Next Things First


Running on Empty by Rob Coppedge

The snow storm that has left Seattle immobilized (the schools were closed a day *before* the storm, just for good measure) has created the perfect  cold, wintry environment to read the just released National Venture Capital Association survey.  It confirms the icy predictions we’ve been making over the past month – things do not look good for start ups and early stage companies in 2009. In fact, for those that will need the capital markets, things look quite bad.

Respected Seattle business journalist John Cook comments on the NVCA report:

I’ve been informally conducting my own survey of VCs, lawyers and entrepreneurs around town.  The message I am hearing is not pretty, with one VC saying that nearly everyone is hunkered down. Long-time tech entrepreneurs such as The Cobalt Group’s John Holt and Jobster’s Jeff Seely have told me recently that it is about the worst economic environment they have seen.

The general feeling is that the capital markets may be shut for another 12 to 18 months, meaning that startup companies will have to learn to exist on the fumes of their previous venture rounds or get to profitability sooner than anticipated.

Running on fumes… Wow. I made the mistake of using that line with several start up CEOs recently and they almost took my head off. “What do you think we’ve been doing?” “We don’t have any fumes left… we ran out in the third quarter”.

A 70s Flashback for Start Ups

Running on Empty: A 70s Flashback for Start Ups

Without access to capital many of these early stage companies won’t make it to the next gas pump. Unfortunately, with news like this NVCA survey and  Coller’s Global LP Barometer, it doesn’t sound like the capital markets are going to show any sympathy.

Sure, there may be bigger problems out there.  But when billions of dollars are spent to bail out industries that  need to shed jobs, it is troubling to see the innovation and job creation engine of our economy seriously threatened by a lack of relatively small amounts of capital (mere rounding errors to the Treasury’s bailout accountants).

Posted by RobC

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