Archive for April 1st, 2009
Starting up during a recession?
by Olivier Cabanes
What are the ideal conditions for an entrepreneur to take the leap and launch his startup? When is the right time to jump in? As far as economic cycles are concerned, I think there is probably no “right time”. In fact, motivated and competent teams/individuals should always be able to draw advantages from the environment they operate in, regardless of the economy.
At last week’s Capital Innovation, it was interesting to hear JLA Venture’s Pierre Donaldson speak along those lines as he drew a picture of the 2009 VC landscape. Here are three things he mentioned that I think every entrepreneur should remember in times when valuations are down and venture funds are scarce:
- Adverse economic conditions will give rise to stronger companies as they force entrepreneurs to run a tighter ship.Consequently, the balance sheets shown to VCs will be healthier and the chances of getting funded are increased.
- While layoffs are generally bad news to most people and the overall economy, they can be a great opportunity for startups. Previously unavailable or unaffordable dream candidate might be looking for a job now, and the perks offered by startups might be more appealing to them than in past times.
-An entrepreneur that has a good business to show (team, product, and business model) should be able to raise funds in order to scale and grow. VCs might have handed out fewer term sheets in the past few months, but companies still got funded.
So when you combine this with the stimulus plan outlined by Quebec in its recent budget (see also Raymond Luk’s post on the subject), I think 2009 should offer a very decent environment for tech startups.
2 comments April 1, 2009
