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In late October, Allison Leopold Tilley’s venture capital client was poised to make a $6 million investment in a semiconductor company when competing VCs swooped in with a better offer. Tilley, a Pillsbury Winthrop partner, was bummed she missed out on the work, but is feeling a bit cheered that VCs are again competing for deals. She said it suggests VCs are ready to put more of their money to work, and maybe, that Silicon Valley will soon be awash in venture deals. Tilley can hardly be blamed for seeking a sign — any sign at all — that VCs in the area are waking up. VCs did fewer deals in the Bay Area during the first three quarters of 2003 than in the same period last year, according to the Ernst & Young/Venture One U.S. Venture Capital Survey. In the Bay Area, venture capitalists put money into 418 deals in the first nine months of this year, the survey said. That represents an 8 percent drop from the 453 deals the survey recorded in the region during the same period in 2002. The slowed investment pace among VCs may help explain why Tilley’s clients, whom she declined to name, were shocked to learn they got bounced. Tilley said the entrepreneur didn’t offer many details about why he chose the other VC firm. Tilley said she suspects the other firm was offering more money for the company’s stock, giving her another reason to pump a fist in the air. “It all comes back to more deals,” Tilley said. “I don’t benefit personally from better valuations. I benefit from more deals happening and companies being happy.” Until the flood of new deals materializes, Tilley said she’s got plenty of hours to bill with an initial public offering in the pipe and IPO launch meetings for two other clients on her calendar in the coming weeks. She predicts a bump in IPO work will continue to feed her practice until VCs get back to work in earnest. In the meantime, she said she’s excited to know that the Valley is looking a bit like its old self. “During the bubble, it was a seller’s market, and the companies were in the driver’s seat and getting lots of term sheets and could pick and choose,” Tilley said. Losing that deal, she said, “was like the good old days.”

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