As small-business owners continue to worry about oil and gas costs, venture capitalists are expected to boost investments in the energy sector in the coming year, according to the National Venture Capital Association.

In a recent survey of more than 200 venture capitalist firms across the country, 91 percent said they expected to see increased investments in energy in 2007, the New York-based trade group said.

By contrast, just 23 percent said they expected increases in software investment, and as few as 9 percent in semiconductors, the survey found.

Overall, respondents said they expected higher investments across the board in the year ahead, with a third foreseeing total investment levels between $30 billion and $39 billion, compared to an average total investment level among all respondents of $27.6 billion, the group said.

"Alternatives will drive venture capitalists in 2007," Mark Heesen, the group's president, said in statement. "This industry has built itself on finding alternative approaches to existing infrastructure issues," he said, citing sectors like energy, the Internet, and media.

Last year, President Bush made alternative energy a cornerstone of his State of the Union address, offering grants and tax incentives to boost research and development.
That should come as good news for small-business owners, of which more than 80 percent use vehicles in their daily operations, according to the National Federation of Independent Business, a Washington-based lobby. In addition, up to 90 percent of small-business owners pay directly for heating and cooling bills, while another 80 percent have outdoor lighting for safety and security, the group said.

Smaller businesses also tend to have higher production costs and tighter profit margins, making them less able to absorb or pass along rising energy costs, according to a report released this summer by Democrats on the House Small Business Committee.