Top, Bottom, Middle, or Who Cares?

Having been an entrepreneur and VC for over 20 years, I’ve now seen plenty of economic cycles – both at a macro level and specifically in the areas I invest in.  As a result, I smiled when I received three conflicting pieces of information today from two people I know and like and one person that I don’t know but know is respected.

Matt McCall at DFJ Portage calls the current VC cycle "dead" as of Q2 2008 in Rough Ride Ahead: Buckle Up & Get Your Money Now (if you can).  He says it with conviction, although he does acknowledge that he hopes he is Peter the Wolf.

Fred Wilson at Union Square Ventures asks (and answers) the question Am I Bored With “Web 2.0”?  Fred is heading off to Europe for a month with his family "to see how the web is changing the world and I want to see how entrepreneurs who are operating with a different worldview are thinking about the power and potential of the web. I could do the same thing in Asia or some other part of the world, but Europe is particularly easy place to do this because of the range of cultures and countries within a couple hours plane ride from each other."

Merrill Lynch’s chief strategist Richard Bernstein in "Some thoughts on alternative investments (6/23/08)" says "The growth in alternative investments seems linked to the growth of the credit crisis" but then goes on to say "There may be two areas of alternative investments that seem relatively attractive in the current financial environment.  In both cases, these are areas that might benefit from the tightening of global credit.  The first is early-stage venture capital.  … If return-on-investment does indeed tend to be higher when capital is scarce, the significant tightening of traditional credit funding to smaller companies seems to make early-stage venture capital strategies more attractive."

While Bernstein’s definition of "early stage venture capital" is mostly likely different than mine (given my interpretation of his assertion), knowing how sound bites work, the three tag lines are "VC is dead", "I’m bored of Web 2.0 and need more meaning in my investments", and "early-stage VC is attractive again."

Like Fred, I also am about to embark on a month outside of my normal context.  Amy and I are about to head to our house in Homer, Alaska for the month of July.  I’m looking forward to going to a place where the Supreme Court rules Homer voter initiative invalid and thinking big (but not big box) thoughts.