Mark Heesen in his office in Arlington. (Evy Mages/FOR THE WASHINGTON POST)

Mark Heesen became president of the National Venture Capital Association in 1999, a time when investors were pouring excessive amounts of money into just about any company that promised new technology.

Then it all went bust.

Heesen is preparing to step down as head of the Arlington-based organization in September as the venture capital industry is again enduring hardship. The latest recession and continued economic uncertainty has many firms struggling to raise fresh money from limited partners.

Heesen sat for an interview with Capital Business. What follows are excerpts from that interview:

What was it like to be a part of the association during the dot-com boom?

It was shocking. We track our investments quarterly and we were investing, in some quarters, more than we had in entire years. It was crazy. And you knew that it couldn’t continue.

One thing this association did, which has helped us over the long run, is when the bubble burst, we were very honest about it. We made some mistakes here. But having said that, the bubble was absolutely worth it because without the bubble, we wouldn’t have the Internet of today. The incredible changes we have seen since the ’98/’99 bubble are really quite revolutionary. Not having that bubble ... very likely [we] would not have quickened the pace of innovation as fast as it did.”

How did the bust change the venture industry?

Our investors, who are pension funds and colleges and endowments and family offices, suffered. Our returns suffered. And we’ve been paying the price for that. What you’ve seen over the last several years is a much more, in my view, mature industry. We’re investing about $25 to $30 billion a year; very different from $100 billion. The industry has shrunk, the tourists got out and those who are left standing are on the cusp of entering a good period for venture.

There has been disappointment in returns from venture capital in recent years. Why should limited partners still invest in this asset class?

We are helping to create, hopefully, the innovations of tomorrow. If we’re not doing this, who’s going to do it? Someone has to be investing in these companies. People say, ‘Oh, crowdfunding can do it.’ But the reality is crowdfunding isn’t going to fund a biotech company. It may be able to help a college kid with an IT company and that’s great. It’s not going to fund a clean tech company. Those things can’t get funded but with venture dollars at this point. And you’ll get a good return at the end of the day if you’re patient.”

How would you compare this most recent economic downturn to the dot-com bubble?

What we’ve gone through this time around is a little bit more unnerving to venture capitalists, and what I mean by that is you’ve seen Darwinism at work. Venture firms that have been able to get through the bubble haven’t been able to get through this downturn.

A lot of that is because our limited partners, our investors, kind of gave them another chance [after the bust]. But you get one more chance, you don’t get two. This time they tried to go out and fundraise, and limited partners said, ‘It’s been great, but no thanks.’ So you’re seeing more walking dead firms than you did in the past, and you’re seeing more firms shut down.

What is the biggest threat to getting people to invest?

I think it’s the exit market and our ability to give them a return that is good enough for them to make these long-term investments. The reason why that’s more important today than it has been in the past is the length of time for companies to go public or get acquired has gotten longer, not shorter. Because it’s gotten longer, you have to have even more patient investors.

You’ve said before that the venture capital industry is shrinking. Do you think venture capital will have less of an economic impact as a result?

You’re still going to have the Facebooks of the world, the Ciscos, the Amgens, the Genentechs — those companies that really are market drivers. Tesla is one that I think is going to be a market driver over the next five to 10 years. Those are still going to be around. Are you going to have fewer companies being funded? Probably. But I don’t think that means we’re going to have fewer successful companies.

How has Washington’s venture community changed over your tenure?

This has been an area that has always been viewed as this could be a real center for venture capital ... and yet we have not seen it yet. I would love to see a venture ecosystem grow here in Washington, D.C., itself. It is one of those things that after 25 years, I’m surprised we haven’t gotten as far as, in my belief, we should be.

Is it just not going to happen?

VCs from outside the region say the problem is we’re so government focused here, that people are used to getting a paycheck every two weeks, which is not the case in Silicon Valley. That’s a hard mind-set for a lot of Washington residents. Until we check that at the door, it’s going to be more difficult.

There are some great companies here, you just have to see if they’re going to be able to grow. We’ve had some issues in the past with some companies going out to the [Dulles] airport that grow but didn’t stay here or grow and failed. You want to have companies that are successful and stay here and continue to be entrepreneurial.

Is there a chicken-and-egg scenario between building the venture capital community and building the entrepreneurial community? Which comes first?

We are absolute followers, not leaders, in my mind. We follow the entrepreneur wherever that entrepreneur is. You have to have an entrepreneurial base before you have a venture base.