Venture capitalists are still bullish on Silicon Valley, injecting over $464M in the first quarter of 1996. Investment may be dropping off slightly -- following a "normal three-year boom cycle" -- but low rates of investment this cycle may equal the peaks of the 1980s. [Ricardo Sanduval, SJM, 5/20/96, 1E.]

Venture capitalists are backing two new Internet startups per week. Stock in such companies, used as a recruiting bonus, is being called "Internet currency." Execs used to expect a $500K equity stake vested over five years, but are now asking for up to $5M over two years. [Kathy Rebello, BW, 6/17/96, p. 40.] (The IPO market is saturating, and Internet companies will have a harder time getting those high stock valuations. Lycos and Excite didn't draw the same enthusiasm as Yahoo!, even though all three hit the market in April.)

What does a high valuation buy you? Other companies. Netscape has traded over $400M in stock for Paper Software, Collabra Software, Insoft, and a minority interest in Voxware. Such purchases -- at what seem like outrageous prices -- are a hedge against declining stock prices. Also, buying a company that's actually earning money can help the new owner look better. For the small company, selling all or part of the company can be a lot easier than going public. RSA Data Security (Redwood City) was getting two informal offers per week, prior to its purchase by Security Dynamics Technologies (MA). The sale price was about $200M, but the stock value quickly rose to $450M -- impressive, for a 50-person company making less than $1M/year. [Janet Rae-Dupree, SJM, 5/20/96, 1E.]

Startups are encountering higher employment costs, shorter product life cycles, and an earlier need to expand overseas than ten years ago. Capital needed for a company's first five years has thus increased from $7M average to $11.6M. [SJM, 5/10/96, 1C.] (A typical venture-backed startup begins with 16 employees, growing to 282 within six years.)

Apple has a new site to help small businesses, at . The company is also planning to donate Mac systems to all SBA Business Information Centers. [iNews. NewtNews, 6/11/96.]

The Enterprise Network (TEN) offers unpaid executive mentors -- and their business connections, and an investor matchmaking service -- to Silicon Valley startups. They help technical entrepreneurs think about markets and business instead of just products and technology. TEN is itself a startup, spun out of the "Joint Venture: Silicon Valley Network" project. It has worked with about 80 companies, of which 39 recently reported 287 employees and a need for another 300 this year. For a free entrepreneur's resource guide, contact Joe Becker , (408) 554-6816, (408) 554-5474 Fax. [James J. Mitchell, SJM, 4/28/96, 1E.]