• TechCrunch, Monday, February 23, 2009 11 AM

If you want to cover startups well, it's not good enough to simply follow the money, writes TechCrunch stand-in Sarah Lacy. You have to be able to distinguish between the "pioneer money" and the "lemming money." Here's the difference: "By the time the lemming money is investing, the story has been told, and the pioneers have already picked their bets," she says.

Right now, it seems, the "pioneer money" has shifted away from Silicon Valley and towards emerging markets like China, India and Israel. More money is still being invested in the U.S., but this is "lemming money," Lacy says. The pioneers, meanwhile, are "doubling down on emerging markets," but they are shifting away from Web and technology startups, because these are increasingly "home-run businesses."

Interestingly, Lacy says, the trend toward overseas VC investment is occurring at the same time Silicon Valley seems to be coming down "with a disturbing case of xenophobia." In other words, Silicon Valley workers are becoming scared of losing their jobs to foreigners. "I know losing a job is scary, but a lot of the value of Silicon Valley has been built by people from other countries," Lacy says. "Put another way: You had your job (and stock options) at companies like Google and PayPal because of foreign-born founders who came to the Valley and were able to thrive."

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