|
|
|
Published: 11/18/2008 9:11:12 AM, comments: 0
|
Recessions are usually considered bad things, especially for those who invest in businesses. Many of those investments will end up accelerating into a crash and burn scenario. I realize that it must be pretty painful for all concerned.
The reasons why recessions are good for business in the aggregate, especially venture capital-supported businesses, are that they focus more limited resources on companies providing maximum value to customers. Recessions get rid of companies that provide minimal value, leaving those companies with a higher value proposition to thrive.
Also, recessions tend to cull out the less-capable entrepreneurs and managers from the more capable. In times like these, only the strongest entrepreneurs are able to obtain financing and support for their ventures.
Lastly, those companies that are around at the end of the recession, which are presumably the strongest companies, usually create the greatest amount of value for their investors and managers as the general economy pulls out of the recession.
To the victor go the spoils.
Cheers,
Don Jones
VentureDeal
|
 |
|
|
|
Published: 11/12/2008 12:26:51 PM, comments: 0
|
Alan Patricof is a highly regarded digital media/Internet company investor, who founded the New York based venture capital firm of Greycroft Partners.
He was recently interviewed about the differences between companies in New York versus the West Coast and also had some interesting comments and perspective on the effect of the current financial problems on the prospects for venture capital investment:
http://www.thedeal.com/blogs/video/behind-the-money/behind-the-money-alan-patricof.php
Cheers
Don Jones
VentureDeal
|
|
|
|
|
Published: 11/5/2008 3:14:07 PM, comments: 0
|
Here's a great conceptual post from Seth Godin on the different ways that people spend their time. It should be thought-provoking...
http://sethgodin.typepad.com/seths_blog/2008/11/reacting-respon.html
Cheers,
Don Jones
VentureDeal
|
|
|
|
|
Published: 10/30/2008 4:28:04 PM, comments: 0
|
This is probably my one and only political post (this year at least). It pertains to the taxing of capital, or more precisely, the possibility of increasing the tax on capital and capital gains.
Study after study has shown that when the government taxes something, it generally disincentivizes the activity related to that tax. An increase in the tax on capital, through capital gains tax law changes proposed by Barack Obama and other Democrats, will result in a reduction of the employment of that capital and related economic activity.
Regardless of other consequences associated with higher capital gains taxes, don't be fooled. Capital gains tax increases will result in a reduction of capital investment. Vote for the party that is capital friendly.
Don Jones
VentureDeal
|
|
|
|
|
Published: 10/22/2008 3:08:00 PM, comments: 0
|
I really like this quote from Paul Graham, co-founder of Y-Combinator, a start-up incubator of sorts:
Paul Graham says "If we've learned one thing from funding so many startups, it's that they succeed or fail based on the qualities of the founders." "Which means that what matters is who you are, not when you do it."
If you are thinking about starting up a technology company, try to minimize your concerns about the current economic environment. The only thing constant in this world is change, and sometime in the near future the economy will turn up. If you are waiting until then to start your company, you'll be behind others who are starting theirs now.
Cheers
Don Jones
VentureDeal
|
|
|
|
|
Published: 10/15/2008 3:17:36 PM, comments: 0
|
With the recent financial market meltdown, many participants in the venture capital industry are noticing that the cost of capital is going up, sometimes very steeply.
Here's a quote from Fred Wilson, Internet company VC:
"...the venture capital and related debt markets have been impacted by what has gone on in the past month. I am seeing it every day in our portfolio and in the investment opportunities we look at. Financings are blowing up, terms are being renegotiated, venture lenders are getting more conservative, and existing investors are stepping up to fill the gaps. The good news is that a lot of companies, and many in our portfolios, have raised money recently and have a good amount of cash on hand. Many of those companies who are flush with cash are cutting burn rates and making sure the cash lasts even longer."
Essentially as capital has become more scarce, the cost of obtaining it for startup companies to large Fortune 50 Enterprises has gone up dramatically. Valuations that VCs are will to pay for companies are dropping.
What to do? Obviously getting your company further along in its development will help increase your valuation. Getting to cash flow breakeven or profitability will reduce risk for a potential investor.
The days of getting funding with barely a prototype are gone for the foreseeable future. So do whatever you can to make your company look bigger and further along.
Cheers,
Don Jones
VentureDeal
|
|
|
|
|
Published: 10/8/2008 12:35:47 PM, comments: 0
|
I came across this blog post from prominent Internet VC Brad Feld and I hope you are inspired by it - whether you are an entrepreneur or corporate executive:
http://www.feld.com/blog/archives/2008/10/ok_entrepreneur.html
Cheers,
Don Jones
VentureDeal
|
|
|
|
|
Published: 10/1/2008 7:14:11 AM, comments: 1
|
Here's a few links to what others are saying about the financial crunch and how to respond:
http://www.feld.com/blog/archives/2008/09/focus_on_things.html
http://www.avc.com/a_vc/2008/09/my-thoughts-on.html
http://news.cnet.com/8301-17939_109-10053832-2.html?part=rss&subj=news
Hang in there...
Don Jones
VentureDeal
|
|
|
|
|
Published: 9/24/2008 1:09:27 PM, comments: 0
|
With the recent crisis in the credit markets, there has begun to be a discussion about how that will affect the ability of entrepreneurs to find venture capital funding.
I see potentially a number of developments:
Venture capital firms, faced with a difficult exit environment, will allocate their limited resources to their existing portfolios to a greater extent, reducing their appetite for new deals.
The extent of the credit crunch will reduce enterprise demand for those portfolio company services that sell to enterprises, potentially increasing the time to cash flow breakeven or hurting revenue growth for VC investments.
VC firms will look to wind down their poorest performing companies, in order to free up capital to allocate to better performing companies.
The bar for making a new investment decision will be higher, requiring aspiring entrepreneurs to be further along with their venture and better prepared in their discussions with VCs.
Thus, I see the market environment for obtaining VC funding is getting more difficult, and requires entrepreneurs to be just that much better prepared during the fund-raising process.
Don Jones
VentureDeal
|
|
|
|
|
Published: 9/15/2008 9:06:52 AM, comments: 1
|
I'm pleased to announce the release of VentureDeal's free WordPress plugin for venture capital transactions in the United States.
The plugin is available to bloggers who are interested in automatically receiving the latest venture capital financing and M&A transactions for startup companies across all technology and life science industries.
The plugin utilizes VentureDeal's XML feeds to provide bloggers with free transactions published to their blog on a daily basis, updated within minutes or hours of their release.
A sample plugin can be viewed at: http://venturedeal.litmusbox.com. Interested bloggers may inquire about obtaining the plugin via the "Contact Us" page.
The benefit to bloggers is that they can now receive the latest information on venture capital transactions, companies and venture capital firms at no cost. The data remains on their site as a growing database, generating additional page views, resulting in a stickier and more profitable site.
Cheers
Don Jones
VentureDeal
|
|
| |