The latest Economist was pretty skeptical about the VC industry. According to the article the downfall is not quite over for VCs. The whole industry should still shring into a half. Also the latest IRR reveal cases are not that important or significant. 'Even some of the rocket scientists have difficulties of comprehending the basis for the figures'... Well, I could not agree more. Until the exit has been done everything is just pure speculation. VCs have a plenty of different reasons to back their current portfolio valuations whether in their top or bottom range of the valuation scale.
Recently I visited a publicly listed company that had its IPO on the boom times. The stock price has had only one direction even since - down. They listed around 3€ and the current going rate is only 0.20€. The only way is up? Well, the atmosphere in the company was pretty forward-looking. Lots of management issues behind but the product is solid and a favourite of clients. The oldtimers of the ten years old tech company had a common understanding about the founders and their high flying ideas: passé. Time for real business and forget all the great ideas. Only deeds, please. Also the clear message from the senior management was that they are going to forget the quartal capitalism and concentrate on the business. 'Cook the books' times are over and only the real doers are left behind. Well, that was the message for the VC industry as well. Value added, please: put your hard paid MBAs for the dirty operational work...
Well, tough times but never mind. One should enjoy life still. It's been a hard day's night...
Posted at July 8, 2003 08:17 PM