June 13, 2005 4:00 AM PDT
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Poker--Texas Hold'em, to be precise--is his game, and he nets an average of $100 to $120 an hour at it.
"As a consultant--a job that required frequent travel to Austin--I made about that much," Meador says.
Two of the three co-founders of San Francisco software start-up ClearContext help fund their company with their winnings from online poker.
Drawing on experience from the dot-com bust, venture-capital firms increasingly focus on companies that already have paying customers, leaving start-ups such as ClearConnect to fund themselves.
Sitting at his desk in a small, stuffy office in a gritty corner of San Francisco's South of Market district, Meador is nonchalant about the win. It's just another Wednesday morning at ClearContext, a software start-up that's keeping the lights on and the servers running with the aid of its founders' online poker winnings.
Meador, who is head of operations at ClearContext, and Deva Hazarika, the chief executive officer, have been playing poker in lieu of collecting paychecks for the past year while working to get their three-person company off the ground. After logging 50 or more hours a week at the office, each one spends another 10 to 15 hours, usually on weekends and evenings, at their favorite poker sites--mainly Partypoker.com, Ultimatebet.com and Pokerstars.
Meador, the lower-stakes player, makes enough to pay the bills in this high-rent town but not too much more.
"It's not enough to put away for retirement," says Meador, who's 34 and unmarried.
ClearContext, which makes a program that helps Microsoft Outlook users sort and organize their e-mail in-boxes, has certainly taken an unusual approach to venture financing. Yet the company's fund-raising technique may be a sign of the times in Silicon Valley, where entrepreneurs with new companies are adjusting to a more frugal reality after the go-go '90s.
No more easy money
While venture capital is on the rebound, funds have gravitated toward more mature companies--those with proven business plans, a lot of customers and steady revenues. Thomson Venture Economics, which is tracking the trend, reported recently that early stage companies grabbed just one-fifth of all venture capital investments last year. Historically, venture capitalists have invested about a third of their funds in such companies.
That's leaving many entrepreneurs, including Hazarika and Meador, to learn the art of bootstrapping a business.
"VCs are much more cautious about investing in concepts and now tend to wait until there is some proven customer traction," said Carl Haacke, founder of Skylight Consulting and author of "Frenzy: Bubbles, Busts, and How to Come Out Ahead."
"That means more entrepreneurs are bootstrapping and creating businesses while they are still employed," he said.
To demonstrate how picky venture capitalists have become, Haacke points to Delicious, a site that helps Web users organize their favorite Web links and share them with others, and Thefacebook, a site that lets college students browse each other's online profiles. Each company recently raked in a first-round venture capital investment, but only after they built enormous followings.
ClearContext isn't alone in taking unorthodox measures to drum up funding. One software entrepreneur in Denver who was desperate for venture financing recently relocated to Belfast, Northern Ireland, where he found willing investors, cheaper labor, and his first big customer, the BBC. The company, Fighting Bull Broadcast Technologies, makes software for monitoring TV and radio broadcasting equipment.
Although such measures may appear extreme, that kind of grit and sacrifice is actually a return to the norm, business experts said. An environment where money doesn't flow quite so easily is also likely to produce a stronger crop of start-ups for venture capitalists and angel investors to bankroll, they said.
"Entrepreneurs are always doing outrageous things to raise money--to get their passions turned into reality," Haacke said. "This (online poker) is a particularly vibrant one. But the issue is a return to normal."
For Meador and Hazarika, who met as students at Rice University, the
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