The list of entrepreneurs who want to start a business and obtain venture capital financing is almost endless.  And the number of different types of businesses and industries are almost as numerous.  However, a savvy entrepreneur who wants to get a hefty check from a venture capital firm will look closely at the main industries in which these firms like to invest.  Here are the top 4 industries VCs invest in, according to PricewaterhouseCoopers (PWC):

#1 - Software

Even since the dot com boom and bust in the early 21^st century, VC firms continue to be most heavily invested in software companies.  However, no longer are unproven business models the norm, nor are the large amounts of total capital invested.  New and emerging software products, whether internet based or custom installed, must have a niche market or be able to obtain a good share of an established market. 

In addition, according to the PWC study, the tens of billions of dollars invested in the software industry in 1999 and 2000 have dwindled to only $5.5 billion in 2007.  And despite slow and steady growth in VC investments since 2003, it appears that the stagnant economy will present a drop in total 2008 and 2009 investments.  Only $4 billion was invested in software companies by the end of 3^rd quarter 2008. 

#2 – Industrial/Energy

The number two VC invested industry is the only one continuing to grow through a down economy.  $3.2 billion was invested in new energy technologies in 2007, and already before the end of 2008, $3.6 billion was invested in new energy technology companies. 

The growing concern for the economy and the larger demand for “green” products have fueled this industry, and venture capital firms are taking note of the potential profit rainfall with new energy companies. 

#3 – Biotechnology

Although still one of the top four VC industries, biotechnology fell the hardest between 2007 and 2008.  $5.2 billion was invested in biotechnology firms in 2007, but by end of the 3^rd quarter of 2008, only $3.6 billion was invested. 

Biotechnology firms use biological substances to perform specific industrial or manufacturing processes, such as pharmaceuticals, bulk food production, and the bioconversion of organic waste.  Despite the drop in VC financing, the biotechnology industry is still expected to continue its high growth.

#4 – Medical Devices and Equipment

Dropping from 3^rd place in 2007 to 4^th in 2008 is the medical industry.  New technology for medical equipment and devices dropped in demand in 2008.  It appears that the economy has affected existing companies who currently produce new medical technology, with many corporations laying off workers in order to navigate through the struggling economy.   However, even through tough economic times, the medical device and equipment industry still is strong.  Venture capital firms invested about $2.8 billion by end of 3^rd quarter 2008 into the industry.  This amount is far ahead of the next straggling industries of IT Services and Media & Entertainment, with only $1.5 billion invested by 3^rd quarter end 2008.

Entrepreneurs who are most likely to obtain VC funding should take a look at these popular industries.  Venture capital firms invest more in these top four sectors than all other industries combined.  And despite the lagging economy, these industries still look to be the top four for 2009.

Women entrepreneurs have been steadily decreasing the percentage gap found between females and predominantly male entrepreneurs.  Even as the 20^th century came to a close, only 9% of institutional investments were given to women entrepreneurs.  However, within the last decade, women-owned businesses have become a prominent mark in the venture capital scene.

Networking Through the “Boys’ Club”

Why has it taken women entrepreneurs so long to gain their share of venture capital?  Even though women business owners are excellent at networking, they have historically lacked the contacts in the financial community.  The financial industry has been predominantly run by men who provide financing to others in their “good ol’ boy” network of friends and business acquaintances.

But as networking through the internet became more prominent, and as more women received VC funding, the financial network has expanded further into women entrepreneurial ventures in the 21^st century.  Businesses owned by women are as financially secure and profitable as any average U.S. business firm.  But yet, women still have difficulty securing VC for their new business ideas.

How can a woman entrepreneur shore up the networking holes and find their place in front of a VC firm?

Network the Financial Industry

Women must be able to network not only among other women business owners, but with all who are involved in the financial market.  Expand networking possibilities with other entrepreneurs, men or women, who have successfully won venture capital funding.  Talk with others who are connected with the VC industry.  A local entrepreneur club may be a great way to share ideas and get venture capital contacts for financing your business.

Study the Main VC Industries

VCs invest heavily in technology businesses.  Many women entrepreneurs have a great retail business idea, but find it difficult to obtain VC funding when there is no model for large scale expansion and sales.  If you want to get a business kick started with venture capital funds, be sure to study the industry of your business idea and discover if it is likely to be viewed favorably among VC firms.

Strengthen Your Idea

As with any entrepreneur or company vying for VC funding, your business idea must be solidly defined, marketable, and in demand.  Discover a niche for your business idea that will allow your company to experience potentially huge sales.  This may take time, trial, and error to narrow and focus your business idea to where it is attractive to venture capital firms.

Assemble a Winning Team

In order to give your business an edge in getting accepted for VC funding, you must have a winning team in place before you approach VC firms.  Take the time to assemble a list of potential managers, directors and executives of your company that have the right experience in their industry and preferably in other startup companies as well.

To win in the venture capital funding game, women must play by the rules set by men.  Most startups that make proposals to VC firms were recommended by other contacts in the financial industry or by other portfolio investment companies.  Once you solidify your high-potential business idea and management team, get in the network and find your place in front of a VC committee.

Many entrepreneurs have a great business idea, but need some advice and a little encouragement on how and where to get venture capital.  And given that the venture capital community is tight knit, you often need to include venture capitalists in your network to secure funding. 

Where else can a newbie entrepreneur get great advice than at a VC conference?  VC conferences are held around the country, and they are particularly popular in California.  At each conference, hundreds of entrepreneurs show up with their best suits on and copies of their business plans in hand seeking advice on improving their chances at Venture capital.

What kind of valuable information could you obtain at a VC conference?

Seminars and Workshops

At each conference, there will be a wide range of seminars that are usually hosted by VC investors who give advice on certain topics.  Here is just a sample of what you can attend:

• Keynote Addresses – At every VC conference, there is usually one or more keynote speakers from major venture capital companies.  Their speeches can be invigorating and encouraging, offering great advice to attendees.  Hearing the best advice straight from the horse’s mouth is one of the best ways to pinpoint your strategy for approaching a VC firm.

• Early Stage Capital – You might find that a workshop on early stage or startup financing can be very helpful.  If you’re an entrepreneur with a startup business and are unsure of your next steps you need to take before approaching a VC firm, attend one of these workshops and get some valuable advice.

• Pitch Coaching – VCs receive a lot of pitches from an infinite amount of entrepreneurs.  They know what works best and what they want to see.  Find out how you can formulate your pitch strategy in a workshop that offers coaching on your pitch presentation.

• Panels – Oftentimes VC conferences will have a professional VC panel Q & A where you can ask and hear other entrepreneurs ask important questions about Venture capital.  These panels not only are a great way to get answers, but a perfect place to network with other entrepreneurs and VC investors.

Network with VC Investors

Your time at a VC conference could lead to face time with important VC contacts.  There is usually time built in to a VC conference for hobnobbing and schmoozing.  Get in and introduce yourself to VC attendees.  This is a perfect time to practice your “elevator pitch,” where you introduce yourself and a 60-second or less pitch about your business.  Get advice, get contacts, and get remembered.  But don’t get remembered as that pushy guy who hogged all the time with VC representatives.  Be professional and considerate.

Low Cost

The best thing about VC conferences is that they are extremely affordable for the information and contacts you could gather.  For around $75 to a few hundred dollars, you can get access to valuable information that could lead to millions invested in your company.  Plus, the cost of attending is tax deductible!