The Equity Kicker - Latest Comments in Macro-economic gloom and startups

Re: Macro-economic gloom and startups

Ian Leonard — Wed, 23 Jan 2008 06:05:59 -0000

I'm inclined to agree with Alex, I started a technology business in 1993, interest rates were relatively high and house prices were forecasted to fall even further. We managed to build up rapidly in a niche market and flourished in the late 90's. Got out in 2003/4 by the skin of my teeth, I hung on too long.
Currently looking for other ventures after a period of consultancy work. Any offers ? Ian

Re: Macro-economic gloom and startups

nic — Mon, 21 Jan 2008 04:55:41 -0000

Hi Alex - your point is a good one. Businesses started in the depths of recession are often the ones best placed to take advantage of the eventual upswing.

Joe - the investors in our funds like us to invest at a constant rate and leave it to them to judge the cycle so in theory our investment rate should remain constant. That didn't really happen in the last bust because there were so many first time funds who lacked the experience required to pull this trick off. Going forward I expect that to be less of an issue. The other dynamic relates to our time - we can only look after so many investments, particularly if they are underperforming and taking up a lot of time, so during a recession when exits take longer individual partners may not have the same bandwidth for new investments as they do when times are good.

Re: Macro-economic gloom and startups

Joe T. — Sun, 20 Jan 2008 04:14:45 -0000

Nic, to what degree do concerns about the performance of existing investments, during rough economic times, influence a VC's decision to invest going forward?

Re: Macro-economic gloom and startups

Alex Moore — Fri, 18 Jan 2008 09:04:23 -0000

A follow-on point worth noting perhaps Nic: setting up a business during a downturn can be the best time. New companies who set up and start generating revenue during tough times can demonstrate they are recession-proof. Something boom-time startups can't claim.