debbiegage

The National Venture Capital Association's annual survey of what VCs expect to happen in 2010 could have been written in part by Bill Gurley, the sage of Sand Hill Road. (Once again we link to his August blog post, "What Is Really Happening To The Venture Capital Industry?") Venture funds will shrink and the number of firms will shrink, said a majority of the 325 VCs surveyed, although they do expect to invest a few more dollars in more companies. They also plan to invest more in clean tech and Internet companies along with companies in China and India. They favor later stage investments over seed and early stage -- a fact that concerns NVCA President Mark Heesen, who worries about innovation -- and they expect exit markets to improve slightly, with more mergers and acquisitions and a few more IPOs.

Two weeks ago I wrote about ZumoDrive, a tiny three-year-old company whose founders had managed to get their product favorably reviewed by Walt Mossberg at the Wall Street Journal. I met them a year ago when they were just three engineers, working day and night to develop this product under a different name for a different audience, and I was impressed by their progress. The company is on a roll -- yesterday they announced a $1.5 million round of funding led by Sherpalo Ventures with participation from Tandem Entrepreneurs and Tandem's largest LP, VeriFone CEO Douglas Bergeron. The funding isn't just a milestone for ZumoDrive, but also for Tandem, a seed fund that is about the same age as ZumoDrive. (Venture Capital Journal wrote about Tandem here).

Former Bricsnet CEO Farid Jinian, who was indicted last month by a federal grand jury in San Francisco for embezzling more than $1 million from his employer, headed a company called Dimensia that was hired by investors to do due diligence on Bricsnet for an investment, said a source close to the case. Dimensia so far has not returned requests for comment. Bricsnet in 2007 raised $13 million from four European investors, including Torimbia SL, Stonefund NV, Paladin SA and TBC SA. The alleged fraud was brought to light by a temporary worker at Bricsnet who had access to financial documents and has since left the company. Jinian claims there was a misunderstanding about his salary -- he denies the charges and will plead not guilty, said his attorney, Douglas Schwartz of Schwartz & Cera, who adds that his client has been shabbily treated by federal authorities because he's Iranian. (Jinian is an American citizen but was born in Iran).

In the spirit of the season, it's time to start dusting off all those holiday venture capital jokes. Here's one from Jeremy Hanks, the co-founder of Doba.com, who posted this last year on his personal blog -- 12 ways that Santa Claus and great entrepreneurs are alike. In the future, if I can find it again, I'm going to post a press release I saw from 1995 on why Santa Claus likes holiday e-mail rather than letters. (He's always been so cutting-edge.) Get Jeremy's take on Santa after the jump -- and happy holidays.

The Wall Street Journal had an interesting story today about the influence of government loans and grants on the clean tech industry -- it called the government "a kingmaker in one of technology's hottest sectors" and says the government has put five times as much money into clean tech this year as venture capitalists. The story also says the presence of government funds influences how much private capital a company can attract and how easy it is for a company to progress. It cites politics as a factor in government funding, telling how Fisker Automotive -- a hybrid electric car maker backed by Kleiner Perkins -- got funding from the DOE after it agreed to manufacture cars in Delaware, at a plant that GM was planning to shut down, rather than in Finland. None of this is new. Battery maker A123 Systems, which got help from politicians in Michigan -- where it will locate manufacturing -- rather than Delaware, could tell a similar tale, as I wrote

Last month both Chegg.com and BookRenter.com announced new funding rounds -- $57 million in Series D for Chegg.com (not counting credit and debt, which take its funding to $112 million) and $6 million for BookRenter.com. At the time, BookRenter was playing David to Chegg's Goliath, claiming it could tackle online book rentals at a fraction of Chegg's cost. However, there's a third player -- CampusBookRentals.com, which claims to be bigger than BookRenter but has so far hung on to its equity and raised debt -- and it appears that merger talks, or at least merger feelers, among the three companies may already have begun.

Some people who have Health Savings Accounts administered by Canopy Financial's software have had their accounts frozen because of a dispute over how much money is supposed to be in them, peHUB has learned. Health Savings Accounts are a way for employers to let their employees set aside a certain amount of money each year for healthcare expenses and to get a tax break for doing so. Yesterday, peHUB reported that Canopy had sent a letter to its customers saying it had reason to believe that its former executives were skimming money from the accounts. Canopy has not yet responded to our report. The company's former president, Jeremy Blackburn, was indicted for wire fraud last week in Chicago federal court. Separately, Blackburn and Canopy were sued by the SEC. We're now told that the discrepancy between what the banks think should be in some of the accounts and what employees think should be there is substantial.

Ethan Farid Jinian, the former CEO of Bricsnet, is accused of embezzling more than $1 million by persuading Bricsnet's senior finance manager to write him checks. Bricsnet makes software that helps other companies manage their real estate portfolios and improve compliance with...wait for it...Sarbanes-Oxley. Its customer list includes Walgreens, Deutsche Bank and Nextel Sprint. According to a grand jury indictment in federal court in San Francisco last month, Jinian told Bricsnet's finance manager, Leon Brown, that their chairman had agreed to make payments to Jinian

Blank teaches at Stanford and does volunteer work and was a long-time serial entrepreneur -- he told me once that he quit after the dot-com bubble because he realized he'd made more money than he would ever again make in his life. Here he is giving the closing lecture in Stanford's Entrepreneurial Thought Leader Lecture Series. His advice is pretty basic -- what is your opportunity, who are your customers -- but then again, as he points out, your customer may not be the same person as the one paying you. Blank also writes a good blog -- he's been running a great series this week on what to do when someone steals your idea for a company, based on personal experience. Get the podcast after the jump.

It was between February of 2008 and May of 2009 that the venture firm completely pulled back, according to a couple of the partners -- not because they'd stopped looking for investments, but because the valuations on the companies they did see were too "frothy," and they couldn't reach agreements with the entrepreneurs. Remember it was during this period that Sequoia summoned its portfolio companies for a stern lecture on conserving cash and its "R.I.P. Good Times" presentation, illustrated with a headstone and a somewhat graphic picture of a butcher knife stuck in a pig's carcass in case anyone didn't get the point. When I first met Azure's Mike Kwatinetz, however -- in May of 2008, over four months before the Sequoia meeting -- he was the only VC I knew who was saying publicly that there was a bubble and that startups were over-valued and that they were spending too much money. That's not to say he was the only VC saying it, just the only one I knew.