The Return of the Venture Capitalists

Shortly after Technorati received a $6.5 million USD in VC funding valuing the company at $12 million dollars (the round was led by Draper Fisher Jurvetson, the guys with the gold fingers; source: Om Malik), the New York Times has a two-pages story (September 2, 2004) "The Return of the Venture Capitalists":

Four years after the Internet bubble burst, the venture-capital industry is stirring back to life. Investments by venture firms rose 22 percent in the second quarter of this year, to $5.8 billion.
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For all of 2004, analysts project an 11 percent increase in investments, to $20 billion, from $18 billion in 2003.
That is a far cry from the $108 billion in the heady days of 1999, and nobody in the venture-capital business is predicting a return to that flood of cash.
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The competition among venture capitalists to get their foot in the door of promising companies has also heated up. The time that elapses for a deal to close has been cut by more than half, from six to eight months two years ago to two or three months today, said Bill Ericson, a general partner with Mohr, Davidow Ventures, another Menlo Park firm.
Perhaps the most encouraging development for entrepreneurs is the increase in venture-capital investments in early-stage companies, to 231 in the second quarter of 2004, the highest number in two years.
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At the same time, it is unlikely that start-ups will see a return to easy-money days anytime soon, in part because many firms are not raising the kind of funds they did during the bubble.
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The real test, then, is whether company management has already proved its mettle with appropriate industry and small-company experience. "Even if they were unsuccessful, at least we know they tried and learned from what they did before," Mr. Brown said. Recently, he said, the firm added a psychological test to the last step of the decision-making process "to sort out the wheat from the chaff."

Rumors has it that recently a new and young company in the Stock Photo Industry received a first round of $12.7 million USD (today, this is a incredible high amount). When we asked some people over there, their CEO said what seemed to be exactly what David Sifry replied when asked by Om Malik whether or not Technorati got funded: "I'm sorry, it is our policy not to comment on questions on funding" (Link for Om Malik). More to report when they go online.