How to survive 'the new future'

Bill Reichert says there are lots of ways in which entrepreneurs can get started without venture capital, even in these gruesome times. Photo / Andy Lukey

In every clever start-up, there is always someone who sees the glass as half full. And if that person is lucky, says American venture capitalist Bill Reichert, there will be another person who is convinced it's half empty.

It might sound like a recipe for a fractious partnership, but in fact another ingredient is also vital, he believes - an engineering type who will inevitably point out that the glass was too big to begin with.

The point of this parable, says Reichert, is that entrepreneurs by their very nature tend to be optimists. But in the current economic environment, a bit of pessimism and a little realism can be helpful, too.

As the managing director of Silicon Valley VC fund Garage Technology Ventures, Reichert is all too familiar with all three mindsets. For the past two decades he has helped found and run several software and science-based businesses, and has witnessed most of California's financial fads first-hand.

One of his early ventures was a company that developed digital pens intended to eventually replace keyboards. Sadly, he sighs, the idea was at least 20 years ahead of its time.

In 1988, with the dotcom boom taking off, a friend invited him to join a venture capital firm then known as Garage.com.

When the supply of early-stage venture capital dried up in 2002, Garage decided to focus on seed investment instead, plugging a gap between angel investors and traditional VC funds.

Since then, there has been the clean tech bubble and the social networking craze. The latest bandwagon is cloud computing, but Reichert is determined to keep his feet on the ground. Garage's investments include companies such as D.light Design, which makes cheap, solar-powered lights intended for use in the developing countries of Asia and Africa.

Invited to New Zealand last week to talk to Kiwi entrepreneurs at pow-wows in Wellington and Waitangi, Reichert admitted the mood in Silicon Valley these days was sombre.

"It's like the story of hitting your head against a wall - it feels much better when you stop. But at least we're not hitting our head against a wall any more. It was extraordinarily anxiety-producing for several months in there. People were suggesting there was indeed a chance that the world would come to an end."

That said, a bit of perspective helps. Reichert notes his grandfather faced much tougher times when trying to set up his own business in Chicago in the 1920s.