Making Money in Technology
After the Bubble, page 9
What Has Changed? The Emerging Landscape..., continued
The emerging technology landscape is not monolithic. Some areas may even be countercyclical,
and do well in down times. So specific companies and business areas need to be evaluated for where they
fit in the landscape (see A Taxonomy of Technology Businesses later in this article).
At this point, most observers understand that technology businesses are made up of
(sometimes overlapping) waves. As in the past, most players in any given wave will not survive.
Technology and Venture Capital Post the Bubble
For the time being, the public markets are essentially closed to start-ups. Although venture
capitalists still have plenty of money, this means that new investments are not a slam-dunk any more.
There is no good exit strategy. (In retrospect, going public was such a good exit strategy that many
start-ups that were not ready to function as public companies took this route.) In other words, the
IPO as part of the business plan is dead.
The implication is that venture funds have cut way back. Either they have to give more than
lip service to long-term thinking, or they have to plan to fund companies that will be bought out, or
their companies have to have reasonable plans to reach profitability without an external liquidity event.
The current state of venture capital is discussed in Funding and the New Order later in this article.
For information on obtaining funding in this challenging environment, see the barticle
How to Get Venture Funding.
In addition, venture capitalists are now faced with honestly re-evaluating their portfolios. Likely,
they have funded more ventures that can survive in today’s environment. Some must be pruned. Others must
be consolidated and rationalized. For more about this topic, see
The Opportunities Today later in this article.
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