VentureBeat

Introducing Citizen Murdoch!

It has been quite an evening for the world of business media. First came news that News Corp. has reached a tentative agreement for the purchase of Dow Jones & Co. at its original $5 billion offer price. The deal is going before the full Dow Jones board this evening for its approval, according to the New York Times.

This means News Corp’s Rupert Murdoch, already a significant media mogul, will now likely own the venerable Wall Street Journal, America’s most respected business publication. WSJ reporters will be walking around dazed by this. Many expressed disdain for Murdoch, saying he holds his own publications to lower standards than those of the WSJ.

Next came news that San Francisco’s Business 2.0, the seven-year-old magazine about technology start-ups owned by Time, may be shuttering after publishing a last issue in September. This is due to a sharp drop in advertising at the San Francisco-based magazine, caused by merging in ad sales people who pitched other Time publications, such as Fortune, more aggressively than Business 2.0. We’d heard the same rumors last week, but were unable to confirm them.

Finally, we note that citizens journalism efforts are also having a tough time, and people are trying to draw lessons.

Chief executive officers at U.S. venture-backed technology companies are earning nearly $30,000 more per year in total compensation than they did a year ago.

CEOs in Silicon Valley and the Northeast enjoy the best deals overall.

The data, compiled by Dow Jones, shows that technology CEOs are earning a median $289,000 this year, up from $260,000 last year. See table below, which also shows how much vice presidents and directors are making.

Total compensation, which includes salary and bonuses, for CEOs of venture-backed healthcare companies also climbed to a median $300,000, from $284,000 a year ago. Total CEO compensation increased somewhat for the other industry tracked, products and services, to $260,000, about $10,000 higher than the year before.

Technology CEOs received the largest equity allocations of the three major industries, at 4.9 percent, compared to 4.7 percent for healthcare CEOs and four percent for “product & services” CEOs.

The survey found the median total CEO compensation across industries is 275,000, up from $263,000 a year ago. The amount of equity in their companies that CEOs reported receiving is 4.7 percent, a decline from the five percent equity allocation reported last year.

CEOs based in the Northeast do earn the largest total compensation packages, at $310,000, edging out Northern California at $300,000. However, Northeast CEOs get a median of 4.69 percent ownership of a company, less than the 4.99 percent among Northern California CEOs.

Dow Jones’ data offering, called CompensationPro, compiles data on 135 different job titles at 734 venture-backed companies—representing nearly 7,800 individuals.More than 700 executives at U.S. venture-backed companies participated in the survey, which is annualized as of April 2007

The WSJ and Zdnet have published oddly incomplete stories about Bambi Francisco, a reporter at Marketwatch, who they say “invested” in a side company called Vator.tv.

They suggest scandal, because she reported at Marketwatch about people who also invested in Vator.

Bambi’s employers requested that she not to talk with reporters about this, but we’ve talked with Bambi over the past few months, so know what she’s been up to. Fact is, Vator is Bambi. This was not a side investment, so much as her own company. Her investment was mainly sweat equity. Read the stories above carefully with that in mind, and it becomes largely a non-scandal. If Vator became a success, the understanding was that she would leave and do it full time.

There are clearly issues she could have handled much better though. The one for us, was that she reported on the activities of venture capitalist Peter Thiel, who also is an investor of Vator. In those stories, published on Vator itself, she should have disclosed his investment more clearly in the story/video itself (he is listed as an investor elsewhere on Vator). We’ve talked with Bambi this morning, and she agrees now that she should have been clearer, but that the site was so small and had so little traffic she just didn’t think of it. Personally, we think she should take the dive into independence (easier said than done), and break altogether from DowJones/Marketwatch, because of the significant complications caused by staying there.

As for her coverage of LinkedIn, Powerset, and Facebook while at Marketwatch, those are all legitimate stories for anyone to be covering, and we understand that she had an agreement with her employer that she could write stories — even those involving Vator’s investors — once they became legitimate stories in their own right. And it was difficult for her to disclose her Vator activities while reporting at Marketwatch, because the point was to avoid using the Marketwatch platform to publicize Vator. Where the ethical line is crossed is hard to tell under these conditions — another reason Bambi should cut and run.

Update: Later Friday, Bambi resigned. See Mercury News.

Ok, you’ve heard versions this headline before: “Investments in clean technologies doubled last year, compared to the year before.”

So far, definitions of clean technology have remained vague, and we’ve remained suspicious about the accuracy of industry data on investments in this area.

Today, Dow Jones Venture One has released a more precise definition of what “clean technology.” Earlier, the group also tightened the definition of “Web 2.0″ investments, which greatly improved upon previous efforts.

In 2006, venture investors pumped $1.28 billion into clean technology companies in China, Europe, Israel and the U.S., the group said today. That’s about double the $664.1 million invested in 2005, according to the research, which was compiled the data with help from Ernst & Young.

And here’s their definition:

Because of the significant level of attention being focused on cleantech, VentureOne’s research department adopted a strict methodology for categorizing potential companies in this new industry. They were defined as companies that directly enable the efficient use of natural resources and reduce the ecological impact of production. Areas of focus include energy, water, agriculture, transportation, and manufacturing where the technology creates less waste or toxicity. The impact of cleantech can be either to provide superior performance at lower costs or to limit the amount of resources needed while maintaining comparable productivity levels.

The most active global investors in cleantech in 2006 include Draper Fisher Jurvetson, DFJ Element, Khosla Ventures, Nth Power and Rockport Capital Partners.

See more info in the table below:

Venture capital investment into U.S. companies slowed markedly in fourth quarter of last year, to the slowest pace in two years.

That drop-off wasn’t enough to knock 2006 from its status as most robust year since 2001, however — and it’s too early too tell whether the slow-down will continue into this year.
For all of 2006, investors backed 2,454 companies, slightly ahead of 2005’s level. Total investment was $25.75 billion, an 8 percent increase over the preceding year, according to the quarterly survey by Ernst & Young and Dow Jones VentureOne.

The surprise is the fourth quarter, when VCs backed 561 deals and invest $5.82 billion, drops of 13 percent and 2 percent, respectively, from the fourth quarter of 2005.

This comes at the same time venture capital firms slowed their own fund-raising from their investors to the slowest pace in three years, according to Thomson Financial data released last week.

Trends in Silicon Valley reflected the slowdown seen in the rest of the nation. VCs invested $1.94 billion in local companies, down from $2.12 billion the same quarter of 2005.

See diagram below, which suggests the interactive Web companies (dubbed Web 2.0) were among the few sectors to grab more money in the fourth quarter compared to the third quarter. The classifications aren’t perfect, but see “consumer/business services” and “media/content”, for example.

But if you stand back, and look at 2006 year as a whole, investments increased across each of the three main industries tracked (a) healthcare, (b) IT and (c) consumer and business products and services, so this a broad recovery. Within IT, though investments fell in the sub-category of chips.

The clear winner was alternative energy, where investments boomed 190 percent, compared to the year before.

Highlights:
–Healthcare in 2006 — 628 companies were invested in; 5% increase from 2005
–11.3% drop in communication & networking in 2006
–14% increase in electronics & computing
–27.5% increase in information systems
–6.6% drop in semiconductors
–1.8% increase in software
–Alternative Energy in 2006 - $537.6 million in 41 companies; 190% increase from 2005

The biggest deals are listed in a table at bottom.

Meanwhile, data suggests that less money can sometimes be better, according to the number-crunchers at Bridgescale, a new Silicon Valley venture firm (see our story here). The firm used VentureOne statistics and other sources to track IPOs and mergers and acquistions. Companies funded by angels initially take in three rounds of venture capital, on average, instead of four, they found. This suggests these angel-backed companies are more efficient. Indeed, these angel-backed companies ended up taking $15 million less money from investors than other companies did before their exits — or $50 million, versus $65 million. Finally, these companies accounted for $700 million in total investments, but led to $10 billion in exit value, a 15-fold return, Bridgescale found. That compares to $2 billion invested, and a $13 billion exit value for other companies, or a 6-fold return.