To: maceng2 who wrote (78514 ) 3/11/2001 3:23:56 PM From: Zeev Hed Read Replies (4) | Respond to I think we are all whistling past the wrong graveyard on the dot.com fiasco. Don't blame the big investment houses (at least not too much), that big money heaven was created actually by the Clinton administration, and they truly did not mean it. The instituted a special "super capital gain" (in 1993, if memory serves, 50% of "normal LT Cap gains if invested for five years in a company having less than $50 M assets) , which had as a major result having "very big money" looking at how to take advantage of that (just as the special tax treatment of real estate, prior to Reagan changing the "at risk rule" created a bubble in real estate and the resulting S&L fiasco). There simply was too much money going into VC's coffers and not enough good start up ideas to go around, so they started to fund the next lower tier as well. After few years (in the hope of cashing after five years), the VC's started to get these immature outfits public, so much of it that the market choked (the new "investors", were of course investing in companies with more than $50 MM in assets and thus no special tax treatment). The investment houses were only the instrument of "special" taxation, the government instituted. It helped that those VC acted like a herd as well, there was a time in 1996/2000 time frame that you could barely approach a VC if you did not have dot.com in your venture's name.
