Venture capitalists' '09 predictions

It has become a tradition at this time of year that I assemble a group of Pacific Northwest venture capitalists to share their prognostications for the year ahead. Predictions are inherently tough, especially in the ever-changing high-tech business.  That's certainly been the case for anyone who has read the VC predictions columns over the past eight years. (After all, Amazon.com never opened 250 retail stores, Qpass never went public and -- last we checked -- the iPhone has been a stunning success.)

Last year, nearly everyone overshot with bullish predictions on Google's stock, except for Bill Bryant of Draper Fisher Jurvetson who predicted a 30 percent decline and the popping of the online advertising budgets. The VCs also were way too optimistic with their Nasdaq picks, coming in at 2,300 or above. (The Nasdaq actually closed the year at 1,577.)

Still, despite some of the missteps of the past, the fearless VCs keep coming back for more. Obviously, 2009 is setting up to be a very challenging year.

Today, we'll hear predictions from Paul Bialek of Frazier Technology Ventures; Bill Bryant of Draper Fisher Jurvetson; Andy Dale of Buerk Dale Victor; and Pete Higgins of Second Avenue Partners. Tomorrow, we'll hear from at least four others.

So, without further ado, here's part one the VC predictions. How do you think they will do?

Paul Bialek, Frazier Technology Ventures:

Number of IPOs in Washington state in 2009: One

Number of new investments your firm plans to make in 2009: Two to three.

Google's stock close at the end of 2009: (Now at $319): $350

Microsoft's stock close at the end of 2009: (Now at $19.70):  $24

Nasdaq final close on 12/31/09: (Now at 1595): 1,725

Will Microsoft acquire Yahoo: No. "I think they have moved on and by virtue of the people they have been hiring, I think they are going to do a build versus buy."

What other tech acquisition(s) will occur in 2009: eBay. "It is such a big asset and PayPal is such a hidden gem. It wouldn't surprise me if someone took the PayPal asset and tried to make a play."

Where will your firm spend its time in 2009: "FTV focuses on software investments in internet, wireless and next generation enterprise companies – we have seen interesting opportunities in each of these sectors over the last several years and expect that trend to continue in 2009 and beyond.

What company is best positioned to take advantage of the downturn, grab market share and grow: "Well capitalized category leaders are likely to grow market share. This list will likely include Amazon, Cisco and Google."

Advice to startups: "It’s back to basics – set goals and objectives for 2009 that are realistic and then execute the plan. Capital efficiency is critical – link spending to measurable tangible results. Customer traction and revenue matters. There is nothing new to the foregoing – these are good principles by which to build and run companies. Those companies that are able to define a vision and execute are those who will survive. Companies that fall short on execution will likely find they do not get a second chance. This dividing line will become more pronounced in 2009. By the same token, history suggests that very interesting companies are incubated in tough economic times – and so the startup class of 2009 could be a great vintage."

Other bold predictions: "Seattle sports become interesting again with rebounding performances by the Huskies, Mariners and Seahawks."

Bill Bryant, Draper Fisher Jurvetson:

Number of IPOs in Washington state in 2009: Two

Number of new investments your firm plans to make in 2009: Two

Google's stock close at the end of 2009: $235. "Google continues to struggle with growing businesses outside of core search; YouTube monetization falls on its face; Android fails to attract developers."

Microsoft's stock close: $26

Nasdaq final close on 12/31/09: 1875

Will Microsoft acquire Yahoo: "Yes, after it merges with AOL."

What other tech acquisition(s) will occur in 2009: "Five from the following: WhitePages, RealNetworks, Urban Spoon, Swype, Wetpaint, Picnik, GMI, Varolii, Payscale, Big Fish Games, A Place for Mom, Edifecs "

Where will your firm spend its time in 2009: "Cloud computing, enterprise software, local and vertical search, mobile apps & infrastructure services, core innovation of any type."

What company is best positioned to take advantage of the downturn, grab market share and grow: Amazon.  "Ecommerce (at the "Walmart" end of the spectrum) is a scale business where volume purchasing, distribution and brand dominate. Amazon is the unchallenged leader in eCommerce and, like Walmart, will inexorably grow its share of wallet in the coming years."

Advice to startups: "Survive - it can only get better as year progresses."

Other bold predictions for 2009 in tech, politics, sports or anything else: "Amazon buys eBay; Microsoft buys Adobe followed by Yahoo/AOL. Huskies win 6 games and go to a bowl. A fundamental breakthrough TBD reignites investor interest in core technology. Angel investing recovers by Q3. A new Seattle based early stage VC fund is formed. City of Seattle invests in a salt mine in advance of next winter."

Andy Dale, Buerk Dale Victor:

Number of IPOs in Washington state in 2009: One. "Not likely a venture-backed company."

Number of new investments your firm plans to make in 2009: Three to four.

Google's stock close: $365

Microsoft's stock close: $27

Nasdaq final close on 12/31/09:  2100

Will Microsoft acquire Yahoo: No

What other tech acquisition(s) will occur in 2009: No major

Where will your firm spend its time in 2009: Growth consumer and business services

What company is best positioned to take advantage of the downturn, grab market share and grow: Wells Fargo or Costco

Advice to startups: "Raise less than $1 million from friends and family; spend less, sell more, work hard."

Other bold predictions for 2009 in tech, politics, sports or anything else: Year end oil at 60 per barrel. Sarbanes Oxley banished Costco runs the table. 1980s Boeing/Weyerhaeuser economy is back."

Pete Higgins, Second Avenue Partners:

Number of IPOs in Washington state in 2009: Three

Number of new investments your firm plans to make in 2009: Four

Google's stock close at the end of 2009: $380

Microsoft's stock close at the end of 2009:  $24

Nasdaq final close on 12/31/09: 1873

Will Microsoft acquire Yahoo: No

Where will your firm spend its time in 2009: Growing existing investments.

What company is best positioned to take advantage of the downturn, grab market share and grow: "QLiance, because in difficult times people will be open-minded to better, most cost effective approaches to health care."

Advice to startups for 2009: "Spend money as if it’s your last dollar."

Other bold predictions for 2009 in tech, politics, sports or anything else: "Huskies win 6 football games and go to Hawaii Bowl. Mariners rebuilding for 2010. Ken Griffey returns. The Seattle Sounders will win the MLS national championship."

[Flickr photo via JulieRosien]