With a down market that has thinned the work forces of tech companies, venture capital firms are being much more careful about how they spend their time and energy--particularly on the companies in their portfolio that are the most likely to succeed.
"1999 was the days of the 'drive-by VC.' You had a VC sitting on 16 different boards and they'd just basically drive by...Now they're doing a lot of triage," said Erik Straser, general partner with VC firm Mohr, Davidow Ventures.
Dealing with that triage, combined with demands on their time to invest money from the billion-dollar funds that have recently emerged, VC firms are largely being forced to turn inward.
VCs are hiring partners who will focus solely on working with companies in their portfolios, rather than seeking new investments and sitting on a number of boards, according to analysts and industry watchers. VCs are increasingly passing on funding many new ideas and instead are looking to build up the companies already in their portfolios. With funding drying up, it is harder for VCs to launch an IPO or find buyers for their portfolio companies.
June Bower recently jumped from corporate communications at Cisco Systems to VC firm Lightspeed Venture Partners, where she uses a hands-on approach to help the portfolio companies raise their public profile and develop a marketing strategy.
"June helped us become more streamlined in our message and focused. She helped us to have an impact," said Teri Whitaker, marketing director at TimesTen Performance Software, one of the portfolio companies. "In the past, our message was mostly based on what our technology was and how it was different. But what June taught us was that we need to say how it helped our current and potential customers, and look at it from their perspective."
That kind of specific assistance from a VC was not as high a priority in the past, but now could mean the difference between a company going out of business or being successful enough to turn a profit for the investors.
"They're my best friends now," Bower said with a laugh. "They know I love French things and they sent me a basket with French chocolates, pate and other French things when we were done. It was really touching."
Jon Holman, head of executive recruiting firm The Holman Group, said many good VC firms are figuring out that it is not enough just to pick good companies to invest in. They are realizing that they have to help them be successful.
"These new type of partners don't go out and find investment deals," Holman said. "They're more like silver bullets."
That means picking partners who bring in skills appropriate to the needs of the portfolio companies.
Take Jennifer Jones, a public relations consultant, who joined VC firm Mayfield last fall as a marketing partner. She said she will be working with the portfolio companies that need a jump start or sounding board for their marketing efforts.
"I've been working with Mayfield's companies for several years, but they wanted to bring me in last year because they have a lot of assets under management now," Jones said. She said Mayfield's assets are in excess of $2 billion.
Bill Gossman, former senior director of global alliances at an Internet communication infrastructure company, will split his time as a partner at Mohr, Davidow.
Mohr, Davidow's Straser said Gossman will work the companies two days a week and will serve as acting chief financial officer for one of the firm's companies. Straser, who said Gossman will not seek out investments or sit on boards, said his firm has used specialists for years to help its companies.
Amal Johnson, a Lightspeed general partner, said it is not that surprising that VCs are turning to non-traditional partners.
"As the industry has matured, you're seeing more specialization emerge like you would with any industry," Johnson said. "And those resources are being brought in-house."