Archive for the ‘recession’ tag
Launch a startup during recession?
Photo by aturkus
I attended the Austin Alliance’s Fall Event tonight. It was a a three man panel moderated by Clark Jernigan of Austin Ventures. The title of the event was “Why the Best Time to Launch Your Business is During an Economic Downturn.” This title was thought up before the big kaboom. The focus of the event remained the same, but the thesis was different, if not opposite. Here are a few quick thoughts on what was talked about.
It is uncertain whether the Sequoia presentation will prove to be true. Slide 42 paints a grim picture of how long it will take to recover. However, there is no historical ground for this assumption because there has been no recession this grave in the last 50 years, let alone in the last 35 in which the Venture Capitalists have been around. Regardless of what happens, the game has changed and Venture Laborists are going to have to adapt.
There are a few things about the downturn that are good for startups if (BIG IF) they have some capital to spend. First, they can employ smarter people for less. The engineering giants have cut their rosters indiscriminately and there is opportunity to snatch up smart people as they fall from Yahoos and eBays. Second, there is opportunity to buy out assets from companies that are shedding weight. Those assets can be tied together to produce a lower cost solution for customers because there is no R&D to amortize. Third, you will necessarily learn to manage capital more conservatively (better). There is no room for high-burn-rate companies and bootstrapping is going to become an art.
In general, there is not going to be much VC money around so we should all plan to survive on seed money and inlaws.
