Funding for US start-up companies skyrocketed 57 per cent in the first quarter of this year to a level not seen since 2001, as venture capitalists poured capital into innovation incubators.
Figures released at the weekend showed that start-up investments totalled $US9.47 billion ($10.13 billion) in the three months, up from $US6.01 billion in the first quarter of 2013. It was the highest since the second quarter of 2001, when investments reached $US11.5 billion.
Ironically these figures were released against the backdrop of a bit of a slump this month in the prices of larger-listed technology stocks traded on the Nasdaq exchange as investors worry whether shares in the likes of Facebook and Google are getting a little toppy in the short term.
There is no doubt that some companies such as Facebook are trading on multiples that are uncomfortably high for many investors and the prices being paid for some companies with killer apps or yet-to-be-proven cloud-based software are heady, but the crazy days of the dotcom boom are not necessarily being replicated.
At the start of last decade any stock with a dot in its name was attracting irrational and speculative money given most didn't have a chance of success. But the current climate is about picking winners (and really big ones) from the pack.
At a recent Goldman Sachs technology conference in San Francisco this year experts said the number of start-ups in the technology space that would ultimately succeed had risen to closer to 20 per cent where 10 years ago that number would have been less than 5 per cent.
Picking the winner is still something of a crap shoot but today the odds of making money are far better.
So where is Australia sitting on the venture capital front?
The answer is that for the most part we continue to operate in the old school. The Coalition government that plans to resurrect knights and dames in the honours system is not particularly focused on the new economy.
The demise of many parts of the traditional manufacturing sector has been well documented. While its death has been called prematurely, the government rightly has been reluctant to support mature players that are structurally challenged. Car making, oil refining and many of the food manufacturing companies have shown that Australia does not have the appropriate settings in which to make a decent return, relative to many other parts of the world.
The flip side of this debate is whether the government has a responsibility to nurture new innovative industries. The policy settings have not demonstrated any real push to create incentives to do so.
While economists talk about recovery in construction, property and infrastructure filling the immediate gap left by the fall in capital investment in mining, this is the fairly short-term vision.
There appears to be far too little thought to longer term solutions.
The talk of beefing up our agricultural industries to capture the growing middle-class Asian market is laudable but it has focused on trade agreements.
(There are universities in Australia making great inroads into innovating agriculture and plenty of offshore venture capital looking to fund it. But this doesn't seem to have been embraced by legislators or received serious funding by local superannuation investors.)
We will probably never be a Silicon Valley as our policy settings are not especially conducive to encouraging aspiring entrepreneurs to create new product or services or foster them to a marketable level.
In Australia the venture capital sector is not starved but neither is it properly supported.
The two people operating out of their garage that need a couple of hundred thousand dollars to develop an app can find the money. However, getting another couple of million to commercialise it is tricky here.
Westpac and Telstra are two companies that have recently made capital (and noise) about putting aside some funds for venture capital. The Future Fund and some industry funds have also allocated some capital to small innovative enterprises. But most of the established retail funds don't do much in this space.
And this is why we hear of so much talent that is pregnant with possibility moving to the west coast of the US.
The reality is that of the $1.8trillion in Australian superannuation less than $18 billion is invested in private equity and venture capital and only half is invested in Australia and the minority is in venture capital.
The Australian Private Equity and Venture Capital Association (AVCAL) says that the biggest supporters of venture capital are high-net-worth individuals.
These are the wealthy individuals that would typically take a punt on a potential big win at the risk of losing all their investment.
The current structure of the superannuation industry (particularly large retail funds) is not conducive to smaller investments in venture capital or private equity.
AVCAL is lobbying the Murray financial system inquiry to consider a ''liquidity backstop'' to tempt superannuation funds to invest in start-up businesses.
Inquiry chairman David Murray noted last month that the state of venture capital would be closely examined by the inquiry.
He said he did not know why institutions were not supporting venture capital but for a country such as Australia reliant on intellectual property development for its future, given its high cost base and wage structure, ''you have got to do more''.
''We are really looking forward to seeing where those impediments are.''