VCs from The Pacific Northwest make some predictions...fyi...
Venture Capital: Experts are cautiously optimistic about 2003
By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER
Friday, January 10, 2003
It is time to dust off the crystal ball and take a deep, long gaze into the future.
I asked six Seattle area venture capitalists to spend some time contemplating the year ahead and trends that might take shape.
Battered by heavy losses from the dot-com era, most VCs want to forget the past two years.
But they are also cautiously optimistic that this year will be better than last.
After all, things can't get much worse.
Or can they?
Here is what the six VCs had to say.
Kent Johnson, Alexander Hutton Venture Partners, Seattle
Favorite sector: Wi-Fi (802.11)
Comeback company of 2003: InfoSpace
Dying company of 2003: Terabeam
Nasdaq close on 12/31/03: 1,750
Number of IPOs in the state in 2003 (top candidate): Two (Classmates Online Inc.)
Will venture capital investments increase or decrease in the state in 2003: Slightly increase
Bold prediction: "Two more VC funds will leave the area, one way or the other. I think we will see what happened with Atlas Venture happen with other large VC funds that are headquartered elsewhere, but with a Seattle office."
New Year's resolution: "Stay optimistic!"
Bill McAleer, Voyager Capital, Seattle
Favorite sectors: WiFi/802.11; corporate instant messaging; security, fueled by large government expenditures; business process management (BPM) software.
Comeback company: Avenue A
Dying companies: Gateway; Onvia, Terabeam.
Nasdaq close: 1,522
Number of IPOs: Two
Increase or decrease in VC investments: Decrease
Bold predictions: IBM will buy Sun; Time-Warner will divest AOL; the housing market will burst in the second half of 2003 as interest rates rise.
New Year's resolution: "Help to defeat any Tim Eyman initiatives."
Other comments: "More private companies will fail during the year as liquidity options remain limited, but technology-buying growth will resume in second half of 2003, with overall 2 percent to 3 percent growth in 2003. Despite the tough economy, it is a great time to start a company."
Robert Nelsen, Arch Venture Partners, Seattle
Favorite sectors: Biotechnology platform technology. "Convergence" technologies that combine nanotechnology and biotech and advanced materials.
Comeback company: JDS Uniphase
Dying company: "Most of the dead ones are already dead."
Nasdaq close: 1,800
Number of IPOs (top candidate): Two (Xcyte Therapies Inc.)
Increase or decrease in VC investments: Flat or slightly down.
Bold predictions: "Fundamental innovations in advanced materials that will change the world as we know it in biotech and also in semiconductors and photovoltaics will begin to see success in the lab."
New Year's resolution: "Raise a new fund in 2003."
Other comments: "A war, a major terrorist attack in 2003, and we still will begin to turn the corner heading toward 2004."
Chad Waite, OVP Venture Partners, Kirkland
Favorite sector: Network data.
Comeback company: Loudeye Corp.
Dying company: Targeted Genetics
Nasdaq close: 1,800
Number of IPOs: None
Increase or decrease in VC investments: Increase
Bold prediction: "Microsoft, Oracle and Intel will pay cash dividends."
New Year's resolution: "Continue to be patient."
Andy Dale, Buerk Craig Victor, Seattle
Favorite sector: "Boring traditional businesses."
Comeback companies: Ivey Imaging, Safeco.
Dying company: InfoSpace
Nasdaq close: 1,700
Number of IPOs: Three
Increase or decrease in VC investments: Decrease
Bold prediction: "One or more Top 10 Northwest VCs will hang it up (or) quit in 2003."
New Year's resolution: "Import capital from around the country to invest in our region. Invest in five great companies and help state economic turnaround. Build the Made In Washington brand by building, growing, and retaining great companies and people in the state."
John Zagula, Ignition Partners, Bellevue
Favorite sectors: "Technologies that serve one of three sectors: the government -- or more-efficient guns, spies and lawyers. Telecoms -- or ice melters to help emerge from industry nuclear winter. And the enterprise -- or riot gear to deal with large, frustrated, and increasingly cost-conscious software customers."
Comeback company: "Any company that successfully comes out of drug rehab from the drug that their cool technology was a horizontal 'platform.' And (any company that) gets well on the way to the 12-step program of cutting costs sufficiently and focusing like a laser on addressing the risks, costs or frustrations facing a very specific market."
Dying company: "Every technology company whose 1990s hangover just hasn't worn off yet -- in other words, that continues to ignore their customers' complaints about hidden implementation costs and ease of use and deployment because what they provide is so 'strategic.' "
Nasdaq close: "Who knows? I think it will either be up or down."
Number of IPOs: Fewer than two.
Increase or decrease in VC investments: "It will likely stay the same with the conservatism of last year. (The) retrenching or retreat of some branch VCs will be offset by the continued inspiration and determination of this region's terrific technical entrepreneurs."
Bold predictions: "Happy customers. Imagine that. Maybe, just maybe, software companies will actually do a better job providing their technology as a real, usable, cost-effective service to their customers."
New Year's resolution: "To be both good and smart (and lucky, too). To help more local entrepreneurs survive and thrive in this environment and yet keep the bar very high for making investments."
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