Wireless, chips, and video were a common theme among the vendors that secured VC financing, but the biggest round was raised by a smart-grid player, Silver Spring Networks.
VC activity outside North America was mostly clustered in Europe and Israel. The exception was China, which showed promise with several major deals, including PearlinPalm ($10 million) and AltoBeam ($8 million).
China's strong VC performance has been helped along by the fact that many major vendors elsewhere slashed R&D spending by over 10% in 2009. This has created strong opportunities for vendors such as Huawei and ZTE to form venture funds to finance redoubled R&D efforts.
While both already have huge R&D operations, they spend less on R&D as a share of revenue than some peers. If they follow the example of Intel, Microsoft, Google, and other large technology firms and create their own venture funds, and use a little bit of their massive bank credit lines for this, then things could really get interesting.
Active debt markets
While VC flows have fallen, vendors and CSPs have had surprising success recently in raising money by issuing debt through private placements. The sector raised $46.8 billion this way in 2009, and $15.3 billion in the fourth quarter alone - compared to just $11 billion for the whole of 2008.
Every region saw strong gains in both deal count and value during the quarter and the year, with Australia, Hong Kong, China and India all seeing major deals.
The largest single placement was for $4 billion by US operator Verizon Wireless. Competitor Clearwire raised $3 billion throughout the year through two separate placements. The strong growth in the US can be explained by the fact that its public markets were the hardest-hit by the economic downturn.
Private debt markets have been more effective fundraisers than public stock offerings simply because, until recently, public markets have been hostile to new stock issuances. In North America especially, public offerings were virtually non-existent from 4Q07 to 4Q08.