"Hello World"
OK, I stole that line from Tiger Woods just before his professional golf debut at the Greater Milwaukee Open in August 1996. Nevertheless, it is a pleasure to jump into the blogosphere with my colleagues around the globe to bring entrepreneurs and investors our thoughts and reactions to the happenings in the emerging company landscape--a landscape that has rapidly expanded beyond its golden hub in Silicon Valley to virtually every corner of the planet.
When I first started practicing law in the late '90s, the dot.com boom was in its heyday. Entrepreneurs with dreams of an early and lucrative exit flocked to Silicon Valley to set up shop and search for local venture capital dollars. Those dollars were spent on extravagant launch parties, marketing efforts and anything else to bring attention to a particular dot.com, with the hope of driving web traffic through the roof. Top venture capitalists were willing participants, investing tens of millions into companies that left Wall Street investors scratching their heads on how anyone could justify those valuations. Nobody cared. The blueprint was simple enough: start an Internet-based business, do whatever it takes to attract the attention and subsequent investment dollars from well-respected venture capital funds. Landing a top-tier venture fund meant that the bulge bracket investment banks would soon come calling for an IPO, and then everyone got fitly, filthy rich.
The money was so easy to come by in Northern California that entrepreneurs and investors largely ignored other established or burgeoning centers of technology and investment wealth. Cross-border investment deals weren't common--in fact, they were frowned upon because that left less room for local, well-respected venture capital funds, which meant less chance for IPOs led by budge bracket i-banks, etc. Government participating in developing young companies was really limited to venture capitalists accessing the federal government's coffers to expand the size of their investment funds. Non-dilutive financing from the government wasn't a priority. And nobody cared about sovereign wealth funds. Again, the Silicon Valley blueprint for success didn't depend upon any of those things.
The false economy (some preferred to simply label it "insanity") had to end sooner or later. It did, of course. But boy, it was fun while it lasted.
Fast-forward a decade and the emerging company landscape has changed dramatically. Gone are the days where merely attaching "dot.com" to a title drew the interest of top investors. In fact, it draws a cynical look today. Gone are the days of extravagant launch parties as a means of catapulting to IPO riches. Entrepreneurs actually have to build a business. Investment dollars aren't flying out of Sand Hill Road like 17-year locust swarms. Venture capitalists are much more conservative with their investments, assuming they aren't stuck in the unenviable position of trying to raise a new fund during one of the tougher global economies in history.
The realities of doing business today has completely changed the emerging company landscape. The world is now a much smaller place. Silicon Valley venture capitalists are searching all over the world in search of the next great company. Entrepreneurs are sometimes forced to look more and more to angel investors or funds located outside of Silicon Valley for early-stage funding. Cross-border deals are becoming more and more prevalent. The sovereign wealth funds in China and the Middle East are becoming players in the game. And the American Recovery and Reinvestment Act in the United States and similar economic stimulus programs in other G20 countries have created a new, relatively untapped source of deep-pocket funding (non-dilutive funding, no less).
In other words, the game has changed, whether temporarily or permanently is up for debate, though if I were a betting man (and I am in fact such a man), I am doubling down on the global platform becoming a bigger and bigger driver for emerging companies going forward. That brings us full circle to the purpose of this blog: leveraging our global network of partners and associates at Reed Smith to help bring a global perspective to the emerging-company happenings in the various geographic markets around the world.
