The annual survey of venture capitalists by National Venture Capitalists Association is out and VCs are predicting moderate growth in the worldwide venture capital market in 2008. They also forecast fewer venture capital firms, larger funds, and continued recovery of the IPO market.

Research firm IDC sees the software as a services sector growing 32% annually over the next few years. So, it seems likely that VC investment in cloud computing startups and software startups delivering products over the web as a service will also grow.

Overall, VCs peg the entire venture capital market at $20 billion to $29 billion in 2008 -- putting it on par with 2007 levels. The majority of those polled also see the IPO market strengthening as well, and mergers and acquisitions increasing, though they are split as to the value of those deals.

If the VCs are right, bad news for the US economy: 60% say it will be on the decline in 2008, even though most think the sub-prime mortgage meltdown will be contained. The next president? If VCs have their way, there will be another Clinton in the White House come January 2009. But maybe we should take VC predictions with a grain of salt.

Along with the survey, the NVCA distributed some prognostications from top VCs, including Patrick Ennis, from ARCH Venture Partners, who demonstrated his love of alliteration by predicting, "In 2008 we will experience another strong year for venture funded startups. Never believe the negative predictions from professional prognosticators of pervasive pessimism - they sound like a broken record. The benefits of technology continue to spread through all aspects of the economy and around the world, across many sectors such as biotechnology, materials science, advanced computing, telecommunications and energy technologies."

That sounds like great news for tech companies, but John Cook reminds us that last January Ennis also made some predictions, including this one, ""The new Apple iPhone will be a flop." Oops.

In M&A transactions, most of them occurred in the consumer sector of online media - 329 transactions, representing 46.5% of the total transaction volume in 2008.

The 2008 reported M&A deal value by sector:

• Consumer - $6.2 billion (36.7%);
• Business - $4.8 billion (28.4%);
• Mobile - $592 million (3.5%);
• Enabling - $2.5 billion (14.6%); and
• Commerce - $2.8 billion (16.7%).

In terms of venture capital, in 2008 $3.5 billion flowed into all sectors of media according to Peachtree. This was a 22% increase over the $2.9 billion in capital raised in 2007 in this sector. Peachtree stated that the "Enabling" category had the largest increase in the amount of capital raised, up 124% with $892 million in 2008. The Mobile sector also saw big gains in investment capital, with $341 million in investment capital in 2008 - a whopping 488% increase over the $58 million raised by that sector in 2007.

The consumer category was the biggest, with 48% of capital raises.

The top five sectors in terms of volume of transactions (not reported deal value) for equity raises in 2008 were as follows:

• Video & Online Games - 59 capital raise transactions;
• Social Networking - 57 capital raise transactions;
• Web Applications/Enabling/IT - 47 capital raise transactions;
• Mobile - 35 capital raise transactions; and
• Blogging/User Generated - 27 capital raise transactions.

It'll be interesting of course to see how the M&A and investment sector pans out in 2009. There were 27 capital raises in 2008 in the Blogging/User Generated sector alone, and I can't imagine there being that many in 2009. Tell us your thoughts in the comments.

Marcus explains a little bit about the differences between venture technology and venture capital models and how his firm adopts good ideas and "A team" executives-in-training to create living, breathing tech startups without blowing through ungodly amounts of cash. He also talks about the need for a solid revenue model for even the best of tech ideas.

Remarkable Wit is a little bit TechStars, a little bit Idealab, and a little bit outside any box.

The firm's flagship project, an expertise marketplace called Moontoast, launched this spring at South by Southwest.

1. The average deal size is increasing. The average went from $2.12 million in November to $4.11 million in December to $6.06 million in January.
2. California still rules, but global investment is happening. In the US, venture capital is still dominated by Silicon Valley, but we are seeing a few more global deals, specifically in the UK, Canada, and English-speaking India.
3. Total diversity was apparent, without any market-segment bias. This is a good sign that ventures are being evaluated on the fundamentals rather than on what's hot.

Which Ventures Received Money?

December:

• NetShelter
• dotblu
• InnerRewards
• KZOInnovations
• smartfundit
• Appcelerator
• Wordstream

January:

• HubDub
• Sittercity
• Appnomic
• CloudSwitch
• GoInternetMedia

Which VCs Wired the Money?

December:

• Rho Canada
• GrowthWorks Canadian Fund
• JLA Ventures.
• DE Shaw, Maple Investments
• Valhalla Partners
• Baytech Venture Capital
• Storm Ventures
• Sigma Partners

January:

• Pentech Ventures
• Apex Venture Partners
• Norwest Venture Partners
• Atlas Ventures
• Matrix Partners
• Kennet Partners

Regardless of whether you use Amazon services, if you are a Web 2.0 company, it makes sense to keep these firms to keep in mind for funding. And if you are using Amazon web services and are looking for money, you might want prepare your elevator pitch and contact one of the below:

Of course, the competition for their attention may be strong, as a full room came to hear a presentation focused mainly on Amazon's developer offerings and what they can do for business owners. One claim repeated several times was that Amazon eliminates 70% of the non-differentiating work for web startups. That means, things like building server farms, maintenance, and any operation that doesn't distinguish you from your competition. 70% strikes me as a bit high, but then my company produces desktop applications so I may not be the best judge. The other 250 people in the room were generally nodding their heads in agreement.

If you're already familiar with the Amazon web services pitch, there wasn't much new in the presentation. However, a question and answer session led by Andy Jassy, Senior VP of AWS, to clarify that Amazon is in fact building a distinct line of operation with its own investments and not using idle capacity sitting around until the next Christmas season, was interesting. True, they have not yet opened up Elastic Cloud Computing, but the servers currently running EC2 are dedicated for that purpose.

Some Take-aways

One participant wondered why Amazon hasn't started its own venture capital arm to make strategic investments in their AWS platform. Then we looked around the room and noticed all the engaged VC representatives and came to the conclusion they didn't need to.

The question of 'What happens if <Big Company> moves in on this space?' is becoming more common, and the big company on everyone's mind in this part of the world (Seattle) is Microsoft. To this, the only thing the AWS folks could do was smile and claim first mover advantages. However Matt McIlwain of Madrona Venture Group mentioned that he had just returned from a Silicon Valley forum where people thought Microsoft simply can't ignore what's happening here much longer. I did hear a rumor that the first Microsoft data center has come online in the last month, and one can only speculate about Google and Akamai, so stay tuned...

Speaking of data centers, there was a question among some attendees about whether Amazon actually owns or leases them. If someone from Amazon would like to clarify this in the comments, that would be appreciated.

Finally, something to watch for. Up to now, most of Amazon's success stories are in the consumer market. Since Amazon runs one of the largest consumer web sites, this makes a certain amount of sense. However, they must have designs on the business market too. While they have the technology, and events like today's certainly show developer interest, it may take a bit more effort to convince corporations their platform is secure enough for enterprise data. Once corporate IT departments begin buying in to Amazon's vision, the other big technology houses will be forced to respond. Given the recent stock market activity on AMZN, that time may come sooner rather than later.

Russia-based Quintura Search Engine has received substantial backing from Mangrove Capital Partners of Luxembourg, an early-stage investor in Skype, ABRT Venture Fund and the partners of OpenView Venture Partners of Boston. This is an interesting deal for several reasons. The first is the Skype connection. Another one is that Quintura is the first Internet Russian company to receive investment from a Western VC. And then, of course, the product itself is very innovative.

Quintura is a visual search engine and it claims to apply the natural way that people think about concepts, to search. One of the most difficult problems that modern search engines are trying to solve is resolving ambiguity. Quintura solves it by presenting the user with a cloud of concepts relevant to the search. For example, when we searched for readwriteweb we got the cloud shown in the picture above. This type of cloud helps to refine results. And when a user clicks on a word, the search results below re-arrange accordingly.

The current version of Quintura supports just generic and image search, but it is likely that more will be coming soon. Users are also able to save and share the results that they find relevant. The results window could use some polishing, but the cloud navigation definitely compensates for any shortcomings. It is clear, as the company claims, that some very sophisticated neuron networks and clustering on the back end are powering this cloud.

Yakov Sadchikov, co-founder and CEO of Quintura, said in the press release:

"We plan [on] using the venture capital to take the Web by storm and reach millions of web users globally when launching the Quintura visual find engines for various user communities."

We think this is very ambitious, given that search is a tough and crowded space. But with a bit of polishing, this one may have a chance of breaking through. Could it be that Mangrove have found another big winner? Only time will tell. For now give Quintura a try and tell us what you think.

Real Venture Capital (RVC) is anything that takes a risk and works hard to create something fundamentally new. Many classic VC funds fall into this category. So do many angels. But I would also put entrepreneurs who bootstrap their ventures into this category. I would also even put Private Equity and Hedge Funds that do turnarounds and transformations.

This is very different from Momentum Venture Capital (MVC). The old asset class categories make less sense in this context. You get all kinds of MVC that would traditionally be called VC, Angel, Entrepreneur, Private Equity or Hedge Fund. But they are fundamentally different from Real VC. MVC jump on trends and amplify them. If they are lucky and smart, they get out in time. They are the bubble inflators. Their core competency is timing trends. They ride momentum.

In a downturn such as this, MVC get crushed. MVC that timed it well and got to cash are sitting pretty, playing golf ready to jump in a gain when the cycle turns. But MVC left "holding the bag" at a time like this get crushed.

RVC is contrarian. They invest when most people are scared and sell when everybody is bullish. MVC is the opposite. Smart MVC invest when the trends are obvious and get out quick, the classic "flip artist". Dumb MVC invest when the trends are obvious and don't get out in time. But both smart and dumb MVC are primarily trend spotters.

Warren Buffet is the RVC Hero

Warren Buffet ignores Mr. Market and buys companies that generate lots of free cash flow. RVC build the kind of companies that Mr. Buffet would want to buy (which mean that anybody would want to buy and that you don't need to sell until the right buyer comes along).

Sure, But Safe??? Look At Alternatives

No asset class looks safe now. Remember that the objective is some cash after inflation, and inflation has certainly reared its ugly head again. Here are some of the usual assets that people turn to in difficult times. (In brackets are the classic "Chicken Little" fear mongering questions that you hear today).

1. Cash (in what Bank? After Inflation? In what currency?)
2. Money Markets (frozen assets in panic, no inflation protection)
3. Muni Bonds (what did Schawzenegger say about California needing emergency funds?)
4. Property, "safe as houses, right?" ('nuff said).
5. Oil (will drop if global economy slows)

I could go on and on. The point is that when nothing is safe the risk/reward of investing in a new business that you really understand, with people you trust, suddenly looks less out there on the risk curve.

The Playing Field Just Tilted To The Little Guy

This is what we wrote about yesterday related to SaaS and traditional IT vendors.

That maybe part of a bigger historical shift of power from BigCo to SmallCo, reversing what happened in the last 50 years when the share of US GDP controlled by Fortune 500 went from 1/3 to 2/3. Coase's Law and the reduction in transaction friction created by the Internet are the theoretical underpinning of this shift.

This historic shift makes it safer to build disruptive innovation from scratch than defend an incumbent position. To put it more simply, today it is better to be a Barbarian than a Roman.

In short, it is time for Real VC to be bold. Some will be bold. Some won't. Enough will be bold for this to work out just fine.

Image credit: Thomas Hawk

This is a great deal for both Feedburner and Google. For Google it gives them access to over 720,000 feeds including, 111,000 podcast or videocast feeds, many of which can now be added into the Adsense network. It also gives Google access to a wealth of data and information about how people consume blogs and information across the greater blogosphere.

The price itself seems like a steal to me. Feedburner's 422,000 publishers may not seem like a lot for a $100 million investment, but that 422,000 publishers actually translates into access to many millions of readers that Google can push advertising to.

Joe: talking about Jotspot, "DIY publishing" - wikis next step after blogs for web publishing. Jotspot heading towards "DIY apps".

Joe talking about Jotspot mistakes this year - not focusing on revenue. "Jotspot was in beta for way too long" --> not measuring the right things; refers to Google being in betas for so long --> people want feeling of reward which betas don't provide. Joe now wants to skip beta phase in his products.

John: both of you have grown quickly, have you gotten to point where you lose community etc of the culture?

Kim: not yet grown that big.

Joe: everyone can still see each other. want little bit of "standing room only" so has energy etc. Inspired by Google's hiring philosophy. Jotspot's hiring philosophy is "no false positives" --> everyone you get in the company will be "great".

John: what about contracters?

Kim: development team is distributed --> set up offshore operations in India.

John: venture capital. what's the profile re financing?

Joe: myth of entrepreneurship - some people need VC backing, some don't. clear matter of economics, supply and demand. lot of companies are "features wrapped up in company's clothing" - those ones shouldn't take VC capital. need to get to $30-40million to get a decent return, which is rare. The VC is not the prize, wrong thing to focus on.

John: arc of kleiner-backed start-up (potential for billion dollar company etc)

Kim: not trying to do that. "let's get this right", scaling correctly etc.

John: excite going public - did you enjoy that (as goal of company)?

Joe: "private piece of the market feels very frothy right now"... "bootstrap froth" - can be a good thing, but if inject lots of money and pump up the valuations, it can be a problem ("venture froth")

John: death by bootstrap "fratricide"

Joe: it's so cheap to start a company these days. jotspot took $100k to go to market, much cheaper than excite. cheap infrastructure, offshore development. Tons of angel or bootstrap companies - "you'll see a ton more entrepreneurship". Will cause its own set of problems, but it's fantastic.

John: is it different this time personally?

Kim: more calm experience, people have families so not burning midnight oil, don't have to kill yourself to build a company - still long hours, but exciting.

Joe: is equally "paranoid, neurotic"; the desire, drive, nervousness - he's "wired that way". Wants to make it successful. Joe thinks he's "no more calm than I was in Excite."

This kind of valuation is going to give Twitter a long runway before it actually has to make money, but at the same time, it also makes it unlikely that anybody is going to acquire Twitter in the near future.

We will obviously keep an eye on this developing story and will update it once we get more information.

Image used courtesy of Flickr user tao zhyn

However, we've also lowered our cut-off to $0.5 million. Tougher times lead to smaller rounds, which is not necessarily a bad thing because tough times force you to do more with less money. This got our list up to nine deals in total for November.

Below, we have linked each company's name to its entry in the Trade Vibes-powered ReadWriteWeb Company Index (or to the company site if there is no entry). You can use this as a starting point for research and comparison, referring to the venture's own site when needed.

• Machinima
• CarWhale
• Maxplore
• Open Candy
• Zuberance
• Carbon Flow
• Casual Collective

Note: a commenter pointed out that in our original A-Team post we missed Siri, which raised $8.5 million in October, although we have written about them before.

So please tell us who we missed in November. We will correct it in December.

Which VCs Are Wiring The Cash?

We identify only the lead VC in the following list (assuming that the first one listed in the PR material is the lead). We aim to make this more in-depth next month by showing all of the VCs that participated.

• Pond Venture Partners
• MK Capital
• Sierra Ventures
• Emergence Capital Partners
• Bessemer Venture Partners: check out its Anti-Portfolio.
• Clean Pacific Ventures
• Lightspeed Venture Partners: it has one of the best blogs in the venture business.

Emergence Capital Partners did two Series A deals in November (Maxplore and Zuberance). That is pretty cool.

If you want to talk to the firm, here are the basics:

Investment categories:

• Software-as-a-Service (SaaS)
• Consumer services
• Digital and social media
• Information services
• Business services
• Cloud computing

Investment criteria:

• Early and growth stage
• Compelling customer value proposition
• Market leadership potential
• Experienced and passionate management team
• $1 to $10 million initial investment
• US preferred

Emergence is riding the enterprise SaaS wave. Most VCs missed that wave, as we found when we surveyed gritty entrepreneurs. That sector was out of favor at the time, and most ventures simply did not get VC funding then.

Where Are Ventures Getting Funded?

It looks like California is still doing the dreaming, with six out of the eight ventures residing there. The other two are from outside the USA: one from England and the other from India.

Which Sectors Are Getting Funded?

The biggest theme was video, specifically games, but there were also two that had a green focus.

Here's hoping that December will be an even better month.

At a time when other ad networks are being scooped up by the biggest players for staggering sums, the Accel Partners led B round brings this Open Source company's total raised to more than $20 million. The current round also included money from existing investors Index Ventures, First Round Capital, Mangrove Capital Partners and O'Reilly AlphaTech Ventures. With this kind of backing you can expect to hear a lot more about OpenAds in the coming months.

In addition to its stand-alone software, OpenAds can also act as a platform for other ad networks to build on top of. FederatedMedia, to which this blog belongs, has reportedly taken this approach.

The new hosted version of OpenAds should dramatically lower the barrier to entry for new publishers. Watch this space.

The venture investing process used to be largely a mystery. Young entrepreneurs were not sure how to value their companies, nor were they sure what to make of the term sheets offered to them - largely because the mechanics of venture math weren't open to them. But recently the rules of the game have changed. The venture process is now much more open, in no small part because of Brad Feld.

Feld is also responsible for building what is today a thriving tech community in Colorado. When he moved to Boulder 15 years ago with his wife Amy, there was little to no tech presence. Today Boulder is a boom town, buzzing with some of the sharpest brains in tech. Companies like Lijit, Me.dium, and Gnip, as well as a whole pack of TechStars (which Feld started with Dave Cohen) alumni headquartered in Boulder.

Besides making a huge impact as a VC, Feld is one of the most inspirational people I've met. It is my pleasure to connect our readers with him via this interview.

What is your background?

I grew up in Dallas. I got an Apple II computer for my bar mitzvah and quickly became a reasonably well adjusted teenage computer nerd way before it was cool. I went to MIT, got a few degrees from there, and started my first successful company (Feld Technologies) when I was a sophomore. With a partner, we grew Feld Technologies into a decent sized (20 person) software consulting firm before selling it in 1993 to a public company (AmeriData Technologies). I worked for a few years at AmeriData while making angel investments with some of the money that I made (companies like Net.Genesis, Thinkfish, Harmonix, and Critical Path).

My wife Amy and I randomly moved to Boulder, Colorado from Boston in 1995 (Boston wasn't home for us) and have never looked back. In 1995 I started working with the Softbank making investments with them and in 1996 teamed up with three of the other guys working there to start Softbank Venture Capital (which turned into Mobius Venture Capital). I've been actively investing as a VC since 1996 in a wide range of software and Internet companies around the US. Last year (2007) I started a new firm with four of my friends from Mobius and we launched our new fund (Foundry Group - www.foundrygroup.com) in the fall of 2007.

How did you get interested in the Venture Capital business?

While Feld Technologies never took in any investment (we only raised $10 to start the company) a number of our customers were Venture Capital firms. We wrote back office software for the VCs to help them manage their portfolio accounting and reporting which - prior to us coming along - was a nasty spreadsheet exercise. I got to know some VCs and after we sold Feld Technologies did some consulting work for a few of them as I was investing as an angel investor. My connection with Softbank was random but timely, as Softbank was making an aggressive push to invest in Internet companies in the US (which directly overlapped with my angel investing). I woke up one day and had co-founded what became Mobius Venture Capital.

What are the top 3 things that you look in a company before you invest? Is there any one thing that always kills the deal for you?

I am a thematic investor. I like to pick a few themes - either deep technological protocols or what I anticipate to be broad market changes in the adoption and use of technology - and invest in the themes over a 10+ year period. Historical themes including email and RSS; current themes include these along with the Implicit Web, Human Computer Interaction, Digital Life, and something we call Glue.

So - thing #1 is "does it fit a current theme?" If no, we pass unless it is an entrepreneur that we know or have worked with before (we aren't a slave to our themes, but the bar for looking at something outside a current theme is usually having an existing relationship.) The next thing we look at are the people. Are these people we want to work with? Do we think we'll have fun creating a company together? Do we trust each other and believe we can have an open conversation regardless of the circumstances? Will we be able to kick ass together? If we get past these two gates, then we go deep.

What was your best/worst investment ever?

Best: Based on combined financial metrics and realized absolute dollar returned, probably Service Metrics. Worst: In terms of heartbreak, probably Interliant. I co-founded it, it maxed out at a $2.5b public market valuation in 2000, and was bankrupt in 2002. I've had plenty of bad investments that didn't ever get off the ground; the toughest ones for me have been the ones that had huge value at some point and then got decimated when the Internet bubble burst.

What are the top technologies that you want to invest in over the next 3 years?

Implicit Web, Human Computer Interaction, Digital Life, and Glue.

How did you become a marathon runner?

I was a cross country runner in high school and always loved running. When I hit age 35 (around 2001) I was a blimp, way out of shape, and physically worn out because of how intense work had become. I decided I needed a big goal that would force me to spend time away from work that would benefit me. Marathon running was a logical one since I had always loved to run. I decided that I would run a marathon in every state in the US by the time I turned 50. I've knocked down 10 of them (the 11th is happening on June 21).

Which business leaders, past or present, do you admire the most and why?

Warren Buffett, Bill Gates, Andrew Carnegie, George Soros, and my grandfather.

What is one insight, business or technical, that you want to share with our readers?

"Do, or do not. There is no try."

What is the meaning of life according to Brad Feld?

When it's over, they dig a hole in the ground, put you in it (or spread your ashes somewhere), print your picture in the newspaper and write some nice things about you, and then life goes on for everyone else but you. Live every minute that you have.

Mainstream Users

We talked to Meebo several months ago about the company's business. Venture Beat writes that the company currently reports 29 million unique users each month. Based on what Meebo told us, those users aren't interested in the higher-tech innovations that many pundits and readers are saying would deliver more substantive value to the service. The vast majority of users login in to a single IM account and IM with their existing friends on that platform. They don't use it to communicate with people on multiple IM services. They just want to IM from school or work without installing the desktop IM client they use at home.

Add in Meebo chat functionality on a swath of new sites looking to offer video, voice and other functionality available through the new Meebo developers' platform and you've got a recipe for rapid proliferation.

Instant is Good

People love IM, synchronous communication and the smooth flow of information IM-style are why we've written here that XMPP (Jabber) could be key to the next generation of web applications. Meebo isn't even alone in rocking the web IM space - Amsterdam's eBuddy is racking up the millions of users and venture capital as well.

Relative Valuations

Early Meebo money came from Sequoia Capital, funders of YouTube and Google. Did YouTube have some drastically innovative technology? No. Could a large company have spent a few million building a great MySpace-clone from scratch? Of course. That's not what it's about, though, in some cases. The ability to get in early on a basic social activity, whether it be online video, social networking or web IM, and then ramp up user numbers - is far easier said than done.

Is Meebo worth upwards of $200 million? It may very well be.

Give it a try, discuss amongst yourselves and witness the handiness of Meebo's embedded "rooms" feature.

I've attended a number of presentations and panels at industry events over the last six months on the state of the venture capital market. In addition, there seems to be a recurring meme in the blogosphere on the subject. To be honest, each of these panels - while interesting - seem to raise the same issues every time. They focus on how inexpensive it is to start and reach critical mass for consumer web services. Thankfully then, this panel today actually took a very different path. Paul laid out a number of interesting statistics around options for exits. It leads to some interesting questions that entrepreneurs need to evaluate.

Paul started by stating, "Despite the topic of my talk, I think that VCs are happy. But I believe they maybe shouldn't be." He then focused on a number of 'facts' and contrasted them with some common 'myths'.

The Technology M&A Market

The first myth he discussed was that the M&A market is back and going strong. Instead he argued that the technology M&A market is actually well below historical averages. He said that people are usually surprised by this, because there are some big deals going on nowadays and they are in the news. However, the fact is that most of the large (greater than $50M) exits have been to Private Equity firms. He explained that this time last year, there was a total of $40B private debt financing around companies that were looking to eventually exit to public capital markets. Today, there is $230 billion of private financing around private equity backed companies.

As if that reality wasn't grim enough, he also emphasized that the deals that are being done by public technology firms are actually being sold to a very small group of companies. Specifically, he explained that 35% of of all tech deals greater than $100 M were done by 10 companies, with a total market cap of $100 B.

The IPO Market

The other myth that Paul focused on was that "the IPO market is back". He said the fact is that before the bubble, in the early nineties the public markets had about 130 IPOs per year. This year, Paul believes we'll probably do fifty or sixty. He explained the reason it feels like 'the market is back' is because we went through a period of doing twenty-five or thirty a year.

Q.E.D.

So according to Paul, most VCs have been funding companies that are "reliant on the M&A market." He said it was 90% of VC liquidity last year. The increased focus on M&A has also meant a decrease in each of the last 6 years of the number of public tech companies. For context, before this streak of consistent declines you need to go back to 1988 or 1989 for when there were 2 straight years.

Right up to this point, everything Paul had laid out was consistent with things I'd heard before; but complimented by strong statistics. However, right then he delivered an interesting point about the future of the market.

Hypothetical Question: The Cisco Market Cap at the time of its IPO was $225M. Today, he asked would Sequoia Capital or other VCs have taken Cisco public, or would they have tried to shop it to AT&T for $250M? The data shared with us seems to lead to the belief that they would have tried to find an acquirer. The challenge is: would Cisco have created the value in the tech market and for other entrepreneurs if they had simply been acquired?

So VCs, Are You Happy?

At this point, the rest of the panel entered to discuss if they were indeed happy! After everyone introduced themselves, Roger McNamee said:

"Can I push back on what Paul just said? I've seen all the statistics he saw and I agree with the data. However, I think it doesn't matter, because predicting the future is fairly futile."

However, he continued by noting that "in the battle between fear and greed, fear is temporary but greed is permanent." Therefore, if there is money to be made, then Wall Street will pull those companies to the public markets out of greed.

Bill Gurley said that he actually felt like this was a fairly liquid time. But if he had one concern it would be "the lack of desire of executives to run these public companies." He explained that the average expense to become Sarbanes Oxley compliant was $2.5 million. He told a few good auditor jokes, but also continued to reiterate the concern around identifying executives who want to step into those roles.

Conclusion

While the panel was looking at this from the perspective of a venture capitalist, it did raise some interesting issues as an entrepreneur. What kind of company is each of us trying to build? Obviously, we each need to ultimately make sure we're creating value for our shareholders.

However, this panel showed a very different perspective - that maybe we're focusing too much on being acquired by a limited set of companies. What do you think?