How A Vc Does It

It is a bright yet chilly April day in New England, and venture capitalist Robert E. Davoli is behind the wheel of his slate-gray BMW 540i. Dressed in a dark-blue suit with purple pinstripes, Davoli is flying down the Massachusetts Turnpike at 75 mph to get to a board of directors meeting in Natick, Mass.

For Davoli, 52, it is a jittery time. Many of the once high-flying stars of the so-called New Economy have lost one-half to two-thirds of their market capitalization. The market for initial public offerings has all but dried up. That puts Davoli, with five red-hot technology companies itching to go public, at ground zero of the tech-stock massacre. Edocs Inc., the company in Natick, produces software for Internet billing. The others boast appellations that just weeks earlier would have quickened the pulse of any investor. There's Excelergy, Servicesoft, Context Integration, and StorageNetworks, which some analysts believe could be one of the year's biggest IPOs. The market decline has exacted a huge price from Davoli. If these five companies had made their debut a month earlier, they would have fetched a combined market value between $7 billion and $11 billion. The biggest uncertainty on this spring day is StorageNetworks, which lost $23.9 million on sales of $3.9 million last year. With investors suddenly queasy about funding money-losing startups, the data-storage utility has been forced to lower its latest proposed offering price to below its last-round valuation of $2 billion. "This has been ugly," says Davoli. "Really ugly."