The top 10 VC stories of 2009

LPs tightened up, secondary markets took off, Uncle Sam stepped in, and the Midas List bowed out

Here, by my reckoning, is what happened in the VC world in 2009.

LPs directed their dwindling risky investment allocations to safe megafirms (and a few star entrepreneurs). Big companies didn’t IPO, so private stock exchanges stepped in to slake the thirst for liquidity. Uncle Sam picked up the cleantech tab. Bill Gurley’s in; the Midas List is out. The few tech IPOs did really well, which means 2010 will be happier. Did I miss anything?

1. Andreessen gets $300 million to continue building the Internet (and enlists Ronny Conway to help).
The Netscape founder (ie, the dude who made the Web browsable) is putting money to work on more deep-dive infrastructure plays.

2. LPs get conservative, poor, and stingy.
Endowments, pension funds and other LPs lost 20-40% of their value. On top of that, they reshuffled their strategy, turning away from risky alternative investments. That all means that less money will be flowing to VC firms in the next few years, and the VC deadpool will slowly grow.

3. Bill Gurley flexes his brain muscle.
Bill gave the best analysis of what the hell is happening to the VC industry, putting to rest both hopeless optimists and doomsayers. If it’s not the most linked-to VC post this year, it should be.

4. Norwest pulls in $1.2 billion.
The biggest VC fund raised this year, NVP XI, will go to companies in an array of sectors and stages. The firm owns a little over two per cent of India’s prime bourse National Stock Exchange, which positions it well to take advantage of emerging markets.

5. Midas List closes shop.
After one last year of picking what it considered the top dealmakers in the global Silicon Valley, Forbes discontinued its Midas List. Two days later, AlwaysOn published its own list, the VC 100 (OK, I did the research for that bad boy with some help from Jessica Chung and Wes Walker, so maybe I’m biased ;).

6. The rise of the secondary markets.
IPO window closed? Regulation got you down? Corporate buyers too stingy? No worries, we’ll sell our private shares on private exchanges. SecondMarket, XChange, and SharesPost led the charge to organize the burgeoning secondary market into bona fide exchanges.

7. Vinod closes 2 funds in the same year.
Positioning himself as the green VC to beat, Vinod Khosla raised a total of $1.1 billion to build out his cleantech portfolio. He started investing his own money in the risky sector several years ago, launching the cleantech investing wave in Silicon Valley. He’s now armed to make his version of a cleaner energy economy come to pass.

8. Uncle Sam’s your late-stage green VC.
The Year’s top IPO, A123 took government money. So did two other VC-backe cleantech company’s: Tesla got $450 million and Solyndra took in $535 million from Uncle Sam before filing for a $300 million IPO just last week. Cleantech is both the fastest-growing venture-backed sector and much more capital intensive than any other. It also is much harder to commercialize. The government showed its willingness to bridge the gap between VC and IPO for the most promising cleantech startups.

9. Facebook doesn’t IPO.
...but it did take in a whopping $200 million from Russian firm DST, in part to buy back stock from shareholders eager to cash in. (in fact, maybe DST’s forays into venture-backed companies including Zynga and Skype could be #11 on this list).

10. A123 Kills it (and other IPOs give hope for the new year).
On the whole, the venture-backed IPOs of 2009, all 7 of them, did very well. Solarwinds, OpenTable, Rosetta Stone, LogMeIn, Ancestry.com and Medidata Solutions demonstrated that the public markets are hungry for technology. It’s not hard to predict an increase in IPOs in 2010, and several VCs expects upwards of 50.