals with 1,121 and 51% of all capital invested with upwards
of $14.6 billion.

The San Francisco Bay Area attracted the bulk of the state's venture investment with 848 deals
garnering $11.2 billion, up 4% from the $10.8 billion put into 888 deals in 2007 and the region's
highest investment total since 2001. For the first time since 2003, Southern California saw its
annual venture investment fall, down more than 18% to $3.2 billion as the region saw only $422
million in investment in the fourth quarter--its weakest quarter in more than 5 years.

I am Tim Johnson and this has been the California Business Minute.

NOTE:  Part 2 will be presented upon the completion of PriceWaterhouseCoopers MoneyTree
results for 2008.  Then upon that, a review comparing the two sources will be presented at the
CalBizBlog.