My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

The Lowdown

This expert says tech has to get even worse before it can start getting better.
Magazine Contributor
2 min read

This story appears in the March 2003 issue of Entrepreneur. Subscribe »

The Waltham, Massachusetts, investment bank is called Broadview, but Paul Deninger's thoughts on the high-tech market are not always broad. In fact, Broadview's chair and CEO has very specific thoughts on how the technology sector can improve, and he should know. Broadview specializes in mergers and acquisitions in the high-tech field, and they also have their own venture capital fund. But not everybody has wanted to hear Deninger's advice. Three years ago, at a European Technology Roundtable conference, he was nearly booed off the stage when he warned Internet entrepreneurs that the bubble could soon burst. It did, of course-but worse is yet to come, according to Deninger.

So if you were king for a day?

Paul Deninger: There are three things I would do, if I could wave my magic wand. First, I would reduce the number of public companies. There are 1,600 to 1,700 public companies in technology. That number has to come down by at least 300 to 500, maybe more, and the way for that to happen is for those companies to merge. There is also dramatic over-funding for technology companies, and [reducing] that would help stabilize the public market. And then one step back in the food chain, a lot of private companies need to either [merge] or go out of business. Thousands of private companies probably should go out of business. Stop venture-funding them. There are way too many companies funded in every category. The third thing I'd do is address the root of the problem, which is too much venture capital, which I'm sure your readers will be shocked to hear.

Undoubtedly. So if there is too much venture capital out there, why do entrepreneurs feel there isn't enough?

Deninger: Because there are too many companies. We've got too much capital out there funding the seventh, eighth, ninth, tenth companies in these markets. And it's those companies that are having trouble raising venture capital; it's the companies that are not going to be winners that feel venture capital is tough to find. I can tell you, really great companies with really great management teams and really great ideas are not having trouble getting funded.

When you talk to high-tech entrepreneurs and suggest going out of business is something to consider, do they agree with you?

Deninger: Yes, they absolutely agree-they think the other guy should do that.

More from Entrepreneur

Dustin's experience and expertise can help you monetize your message, build a marketing strategy and connect with influencers.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Are you paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.

Latest on Entrepreneur