2011: A banner year for startup investing

The year is shaping up to be the biggest for VCs deals in a decade--with a ton of activity from well-known startup backers and a new breed of investor.

Vinod Khosla closed a $1.1 billion fund in October Techcrunch

Here's an upbeat tidbit to end the year: 2011 is on track to the biggest year in venture capital deals in a decade.

Big years make for daring bets, and for this year I've chose a dozen influential investors to single out for their role in fueling startups of all sorts.

If the final quarter shapes up as it looks like it will, venture capital deals will total $30 billion for the year, a 25-percent jump from 2010, according to Anand Sanwal, whose firm, CB Insights, tracks investment activity among VCs and some big angel investors.

"I know people like to talk about a bubble, and everybody enjoys playing the when's-it-going-to-end game," said Sanwal. "But all the signs are good for now."

Those signs include a resurgent IPO market for tech companies, with debuts by Zynga, Groupon, LinkedIn, and Pandora, among others. They include some big acquisitions, such as Microsoft's $8.5 billion purchase of Skype , HP's acquisition of Autonomy for $10.2 billion, and Google's $12.5 billion purchase of Motorola Mobility. And they include a soaring number of small acquisitions from the likes of Facebook and Google, the latter of which is snarfing up startups at a pace of one a week.

So long as this trend continues, private money will make its ways to venture capitalists hoping to fund the next big thing--or at least to make a decent exit by way of a sale to one of the giants.

The numbers in Sanwal's latest report bear out what lots of people are talking about: It doesn't take much cash to start a tech company these days. That, along with a bevy of newly wealthy investors on the scene, has resulted in a booming number of small startup investments.

Seed-stage deals, which CB Insights categorizes as anything below $1.5 million, made up about 15 percent of the roughly 700 fundings in the third quarter alone--up from about 10 percent a year ago.

Of course, the pace of funding has been frenetic this year, and CB Insight's numbers don't even capture the hundreds of angel deals done without VCs or the funding that goes on at scores of incubators. Y Combinator, for instance, invests an average of $18,000 in each of about 125 startups a year.

In 2011, some of the usual suspects were more influential than ever. Some are just making their mark. And plenty were omitted (sound off about them in comments, please).

 

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