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…and so this is not at all surprising. kwc Dot-Coms Are So '90s; In Silicon Valley, Doing Good Is the New Thing By Ariana Eunjung Cha, Washington
Post Staff Writer, Tuesday, August 9, 2005; A01 Today the signs have
changed. "End World Hunger," urges one billboard. Another promotes a
campaign to aid the mentally disabled. A third features a smiling portrait of
the men and women of the California Air National Guard 129th Rescue Wing, who
"keep America safe, secure and free." Ten years after the Aug. 9, 1995, initial
public offering of Netscape Communications Corp. set off the Internet boom and
five years after the bust, venture capitalists are leading a push to remake
Silicon Valley as a center for a new form of social entrepreneurship and
venture philanthropy, a place where you can make good money by doing good. While plenty of people
here still are out to make fast bucks, there also has been a surge in
investments aimed at solving some of the world's most formidable problems.
Venture capitalists chastened by the bursting of the bubble say they want to
make a mark that lasts beyond the next quarterly filing with the Securities and
Exchange Commission. A decade ago,
scientist Eric Nyberg had what he thought was a breakthrough technology.
Working out of his garage, he invented a low-cost, low-energy method for
purifying water. But it was all but impossible to get the attention of dot-com-crazed
investors. A few months ago,
Nyberg's company, Pionetics Corp., began soliciting investments again. This
time it was inundated with offers and had to turn some down. The company, which
aims to help stop the spread of waterborne disease in underdeveloped countries,
raised about $6.4 million in venture funds from seven firms. "People are looking to
have more meaning in their lives," said John Doerr, a partner at uber-venture capital
firm Kleiner Perkins Caufield & Byers. "It is a sign the technology community is coming of age." Doerr became famous
for funding some of the Internet's biggest success stories, as well as some of
its most spectacular failures. These days he focuses mostly on health care and energy companies and has been applauded for helping
get California's $3 billion stem cell initiative passed and for promoting small loans for entrepreneurs in the
developing world. Some say the shift is
as much about helping themselves as it is about helping others. "Adam Smith said that self-interest is the purest
form of altruism. . . . As venture capitalists we are driven to produce
financial returns, but to do that we have to think carefully about whether our
investments solve unmet needs,"
said Robin Bellas, a general partner with Morgenthaler Ventures. Halfway down 101 is
the geographic, philosophical and emotional center of Silicon Valley: Sand Hill
Road, where the region's most prestigious venture capital firms are based and
where countless entrepreneurs' dreams are either made reality or crushed. It is in these offices
where the transformation is most acute. Instead of waiting at desks as the
business plans flow in, many venture capitalists are actively trolling
university labs for the latest inventions. More than a few firms these days
keep their venture capital investments a secret, allowing companies the ability
to concentrate on their research without public scrutiny. Many of the new
entrepreneurs are technologists, not MBAs -- signifying a new emphasis on products over profits. "The thinking today
is, 'I don't care as much how much of a Harvard MBA or super-experienced CEO or
whatever you are or how much money you've raised,' " said Philip J.
Kaplan, the founder of an infamous Web site that mocked the deaths of thousands
of dot-coms. He said businesses have to be "cool." He works at a
start-up that sells online ads to corporations but provides them to nonprofit
organizations for free. The change can be quantified in venture
capital investment. In the second quarter of this year, investments totaled
$5.8 billion in 750 companies, an increase of 19 percent over the previous
quarter, according
to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics
and the National Venture Capital Association. Life
sciences, which includes biotechnology and medical devices, has been the
dominant sector for investment for the past two years. Energy investments are
also on the rise. Many of the companies
that have recently received funding probably would not have had a chance in
1999, when many of the venture capital firms' portfolios were laden with
dot-coms. Ion America Corp., for instance, is working on technology
to create a clean energy source from hydrogen that would reduce pollution and
dependence on foreign oil. Savi Technology Inc. is making radio identification
tags for container cargo that it hopes will help border security officials keep
out bombs or other weapons. Satiety Inc. is fighting obesity by designing a
tubed instrument that may reduce complications from stomach surgery. Former Homeland
Security Department chief Tom Ridge said he recently joined the board of Savi
because he is "very interested in any technology that can help create a
safer and more secure America." Venture capital firm
RWI Group Inc. has invested in various health-related companies, such as DexCom
Inc., which sells a continuous blood glucose monitor that helps people with
diabetes manage their disease, and Paracor Medical Inc., which has designed a
device that treats patients with heart failure. "It's a very
rewarding experience to be dealing with companies that are committed to helping
people," RWI managing director Mark J. Foley said. Phil Schaaf learned
his own lessons when he worked in business development at six dot-coms before
the crash. He has commemorated the experience by writing a play -- "Goin'
Dot Com" -- that has been drawing crowds of Silicon Valley veterans to the
Eureka Theatre in San Francisco. A wry sendup of the era, the play involves
venture capitalists enthusiastically backing a company, RentalPuppy.com, that
rents pets to guys who want to meet girls. But after the initial public
offering, the venture capitalists cash out and leave the company to its ruin. The outcome is the
kind of aimless destruction that many participants experienced -- "there
was no moment of apology and dramatics," Schaaf said -- and that led to
the drive to do something more. "Everyone just turned right back
around," he said, "and began innovating again." http://www.washingtonpost.com/wp-dyn/content/article/2005/08/08/AR2005080801486.html |
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