Monday, September 15, 2003

The San Francisco Chronicle ran an article discussing how some failed dot-com CEOs are getting a second chance from VCs.

This isn't big news; anyone who has been through the startup process before knows just how much leaders learn from the experience, win or lose. In fact, even in 1999, failed entrepreneurs were more sought after than first-time entrepreneurs--a fact that I didn't appreciate the wisdom of at the time, being in the second category.

What's bigger news is the following:

"After declining four consecutive quarters, funding for startups in seed or early stages of development rose 44 percent, from $408 million in the first quarter of this year to $588 million in the second quarter, according to industry data."

VCs haven't been investing in seed-stage deals because they could invest in later-stage companies at a similar valuation. This increase in early-stage investing indicates that a) we have finally worked through the overhang of excessive company formation during the bubble, b) there are hot new technologies on the rise, c) VCs are again bullish on the future (which means that they believe their startups will be able to achieve liquidity events), or d) all of the above.

It's too early to call it a recovery, but things seem to be looking up.

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