I had to shake my head this morning after reading a New York Times story on how VCs appear to be stumbling over each other to invest in dot-com firms again. The story cited Accel Partners' $12.2 million investment in Facebook.com, a social networking outfit focused on college students. (Haven't we gone through the social networking investment craze already and discovered there isn't a compelling business model?) The VCs justify these kind of investments because they are quality opportunities even though there's plenty of risk. Hey, this sounds a lot like what they were saying six, seven years ago! One thing I've learned from 15 years of business journalism is most investors who do well are a lot less smart than we give them credit for, and investors who make bad decisions tend to have short-term memories. The new wave of interest in dot-com companies has much to the fact investors are optimistic again about the Internet's potential - fueled, in part, by the success of Google shares since its IPO last year. As a result, investors are more willing to accept risk than they were just two or three years ago when dot-com investments were brushed aside as investors licked their wounds and VCs retreated to "tend" their portfolios. It means there will likely be be a mini-dot-com boom as investors race to make sure they catch the next wave. Unfortunately, the bubble will likely burst again as people pay for their irrational exurberance.