BUSINESSWEEK ONLINE : FEBRUARY 19, 2001 ISSUE
BUSINESSWEEK E.BIZ -- COVER STORY Venture Capitalists' Five-Point Survival Plan For three years, venture investors have raced from deal to deal, throwing money at startups at a record pace. But the party is over as the economy and the tech biz slows. 1. Slow the investment pace: Firms are funding fewer new startups. Redpoint Ventures has cut in half the number of new deals it is doing to about 15 this year. And Crosspoint Venture Partners isn't raising a $1 billion fund because of the depressed market--even though investors had committed the money. 2. Up the reserves: Firms are setting aside more funds for their cash-strapped companies. New Enterprise Associates has set aside 50% of its newest fund instead of its usual 35% to 40% to keep companies afloat. Battery Ventures is making a similar change. 3. Triage portfolios: Troubled companies are getting the ax or being asked to make big changes as VCs try to minimize losses. Accel Partners has directed half its portfolio companies to cut their cash burn rates, while Battery Ventures has a ''red list'' of upstarts with serious management, revenue, or financing problems. 4. Mind the store: After three years focused on landing new deals, VCs are spending more time nurturing existing investments and streamlining internal operations. Technology Crossover Ventures limited to eight the number of boards that any partner may sit on. 5. Offer more help: Experts in fields ranging from marketing to recruiting to public relations are being hired into VC firms to help entrepreneurs. Kleiner Perkins Caufield & Byers, for example, brought in a human resources partner. Softbank boasts a professional support staff of 40. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Crunch Time for VCs COVER IMAGE: Shakeout! TABLE: Venture Capitalists' Five-Point Survival Plan CHART: The Venture Capital Bubble Is About to Burst INTERACT E-Mail to Business Week Online

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