In life after the bubble, tech takes a backseat

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pie, overall, has grown. Last year, venture capital firms invested $20.9 billion into companies in all industries, reversing a three-year sequential decline.

Wall Street looks for what's next
Overall, the group of 385 companies--including a number of technology businesses--that underwent an IPO in 2000 is performing poorly, according to Thomson Financial. According to the firm, 71 percent of the companies are either trading below their offer price or not at all. The companies in the latter category--including Pets.com and Genuity--have either been delisted, folded or sold.

Now Wall Street is starting to embrace the return of initial public offerings, after a long hiatus. But it's not looking to tech.

Last year, companies across all industries raised more than $40 billion with their IPOs, marking the best year since the go-go days of 2000. While there have been a few notable exceptions, such as Google and Salesforce.com, the winners of this renewed investor interest have largely been nontech companies such as automotive supplier TRW Automotive and mortgage insurance company Genworth Financial.

"Technology issues are taking a backseat to old-economy deals," Peterson said. "This year, for example, technology companies accounted for only 29 percent of the IPOs. The question going forward is, will tech be able to regain its momentum?"

A few companies are testing that; during the first three months of this year, Korean online-game company Gravity has filed for an IPO and online retailer Buy.com said it would take another run at the public markets.

Lessons learned
Professional financiers aren't the only ones who have learned from the Net boom. The rise and fall of the bubble had a significant impact on the way ordinary investors view the markets, experts said.

"Many investors ventured into areas where they had little knowledge or experience but loved the expectations of a (large run-up in the stock). They were deeply disappointed. The pie-in-the-sky deals suffered the most," Peterson said, noting that investors are taking a closer look at a company's fundamentals and financial performance.

One economist pointed out that a number of Internet companies born in the late 1990s had reasonable business models but simply overestimated the size of the potential market.

Webvan, for example, had a reasonable business model that was later validated by brick-and-mortar grocery chains Safeway and Albertsons,

Venture Capitalists have learned their lesson?

Your article "Life after the bubble.." states that VC's have learned from their experiences. My own experience suggests that they are more cautious to validate the truth behind any claim, that they require much more to even consider an investment, and do want a plan for profit and liquidity. What they haven't lost is their desire for unrealistic returns, the kind of returns that are very rarely achieved in the timeframes required. Consequently, they force unrealistic forecasts and pie-in-the-sky promises. The result is that few deals are ever done, and many very good ideas and contributions die from a starvation of capital. Part of the burst was due to the same expectations and behavior.

[Prndll]

lol.....

The so-called "bubble burst" was nothing more than idiots leading idiots. The truth is that only an idiot would buy a pair of jeans online.

LOL....
With the security mess that exists today, it would be a very big mistake to wage huge dollars on wether or not large scales of people are going to buy online. I know that more and more are, but each and every time for everyone is not only another oppertunity for ID theft, but theft directly out of people bank accounts.

Until some of the larger security issues are resolved, this kinda thing needs to be just put on hold. There just simply is too much risk on behalf of ordinary people and too many people that know too little or nothing at all about how and why computers do what they do.

I just wonder if any of these investment firms understand any of this???