Making Money in Technology
After the Bubble, page 15
Funding and the New Order, continued
For example, Flatiron Partners recently closed its offices and moved in with backer J.P.Morgan Chase--
to save rent money. (This is a move a little analogous to a grown child losing his job and moving back in
with his parents.)
Certainly, the glamour and glow is off the VCs that financed and promoted content sites. The bulk of
the attention at these firms is now taken with triage, closing down the fatally ill businesses and
propping up that which still might have a chance. Quite possibly, we’ll see more fund closings,
particularly as the extent of investment losses becomes clear to limited partners.
Firms like Bay Partners, which essentially eschewed the dot-com phenomenon, are in better shape to
consider new investments today.
The best advice to entrepreneurs is to be careful, and, in the words of John Doerr, partner in Kleiner
Perkins Caufield & Byers, “get a lot of cash, conserve cash, forge strategic alliances, and strengthen
your team. Be conservative in your plans.”
A Taxonomy of Technology Businesses
Standard stock screening tools easily categorize technology businesses. For example, Microsoft’s
MoneyCentral Investor recognizes about thirty categories falling under five high-level categories.
(The high-level categories are Computer Hardware, Computer Software, Electronics, Internet, and
Telecommunications.) Figure 2 shows the companies that fall into the Internet Software and Services
category ranked by market capitalization.
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