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To: Lizzie Tudor who wrote (15853)	1/21/2003 6:35:22 PM
From: Bill Harmond	Respond to of 57684

Message 18471950

To: Lizzie Tudor who wrote (15853)	1/21/2003 6:59:43 PM
From: Bill Harmond	Read Replies (1) \| Respond to of 57684

marketwatch.com

To: Lizzie Tudor who wrote (15853)	1/21/2003 11:56:12 PM
From: Bill Harmond	Respond to of 57684

news.com.com

To: Lizzie Tudor who wrote (15853)	1/22/2003 3:34:14 AM
From: stockman_scott	Read Replies (1) \| Respond to of 57684

Venture capital office closes By JOHN COOK SEATTLE POST-INTELLIGENCER REPORTER Wednesday, January 22, 2003 That hissing sound could be the air leaking from the Pacific Northwest's overinflated venture capital industry. Yesterday, Mohr, Davidow Ventures became the second venture capital company in the past month to announce plans to close a branch office in Seattle. An early-stage investor in digiMine, nLight Photonics and Onvia. com, Mohr, Davidow will phase out its 3-year-old Seattle office in the next six months and chop another $200 million from its most recent fund. Mohr, Davidow, a 20-year-old firm with headquarters in Menlo Park, Calif., also will close its Reston, Va., office. It will retain about $450 million in its seventh fund with plans to invest in 30 to 35 start-ups. The news comes a little more than a month after Boston-based Atlas Venture pulled the plug on its downtown Seattle office. It also follows this month's closure of the Kirkland office of Cooley Godward -- a Silicon Valley law firm that represents start-ups and venture capital firms. Some industry watchers believe the consolidation wave has only just begun as venture capitalists -- hung over from the excesses of the dot-com boom -- struggle with measly returns and a poor market for initial public offerings. In Washington state, only two companies managed to conduct initial public offerings last year. Meanwhile, one-year returns for venture capitalists were a dismal negative 22 percent for the period ending Sept. 30, 2002. Mohr, Davidow general partner Bill Ericson, who helped establish the Seattle office in April 2000, will relocate to Silicon Valley, where he will continue to oversee investments in the Pacific Northwest. Two support staffers will lose their jobs after the office is closed this summer. Venture partner Bill Gossman, who joined Mohr, Davidow's Seattle office in April 2001, will work with the firm as a consultant. Ericson said the closure was not a cost-cutting move and does not reflect the poor economy in Seattle. "It was purely personal," he said. The 44-year-old venture capitalist said it made sense to have all six investing partners in one central office. The father of two also said he wanted to cut down on travel to the San Francisco Bay Area, a task that was consuming about two to three days per week. But he also conceded that a branch office just didn't make sense in Seattle. "At the time we started this office it was really important to physically be here because things were happening so fast," said Ericson, who sits on the boards of digiMine and Vykor. "Today, I think things are back to where they were in 1992 where things are not moving as fast and therefore you have time to travel, etc." Mohr, Davidow was one of the first venture capital firms to cut the size of its investment fund after the venture capital slowdown. Last year, the firm reduced its $850 million fund to $650 million. Yesterday's $200 million reduction is yet another sign that the investment climate for start-ups may get worse before it gets better. "We just don't think that we can invest $650 million profitably in the three- to four-year time frame that we set aside for our fund," Ericson said. "And we are early-stage focused and when you are early-stage focused it is not necessarily a virtue to have too much money, just like our companies." P-I reporter John Cook can be reached at 206-448-8075 or johncook@seattlepi.com seattlepi.nwsource.com