While people typically guess that 90 percent of dot-com companies failed, the reality is that a random sample of all dot-coms that received venture capital financing in 1999 showed that about half (48 percent) were still in business five years later, write Tim Laseter of the University of Virginia’s business school and David Kirsch and Brent Goldfarb of the University of Maryland. (Via New York Times)
Here’s their study. They conclude: More, smaller bets can make technology booms more productive and enduring. More, smaller bets should have been made during the boom, and the same should happen now.
All fine in theory. Practice is another matter.
2 Comments
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Pran Kurup said:
There are a lot of small bets happening these days particularly in Web 2.0 (alongside the Joost kind of large investments). This wasn’t the case in the dotcomm days when most of the investments were pretty substantial. So maybe
many are learning from the past, though in a small way! :-)Interesting study, nevertheless.
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Elliott Dahan said:
There must be a combination of a greater number of fundings on the Seed level and implementing a funding system with greater efficiency that either a Charles River “QuickStart”, the Angel model, or just a small-sized fund which is still modeled on the VC system.
There must also be a change in attitude among Funders - no longer will the pilgrimage to Sand Hill Road where Entrepreneurs genuflect and VCs pontificate work.
There must be recognition and support for the infrastructure which already exists.
2 Trackbacks
5:11 pm
links for 2007-05-15 « John’s musing said:
[...] VentureBeat » Only half of Bubble-era companies out of business I’d have been one to put money on most dot-doom companies having gone bust - lends further credence to the Y Combinator et al approach to larger numbers of smaller investments (tags: finance funding investments startups entrepreneurship business) [...]
6:42 am
SonnoProfondo » Blog Archive » Metà bolla è rimasta in piedi said:
[...] SiliconBeat contesta che questo sarà anche tutto vero in teoria, ma poi nella pratica ? Alcune società probabilmente stanno in piedi solo grazie ai fondi ormai considerati persi di alcuni venture capitalist, o sono state assorbite da altre società per pure ragioni di brand. [...]