2009 started out as a hard year for entrepreneurs. Consumer spending, venture capital funding, and bank loans were all down due to the global recession, making it harder for small businesses to grow.  Yet as the economy has recovered, positive signs have emerged for the startup world.  Venture capital is bouncing back and holiday spending seems to be recovering.

What can entrepreneurs and small businesses expect to see in 2010?  The last twelve months have been an economic roller coaster, but startups can look forward to a brighter 365 days ahead.  Here are some trends you’ll likely see emerge in 2010:

1. There will more IPOs in 2010: In terms of exits, the initial public offering is often the granddaddy of them all.  It is what turns a few innovative entrepreneurs into millionaires and billionaires.  With the market recovering, you can expect more of them to occur this year, including several high profile ones.  The big IPO highlight this year could be none other than Facebook.
2. Venture capital will continue to flow: As I said before, venture capital is recovering, but it’s nowhere near its previous peaks.  $4.8 billion was invested in startups in Q3 2009, up from $3.32 billion in Q1, but still well shy of the $7.16 billion in Q3 2008.  Several VC firms are already predicting that 2010 will be a buyer’s market, and unless we have another economic collapse, I tend to agree with that assertion.
3. More social media starts will find ways to be profitable:  Profitability in social media and the web has always been a problem.  In the last few months though, companies such as Twitter, Facebook, and Zynga have found ways to become profitable.  This is a good sign for the rest of the industry: the online ad market is recovering and social media companies are finding innovative ways to earn revenue.
4. Industries to watch: Biotech, Clean Tech, Energy, Media/Entertainment: These four industries were some of the most-funded and rapidly-growing industries this year.  Biotech raised $905 million in venture capital last quarter, while clean tech grew by 89% from Q2 to Q3 2009 alone.
5. More economic turmoil: While I’ve painted an overall rosy picture for 2010 (especially compared to the economic abyss of 2009), entrepreneurs are not out of the woods yet.  While the stock market has made a comeback in 2009, banks are still closing and the U.S. federal deficit is still rising.  

While the recovery should still continue into 2010, there are likely going to be more bumps in the road.  Entrepreneurs need to continue to be vigilant, find innovative ways to sustain positive cash flow, and create long-lasting companies.

Bubble chart of nations sized according to new business density.
Source: 2008 World Bank Group Entrepreneurship Survey.

[openforum]

"Business" Other Trends in this category

(PDF) Future Economics Models Of Online News	2010/03/19
Social Media Monitoring & Engagement - Radian6	2010/03/19
Expert Fashion Forecasts For The Masses	2010/03/18
IBM Makes A Major Move Into The Cloud	2010/03/18
(Video) Augmented Reality Scavenger Hunt	2010/03/17
How To Develop New Startup Ideas	2010/03/17
7 Startups Building Green Car Tech for a Pre-Electric World	2010/03/16
How Toyota’s Prius Troubles Will Shape the Green Car Market	2010/03/16
Mobile Commerce Growing Rapidly This Year	2010/03/15
Marketers Buzz About ROI	2010/03/15

With the economy rebounding, is there any surprise that the world of social media might be primed to take a run on the stock markets? While a 140 banks were forced to close in '09, 140 characters became the digerati's new mantra. 

Where were you when Google and Apple went public? Sitting on the sidelines? Might be time to keep your ear to ground and listen to the growing digital drumbeats signifying that IPOs could be right around the bend.


Here is The list of Top Social Media IPO Contenders for 2010 or 2011. Please take our POLL at the end of this blog and let us know your favorite(s).

No.1- Facebook

Most imminent to tread the IPO waters is Facebook. The mega-social networking site that reached another milestone with 350 million users last month has also eclipsed its former rival network in ad revenues. According to a eMarketer report, it will surpass MySpace in ad revenues in 2010 when brands are expected to spend $605 million on Facebook versus $385 million on MySpace.

But more important than ad spend is Facebook's recent 'dual-class' stock structure that is making sure that the founders retain control of the company. With Class A and Class B shares, it appears that Mark Zuckerberg is protecting himself and his inner circle from the yielding the floor to outsiders if and when the company goes public. Google (GOOG) structured a similar deal for themselves prior to be listed on the NASDAQ.

A Wall Street Journal report says that, according to its sources, all current shareholders would be converted to Class B shares, which carry 10 times the voting rights of Class A shares. Based on this re-org taking place in late November, the company may be waiting till  Q1 of the New Year to issue an IPO. Having raised $600 million in capital from investors over the past five years, with the most recent coming from Russian investor Digital Sky Technologies for $200 million, "there are plenty of stakeholders among the gawkers," notes Tom Johansmeyer in a BloggingStocks.com report.

No.2- Twitter

Twitter, the 140-character wunderkind has rallied from the depth of criticism that it didn't know how to monetize one red cent to striking a lucrative deal with Google and Bing with just two strokes of the pen. Citing anonymous sources, Business Week reported the company received $25 million from syndication deals with Google and Microsoft that allow those companies to post tweets in real-time on their search results.

Coupled with raising a whopping $250 million at a $1 billion valuation and striking a deal with Mixer Labs and its GeoAPI service to develop location-based applications - can an IPO be far behind? While Twitter is a very methodical and financial savvy company, my thought is they  will continue to ramp up their geolocation technologies in 2010  - and hold out for an IPO roll-out until 2011.

No.3- LinkedIn

In a recent Reuters report one of the largest business-related social networks is mulling over the idea of an IPO. LinkedIn, with 53 million members worldwide is seen as a strong IPO contender and a Reuters poll found it one of the Silicon Valley's most eligible to go public.

Valued at $1 billion, the firm backed by Goldman Sachs, McGraw Hill, SAP Ventures and Bessemer Venture Partners raised $76 million in its last funding in 2008. While BloggingStock.com affirms that an IPO is part of co-founder Reid Hoffman's exit strategy, Hoffman sees an IPO as inevitable but is also not tying himself to a specific date. "Probably at some point a balance will occur when that's the right thing. (But) that will not occur in the near term," Hoffman said at a London event to celebrate the network's reaching 3 million users.

No.4- Yelp

In my previous blog, "Will Google Purchase Yelp To Create Its Own Foursquare," I felt strongly that Google was coveting this acquisition to get a more solid foothold in the location-based service space - a nut it hasn't been able to crack (even with its own LBS Latitude). While such a marriage would have added to Google's stock price, now it appears that Yelp might be prime to go public on its own.

In order for Yelp's founders to walk away from a $500+ million deal with the social engine giant, this does seem to indicate that the shareholders of this local community Web powerhouse might be seeking an IPO opportunity, in advance of Foursquare gaining any more ground in geolocation technology - which, if that happens could undermine its chances.

No.5- Zynga

One of the more controversial IPO contenders is Zynga. On December 16, Russia's Digital Sky Technologies which has a stake in Facebook (see above), and other investors have bought $180 of securities in social game company Zynga according to Chief Executive Mark Pincus. Industry analysts have speculated that Zynga could raise $1 to $1.2 billion in an IPO. Zynga makes games played by members of Internet social networks like Facebook an MySpace, and profits by selling add-on tools and "virtual goods." In my blog, "Scamville? A New Online Game? Who's Up For The Challenge?" I followed up Techcrunch's Michael Arrington's harsh criticism of Zynga's "scam-laden lead gen-type offers."  This was followed up by a Time Magazine expose' in November titled, "Troubling Rise of Top Game Company."

But as we all know, controversy is good for a company that is looking to scale its membership base quickly. And as of September according to both Inside Facebook's AppData and Developers Analytics, Zyngas boasts 129 million active users across its portfolio of more than 30 games.

The list above are the most likely to go public if the economy continues to stabilize. Other social media companies which might tap the public markets include  YouTube,  Delicious,  Digg,  StumbleUpon, Flickr and Technorati.

[inventorspot]