The VC’s Lament

In a bust like no other, we remember the good days.

By Chris Winters | September 2009 | FROM THE PRINT EDITION

Credit: Illustration by Craig Hill

The ball traced a thin parabola against a hazy Florida sky before burying itself in the weeds next to the water hazard. Tom wiped the sweat off his brow and was about to go after it when an alligator lurched out of the pond and snapped it up in its jaws, then slid back under the murky water.

Tom swore and his eyes burned, more from the nearby wildfires than the lost ball. “That was my last Pro V1x,” he said.

“Should have gone back to Semiahmoo,” George said. “Better weather. Less fauna.”

“Yes, but the club fees! At least this is still a private course.”

“Not private enough,” George said, watching the water.

They walked down the fairway to where George’s ball had landed, their caddie—Tyson or Travis or something similarly Gen-X—pulling their bags. He wasn’t even wearing a proper golf shirt, just some worn out Lacoste. Their talk turned to business. They were all hurting, and Tom said so.

“What was your last exit?” George said.

“The sale of NüDiesel,” Tom said. “Pennies on the dollar. Malaysian palm oil wasn’t really that cheap. Who knew? Then Greenpeace blockaded our tanker. What about you?”

“BioGrow bought a shell company to get a ticker on the Vancouver exchange. Now I’ve got 50,000 shares in cabbage growth hormones I can’t give away.”

They’d reached George’s ball, but he wasn’t moving to take a shot. Not yet. “Ever thought about leaving the business?”

Tom was aghast. “Leave venture capital? What for?”

“Something more stable. Face it, the returns aren’t there anymore. Just three IPOs nationwide this year. Three. And terrible valuations on the exits. Even the first-round term sheets blow. Have you seen one lately? 20-pound paper! From a chain store. In the ’90s, we used 40-pound vellum.”

“Maybe Office Depot has an upside,” Tom said. “Want to try the public markets? Just for kicks and giggles?”

“I hear Office Depot is a good buy,” Tyson offered. Or maybe it was Tyler.

The venture capitalists ignored him. “The ’90s, those were the good days, weren’t they?” George said.

Tom chuckled. “Hell, I wrote out term sheets that had more words than the business plans they were submitting.”

“I made my first million on internet pet treats,” George said.

“Mine was Nails.com,” Tom said.

“Hardware?”

“No, that was Nails.net. They tanked. Manicure chain. They boomed when The Sopranos took off. Especially in Jersey. Orange County, too. Great timing.”

Tom stared off into the middle distance. “Do you think we’ve bottomed out yet?”

“Trying to time the market again?” George said smiling.

“Google’s moving deeper into operating systems, Microsoft territory,” Tom said. “When Microsoft drops, people leave and start up new ventures. Could be some good stuff coming out of Redmond.”

Sweat trickled down Tom’s nose. “We’d better move. That fire’s getting close.”

“I’m not sure I’d back anything run by the Vista team,” George said.

“Hey, I just upgraded to Vista,” Teller chirped. Or was it Trigger? Trellis?

George pulled an iron from his bag, lined up a shot, took a breath and swung. The ball arced onto the green.

“Can I borrow a ball?” Tom said.

George pulled one out and tossed it over. A range ball. “Beggars can’t be choosers,” he said. He pointed toward the pond. “No mulligans. Off you go.”

“What do you recommend?” Tom said, warily eyeing the rippling water. He had a feeling that scaly reptilian eyes were watching him.

George considered. “A seven for the rough. Use a nine for the gator.”