Venture capitalists still see a lot that interests them, but it's mostly not in glamorous, sexy industries like the Internet.
Speaking at a breakfast panel discussion at FORTUNE's Brainstorm conference Friday morning, several prominent VCs talked about the industries and regions where they are focusing most of their attention.
Gary Rieschel, the founder of Qiming Venture Capital Partners, a firm focusing on early-stage companies in China, said that medical technology firms and energy start-ups in China are two areas that excite him the most.
Other VCs also raved about the prospects in China.
Kevin Fong, managing director of the Mayfield Fund, said that one of his most promising investments is in a company called Sports GG, which has developed a service that allows Chinese consumers to legally bet on sports using their cell phones.
Fong said that Sports GG is up and running for the current FIFA World Cup and has been a big success so far.
Still, one VC said that while the Chinese market obviously is very lucrative, India might actually be a better market to bet on right now.
"I am more interested in India than China," said Aneel Bhusri of Greylock Partners. "People are so focused on China and I am surprised that they are not paying as much attention to India."
Bhusri said the fact that India already has a strong, vibrant technology sector is one reason his firm is investing more heavily there. He added that it's more likely that Indian consumers will act more like consumers in the U.S. and Western Europe, which means that it should be easier for U.S. VC firms to identify businesses that will be successful there.
Wowed by wireless
One thing that the VCs and other industry experts on the panel could agree on was that broadband wireless companies, as opposed to PC-focused Internet firms, seem to hold the most promise for investors.
"The phone is now the center of innovation," said Mark Anderson, president of Strategic News Service, an Internet newsletter focusing on technology trends.
Kamran Elahian, chairman of Global Catalyst Partners, said that the semiconductor sector is still booming, as long as you're looking at companies exposed to wireless.
"We feel very comfortable investing in basic technology like chips," he said, adding that one of his firm's most intriguing investments is in a company called Beceem Communications, which develops wireless chipsets that can be used in phones and other mobile devices.
Mary Meeker, the influential Internet and software analyst from Morgan Stanley, added that she expects more companies to focus on mobile commerce, citing the fact that most consumers appear to be willing to pay to download games and ring tones on their phones, even though they would probably not pay for similar services on their computers.
The potential for mobile advertising is also attracting attention. Mayfield's Fong said his firm has invested in a start-up called Black Arrow that is experimenting with what types of ads will work on cell phones as well as other forms of media technology, such as digital video recorders.
Still, the PC-based Internet is not dead. Greylock's Bhusri said that one admittedly mundane way his firm is looking to cash in on the popularity of consumer Web sites is through data storage companies since they are a natural beneficiary of the explosive growth of sites that allow people to host and share media files.
But none of the VCs present talked about trying to find (or fund) the next Google. So it seems that the "smart money" is focused more on innovation, rather than duplication.