It’s tough getting back to business.
We count our blessings, especially if we were spared the loss of family or friends in last week’s attacks. We remind ourselves that we’re fortunate to have jobs when so many are being laid off.
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Even so, we’re thrown off balance by countless little things, like a blaring TV advertiser urging us to watch a thrilling “life and death” contest. What could it be? Of all things, an auto race.
We’re not finished mourning, but we’re getting back to business. Chief among our losses is the end of a more carefree era, when it was easy to forget that taking a risk can mean more than losing money.
At venture capital firms–one of the riskiest corners in the banking world and a financial engine for high-tech innovation–venture capitalists are getting back to business.
They’re faced with the difficult task of making decisions based on expectations for the markets in three, five or 10 years.
They’re investing for the long haul at a time when even short-term forecasts are murky.
Before the attacks, VCs were facing one of their worst years ever in terms of return on investment. Portfolio values were declining. New investments were down 60 percent in the second quarter from the record previous year.
Still, VCs had raised $40 billion more than they had put to work. Now they’re evaluating how to invest in a society alert for terrorists and looking to equip itself against disruptions.
As always, they’re taking their cues from the public markets. Investors are placing a relative premium on technologies such as videoconferencing, which plays a bigger role when travel is restricted.
Even before the attacks, VCs were investing in security-related technologies that scan faces in crowds, control access to buildings, protect networks and encrypt data. Those investments look more promising than ever.
Few acts require more optimism than starting a new fund to invest in early-stage ventures–companies with technology and a business plan but few, if any, customers.
That’s one of the tasks Jim Tyree resumed this week. The 43-year-old chairman and CEO of Chicago’s Mesirow Financial is in talks with a venture capital firm to manage a fund to invest exclusively in start-ups in Chicago and Illinois. The effort, initiated in 1999 by Mayor Daley, stalled last year when Divine Inc. resigned as manager after exiting the incubator business.
The pool’s name–Skyscraper Ventures–will be changed for obvious reasons.
During last week’s attacks, Tyree was attending a charity-related meeting in a hotel four blocks from the World Trade Center. He stood on the street outside the hotel, watching people flee.
All 15 Mesirow employees at a nearby office are safe, but it was Friday before Tyree flew back to Chicago where most of the firm’s employees work.
In a typical week, as many as 150 of Mesirow’s 750 employees are traveling for the firm’s diverse businesses: securities and insurance brokerages, investment management, real estate and private equity investing.
This week, not one traveled.
Mesirow is in the middle of 29 private transactions, raising capital or buying or selling assets. Each was affected differently by last week’s events. “Everyone is putting in a lot of time and effort to sort it out and try to push things forward,” Tyree says.
The toughest challenge in the weeks ahead?
“Each day we’re not exactly sure what’s going to happen. That uncertainty is going to grip every part of our life, business as well as personal.
“The way we’re dealing with it is making sure we have a wide vision and the people and resources to be able to react.”
As for the reincarnated Skyscraper fund, Tyree expects to announce a manager soon. The city in 1999 committed $4 million in pension money that Mesirow manages as part of a $220 million pool.
“One way or another,” Tyree says, “I’m confident I’ll have a small but effective seed fund focusing on the city and state.”
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It’s time we get back to business.
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