The MoneyTree Report has issued its analysis of the vertical sectors into which venture capitalists put their investments in 2006, and while software still outpaces all other sectors, both biotechnology (with more than $4.5 billion) and medical devices and equipment (over $2.65 billion) registered significant increases. These two life-sciences industries combined were involved in 731 deals last year that totaled $7.2 billion, compared with $6.0 billion in 2005. Both biotech and medical devices hit record-high levels of investment last year, and life sciences accounted for 28 percent of all venture capital invested during 2006.

The industrial/energy sector also was an attractive area for venture capitalists, who invested 107 percent more dollars in 2006 than in the previous year. Alternative energy, a subset of this category, accounted for 40 percent of the funds invested in the industrial/energy arena.

Software investment totaled $4.97 billion, up from $4,815 billion in 2005. Losers among the industry verticals were financial services, computers and peripherals, healthcare services and retailing/distribution, each of which saw a decrease in investment capital during 2006.

"These trends are important because they suggest what will happen in these sectors months and years from now," observed Airfoil Account Supervisor Todd Krieger. "Investments are pouring into select verticals now because venture capitalists are looking for 'big buzz' surrounding companies in these sectors 12 to 18 months down the line. They will expect to see some substantive results to validate the buzz six to 12 months after that, after which the leaders in the vertical will separate from the pack of also-rans, who will likely scramble to gain some return on investment though mergers or intellectual-property sell-offs. Then an influx of second movers enters the arena to capitalize on the segment that was proved out in the first wave."

In all last year, according to MoneyTree, venture capitalists invested $25.5 billion in 3,416 deals, 10 percent more transactions and 12 percent more dollars than in 2005. That made investment during 2006 the highest since 2001. Financial data for the MoneyTree Report is provided by Thomson Financial.

From magazines like B2B and Ladies Home Journal to Teen and Appaloosa News, specialty magazines have always appealed to well-defined verticals. Today's niche economy, however, is built on clusters of verticals and verticals within verticals, a fact acknowledged in the unusual marketing strategy employed by TechTarget publications.

TechTarget magazines and Web sites all are aimed at the IT professional-but not just any IT guy or gal. The company publishes specialized Web sites for IT professionals in each of nearly 30 separate subspecialties. All the sites are built on a search.com brand name, and the individual news-oriented sites carry names like SearchMobileComputing.com, SearchOracle.com, SearchStorage.com and SearchVoIP.com. In addition to the sites, TechTarget publishes three magazines with similarly narrow interests: CIO Decisions, Information Security and Storage.

TechTarget calls its strategy straightforward, declaring, "We believe there is not a single IT market, but many IT markets. We have created technology-specific media to serve the information needs of enterprise IT professionals-and marketing goals of technology companies-in.individual technology markets by treating each as a complete entity, not a segment or niche of something else.

Each Web site offers news stories on its topic and additional stories on subtopics within its vertical, along with tips, "Ask the Expert" items, whitepapers, a webcast directory, downloads and many other features, all aimed at the reader on the specialized site.

"Certainly, TechTarget has the right idea for today's marketplace," said Airfoil Vice President Eric Kushner. "If you intend to sell to vertical markets, you must speak not only their language but also the particular dialect of the buyers toward whom your product is targeted. We may soon need to replace the term 'vertical' with something like 'diagonals' or 'struts' to indicate the sub-units from which the larger vertical is constructed. Media like TechTarget are playing out Zeno's Dichotomy that suggests we can continue to subdivide distances-or, in this case, audiences-by an infinite number of smaller segments and never reach our destination. But the challenge for public relations professionals is to define and reach out to these segments to help ensure that, at the least, we are communicating in the right direction."