Venture Capital's Liquidators

Silicon Valley is famous for its awesome startup machine, but the place is just as brutally efficient at winding down those companies when things turn south. So as the imploding economy finally hits the tech sector, the vultures of the Valley are flocking, hoping to profit from corporate misfortune as they did during the dot-com bust. "We unwind dreams," says Martin D. Pichinson, co-managing director of Sherwood Partners, a firm that restructures and often sells the remains of failing tech companies. "It's our turn."

Pichinson, known among his venture capital clients as Marty the Liquidator, is part of a network of corporate dismantlers that includes online auction firms, intellectual-property brokers, used-equipment liquidation outfits, and bankruptcy attorneys. They're starting to work overtime as troubled companies—from high-profile Internet phone service SunRocket to countless obscure Web, semiconductor, and networking startups—flame out in greater numbers. And with venture capitalists starting to cull more and more of their less promising startups in the past month or so, the corporate cleanup crew anticipates even more business in the coming year, if not years. "We're going to make a lot of money," says Ross M. Dove, president of worldwide business development for GoIndustry DoveBid, which auctions off everything from chairs to computers for a cut.