Todd Dagres, from Battery Ventures, said that his firm is investing one-third of its normal amount because it will likely have to support the firms in its portfolios for a long time. "We're supporting F rounds [a sixth round of financing instead of the customary three or four] now. That used to be a dirty word," he said.
Many VCs are now waiting for the "perfect deal," said Tim McMahon of Adams, Harkness & Hill. "There's no rush. They have a huge fear of making mistakes. And they think prices will be even better in six months."
Most of the panel said that the market is headed "back to the future" circa 1994. "You won't see 1999 again," Harris said. "History will show that the best time to get funded -- and the worst time to make money -- was 1999" because of the high costs of rent, legal, talent, advertising, and payroll, he said.
To look forward, we must look back to a time before everything got out of whack. For example, entrepreneurs are starting to talk about their 5- to 10-year visions for their companies -- an unheard-of timeline for the past few years.
The panel concluded on a grimly upbeat note: "The best thing I can say about the current environment is that it's lousy," McMahon said. "Despair is the first sign of a market bottom. So take heart in the fact that we all feel so bad."
Linda Tischler (ltischler@fastcompany.com) is the Fast Company managing editor of new media.
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