Venture capitalists fight Filthy Lucre

— High-Tech companies in Sonoma County’s Telecom Valley find venture capitalists want a bigger piece of the action now that the economy’s in the dumper. This article explains the moral clarity of investors (Signs of life return) But the decline in valuations is not necessarily bad, said Winston Fu, general partner at U.S. Venture Partners, … Continue reading “Venture capitalists fight Filthy Lucre”

— High-Tech companies in Sonoma County’s Telecom Valley find venture capitalists want a bigger piece of the action now that the economy’s in the dumper. This article explains the moral clarity of investors (Signs of life return)

But the decline in valuations is not necessarily bad, said Winston Fu, general partner at U.S. Venture Partners, a Menlo Park venture capital firm. Investors want to fund companies that are focused on building a real business, not just becoming rich.

What we have here is the beginnings of an explanation for the Dot Com Swindle, in which VC firms and Investment Bankers took the public for a ride. “It’s good that we fleeced you,” they’re saying, “because you should be more concerned about your soul than your bank account.”

Isn’t it good that they’re looking out for us?

3 thoughts on “Venture capitalists fight Filthy Lucre”

  1. Who got fleeced? I know plenty of people who had millions on paper, but never capitalized on it. Plenty of people–none I know, but you hear about them–went into hock with their paper worth as collatoral, only to find that they couldn’t pay the piper when their stocks tanked. But is that the fault of VCs or the founder of a startup?

    I know plenty of other people who, instead of borrowing against paper assets, bought a house they could afford, a nice car or two, and then invested the rest. They had maybe $3 mil at one time on paper, payed half to the government, and lost half of the rest in the downturn. Net result is that they have more assets now than they had in 1995.

  2. In the Valley, there were more winners than losers in the Dot Com Sindle (or Boom, as it looked from here.) In the Outside World, it was a different story. I call it a swindle because unsophisticated investors were lured into the stock market with promises of vast riches from the sale of dog food on the web, oftentimes from brokerage houses running IPO marts on the side. Billions of naive investor dollars went into the market, and billions were taken out on Wall Street and in Silicon Valley. At the end of the day, it was a massive wealth transfer from middle- and working-class Americans to investment bankers, VCs, and high-tech figureheads.

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