Investors have been trying to guess how the Goldman Sachs (GS) business model will morph, especially as the firm moves away from proprietary trading. Interestingly enough, it looks like a part of the new strategy will be a focus on venture capital deals. Of course, the standout transaction was the investment in Facebook.

But there is another interesting one, which was announced Wednesday: a $70 million minority stake in AppSense.

Fewer business start-ups are being launched, reports the the Wall Street Journal. The Labor Department said that the number of companies with at least one employee fell by 100,000, or 2%, in the year ended March 31. That was the second worst performance in 18 years -- the worst one was a drop of 3.4% the previous year.

Why are these numbers important? In past recessions small business start-ups were the key to spurring the economy. In the three quarters that ended in March, newly formed companies created only 2.6 million jobs, 15% fewer than in the first three quarters of the last recovery.

The tree-hugging sector has found its way back into the spotlight. A new report from the Cleantech Group, in conjunction with Deloitte & Touche, pegs venture capital in the cleantech sector up 29% from the fourth quarter of 2009 to the first quarter of this year -- and up 83% year over year. In fact, VC action in cleantech set a new record for the number of deals closed (the previous best, 165, was set in the prior quarter). A total of $1.9 billion was invested last quarter in 180 cleantech companies.

According to Sheeraz Haji, president of the Cleantech Group, "The first quarter's bounce back in terms of venture capital investment compared to 2009's early lows bodes well for what we think is in store for the remainder of the year." Haji continues, "North America was particularly dominant this quarter."

The federal government needs cash, and we all know it has to come from somewhere. As no politician has ever been criticized (at least not broadly) for going after the folks with the deepest pockets, private equity industry needs to dig in for what could become a fierce battle over new taxes.

The issue isn't new. For a while now, the feds have been kicking around new taxes on private equity firms based on how profits are classified. Yet, this search for cash could have unintended consequences, as the definitions used could wind up taxing venture capital funds and small partnerships, which could be the keys to an economic recovery. Critics argue that the tax may not bring in as much money as the government hopes.

Venture capital funds aren't being terribly adventurous. In the U.S., they invested less capital in start-ups, a sign that uncertainty persists. Also, they're spreading the wealth: More companies are getting a taste, but in smaller doses. This tendency suggests that VC investors are diversifying as a way to test the waters for promising companies.

The situation is pretty straightforward: A difficult economy means that (a) start-ups will have trouble finding customers and (b) exit strategies for investors will be more difficult to attain and probably less lucrative. So, the risks of failure are higher, and the rewards are lower. As a result, VC investors need to be more cautious as they enter positions. Add to this the general financial market malaise we've experienced for the past year and a half -- longer if you trace the origins of the financial crisis to February 2007, with the agita at New Century Mortgage -- and now doesn't exactly seem like the time to place a handful of big, concentrated bets.

The Twitter-verse continues to get interesting. I've always felt that the returns are to be found around Twitter rather than with Twitter itself, and the venture capital community seems to be acting from the same position. Twitter interaction platform HootSuite just announced a new round of venture capital funding, with $1.9 million in fresh money coming in the door to support its growth efforts.

HootSuite, which was started by Invoke Media in November 2008, has evolved into a brand monitoring, file-sharing and social media integration utility. Only a year later, it has attracted more than 300,000 users, from Time (TWX) to Martha Stewart to the White House to Aol (AOL).BloggingStocks is among the Aol blogs using HootSuite.

Over 10,000 leaders in technology, business, and finance recently gathered at Columbia University in Manhattan to analyze emerging trends at the second New York Entrepreneurs Week. The conference featured such companies as SecondMarket, FirstMark, Capital Behind the Burner, Behance, Nolcha, TheLadders.com, Bonobos, 1-800 Flowers, Meetup.com, Thrillist and NYC SBS.

The conference's founder is Gary Whitehill, a 26-year-old entrepreneur who strives to educate entrepreneurs worldwide. Whitehill graduated in June 2007 from Central Connecticut State University with a triple-degree in management, marketing and entrepreneurship. Having been to New York City just once in his life, he relocated to the Manhattan without knowing anybody. Whitehill said, "I knew for sure that one way or another, my decision to move to New York would be an adventure I would not regret," and it definitely paid off, not only for him, but also the thousands of people who attended New York Entrepreneur Week.

If your job last year was to raise private equity capital, you couldn't have been all that happy. Capital raising hit its lowest level since 2003, according to Dow Jones LP Source by way of VentureBeat, falling to $95.8 billion for 331 funds. In 2008, $300 billion had been raised across 508 funds, translating to a 68% year-over-year decline. Nobody was spared the struggle to raise funds, except secondary funds, which reported a 50% surge in fund raising.

The buyout fund, among the largest sectors in the private equity business, saw the capital raised fall 72.5%, from $195.5 billion in 2008 to a mere $53.7 billion in 2009. The largest buyout funds suffered most: only six funds with more than $6 billion under management raised an aggregate $14 billion. The year before, it took only 12 funds of this size to pull in a combined $75.2 billion in fresh capital.

The clean technology sector was a lone glimmer of hope for the venture capital business through the financial crisis and ensuing recession. Quarterly updates gave positive news despite the destruction of capital elsewhere in the global financial markets. Now that the results are in for 2009, however, the outcome isn't as positive as many expected.

According to data from market research firm Cleantech Group and accounting and consulting firm Deloitte, venture capital funding fell 33% last year, but still held up better than the market as a whole.

This post is part of a special report, Top Picks for 2010, the 27th annual survey in which TheStockAdvisors.com asks the nation's leading advisors for their single favorite stock for the new year. See all 80 stocks listed here.

"EZchip Semiconductor (EZCH), a fabless semiconductor company that specializes in network processors, is my top pick for the coming year," says technology sector guru Paul McWilliams.

In his Next Inning newsletter, designed for sophisticated tech investors, he suggests, "I think the upside potential here in 2010 and beyond is significant.

The U.S. Department of Energy is becoming a major venture capital player. The government agency is shooting to dish out -- through loans and grants -- more than $40 billion to companies in the clean technology space. The DOE is looking to fund a wide range of businesses in this space from solar panels to electric cars. In the first three quarters of this year, the department pushed out $13 billion under this model, far ahead of the $2.68 billion that venture capital funds pumped into the sector.

So far, more than 40 companies involved in the auto industry have pursued DOE cash. They have their collective eye on the $25 billion in federal low interest loans that have been allocated to the sector.

The private equity market was hit hard by the financial crisis last year, but it's already on the road to recovery, according to a new report by Preqin (pdf).

From the first quarter to the second, this year, increasing returns and valuations have given investors a reason to hope, even though the industry's average return is down 24.1% for the 12-month period ending June 30, 2009. The negative return still outpaced the S&P 500, MSCI Europe and MSCI Emerging Markets indexes, the alternative investment research firm says, which returned -26.2%, -34.1% and -27.8%, respectively -- and the 12-month average improved from -30% for the year-long period ending March 31, 2009.

Sunny skies are here for Ausra, the solar thermal company backed by Kleiner Perkins and Khosla Ventures. The company is looking for a buyer, and it's already talking to three, according to a report by Reuters. Everything is up for grabs, from a majority stake in the company to 100% of it, and the back-and-forth going on is at a "very aggressive level."

The businesses looking to pick up Ausra are said to be global power generation conglomerates but haven't been named yet. So, the clean energy company would be a way for one of them to diversify.

KaChing! KaChing!

It only makes sense to call a company a sound you like to hear. This is exactly what CEO and co-founder Andy Rachleff must have had in mind. His new company -- kaChing, of course -- is backed by Marc Andreesen (a name often associated with that sound) and Jeff Jordan, the CEO of OpenTable (NASDAQ: OPEN), two guys who usually do a solid job of backing winners. But, they've taken on a challenge by backing a company in the financial services industry.

The amount of investable assets available to venture capital funds has basically been a growth story since 2003. Dry powder slipped 7% in 2004 and 10% in 2008, but increased in every other year over this period.

Now, the dry powder number sits at $155 billion, according to alternative investment research firm Preqin, just off its December 2007 peak of $160 billion. The big number, however, masks a wide range of market situations for venture capital funds. Dry powder levels vary by strategy and region. To get a sense of what's going on behind the scenes, check out the five facts below about venture capital dry powder.