Bill McAleer

The market for mergers and acquisitions is in the pot, with just 37 venture-backed companies finding acquirers last quarter. But Seattle venture capitalist Bill McAleer is betting that things will turn around later this year as large corporate buyers start fishing for deals.

"From our contacts up and down the West Coast  -- with companies like Oracle and Microsoft and so forth -- we're hearing increasingly that the ones that have cash are starting to look again," said McAleer, a managing partner at Voyager Capital. "They are not shopping yet, but they are talking about getting acquisitive again."

McAleer's theory was bolstered by recent comments by Microsoft CFO Chris Liddell, who expects to find "very good" buying opportunities in the next 12 months as companies reset their expectations. That's a good news-bad news story for entrepreneurs and VCs.

The good news is that large corporations may actually start looking for deals again. The bad news is that the buying spree will be motivated by massive valuation decreases.

While big tech companies may try to buy established companies with revenues, McAleer also believes that smaller, tech-focused companies will attract suitors.

"We think the place to be is early-stage differentiated technologies that could be complementary to an acquirer," said McAleer, who admits that it has been a "tough environment" in recent months.

Of course, trying to sell a company in this climate presents enormous challenges. Startup companies are having a hard time making revenue projections or figuring out their infrastructure costs, McAleer said. The extreme valuation nose dive that began last fall also is not helping matters.

"The effect was a lot harsher and faster this time. It took almost a year or year -and-half for valuations to show any movement in that 2001 period," said McAleer. "This time, it was like a month or two. Valuations came down immediately."