Subject: RE: A few here may have an opinion on this
From: Chris Maeda <chrismaeda@attbi.com>
Date: Thu, 24 Oct 2002 10:49:04 -0700

We've seen the curse of not enough high quality software investment
opportunities play itself out in the internet and telecom bubbles
of the past couple of years.

Today most VC's will only fund software businesses and life sciences
businesses.  And I would claim that most life sciences businesses
today are actually genome-based software businesses as well.

At 08:05 AM 10/24/2002 -0700, Larry M. Augustin wrote:
> > I would think the numbers can't be true on average, or the only
> > business left in the world would be software business.  VCs would
> > only fund software businesses.
>
>You are assuming that there is an infinite supply of software
>investments.  There is not.  Many VCs I know would only invest in
>software businesses if they had a choice.  In addition to high IRR,
>software businesses typically require less capital and are simpler to
>manage.
>
>However, "less capital" is both a blessing and a curse.  Assume a
>hypothetical but not atypical venture fund with $1 billion to invest.
>If they are lucky, they might find 10 software investments to make in a
>year.
>With the exception of the Internet bubble years, software investments
>are generally small.  Maybe $3M to $5M in a first round, and $10M to
>$30M in total paid in capital.  So while the software investments may
>get a high IRR, only a small fraction of the available capital can be
>put to work there.