Talking Points

Many start-ups were supported by VCs who had little regard for traditional criteria about who was starting these companies. Previously, a venturer backed not so much an idea, nor a plan, but a person or team. During the bubble, an experienced management team was no longer essential to get funding. As we saw with Garden.com and Boo.com, even the smallest amount of experience was enough.

Some entrepreneurs bought into this new approach completely. Others were made captive by it. Many entrepreneurs were trying to build large and stable businesses, and were willing to take the time necessary, but for too many of them, their venture backers never let them look to the long term, pushing them to do the wrong things.

A summary of how venture criteria for investments had changed during the Internet bubble is given in Table 9-1. The new economy concept had enticed venture firms out of their traditional niche in technology and into the entire range of the economy. After the bubble burst they fled back to their old hunting grounds.