Investors Tighten Grip On Venture Capital

As sources of money dry up, potential backers demand that science startups have prototypes to show off, if not products ready to roll PALO ALTO, CALIF.--For much of the eighties, software engineer Eric Hannah rode the roller coaster of venture capital funding for new high-tech startups in northern California. But after one rocketing success and one crashing failure, he's promised himself never to risk another ride. In fact, one of the things he likes most about the Silicon Valley company he's

Written byTa Heppenheimer

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As sources of money dry up, potential backers demand that science startups have prototypes to show off, if not products ready to roll

PALO ALTO, CALIF.--For much of the eighties, software engineer Eric Hannah rode the roller coaster of venture capital funding for new high-tech startups in northern California. But after one rocketing success and one crashing failure, he's promised himself never to risk another ride. In fact, one of the things he likes most about the Silicon Valley company he's now with is that it's not being bankrolled by venture capitalists.

"The problem with venture capital is that it's impatient money," says Hannah, a physicist who is now vice president of engineering at Palo Alto, Calif.-based Savitar. The two-year-old company, which designs software for electronic imaging with an emphasis on high-resolution color, relies on the personal assets of its founder, computer scientist Rudolph Burger.

Not every entrepreneur has sworn ...

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