Employees of established companies jumped ship to join the Internet gold rush, their fledgling firms funded by venture capitalists desperate to get a piece of the next big thing. And as those companies listed on the stock markets, financial institutions got in on the act, driving valuations and share prices through the roof. Then the tide turned, taking with it many investors, market analysts and the brash young things with their big dreams. In the markets, black humor has replaced boundless optimism, and the word dotcom has become first dotbomb and then dotgone. Out of the wreckage has emerged a vastly different landscape, where Old Economy companies, values and business fundamentals like real revenues and profits have reasserted themselves, and where risk and euphoria have been displaced by disillusionment, caution and blame.
Venture capitalists are at the heart of that change.
We want strong entrepreneurs, a rational business model, strong marketing possibilities and defendable technologies. While the VCs may not necessarily be investing less, the patterns of those investments have changed. When it comes to the firms still in their portfolios, VCs are demanding tighter cash management and better results. And when it's clear that one of their charges isn't likely to pull through, the backers are simply pulling the plug. Time Inc. All rights reserved.