4 ms·
key points: 1. Best scenario is to not have to raise capital right now. This condition may last for another 12-15 months. 2. Slower growth at a 24-30 month or
by skmurphy 4y ago
key points:
1. Best scenario is to not have to raise capital right now. This condition may last for another 12-15 months.
2. Slower growth at a 24-30 month or longer runway is much better than high growth on a one year runway. Break-even cash flow is a good target if you can hit it.
3. Cut any sales / marketing spend that does not have an immediate (< 3 months) payoff.
4. Except for raising money most things get easier: for example less competition for good candidates and ads become much cheaper.
For context here is the "Sequoia memo" from 2008 https://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation?type=powerpoint https://www.slideshare.net/eldon/sequoia-capital-on-startups...
- prohobo 4y agoThanks for summarizing the info. But only 12-15 months? What do they foresee is going to change then, just adaptation to the new market realities? From what I understand we're likely to enter a prolonged recession.
- scarface74 4y agoThe economy is not the stock market. It’s bad for non profitable startups because VC funding is a Ponzi scheme where they fund startups hoping they can exit by selling their investments to the “bigger fools” - retail investors - after they and the investment bankers/underwriters take advantage of the initial “pop”. When the public markets are skittish, VCs are going to be holding the bag.
- petercooper 4y agoThe longest recession in the past 80 years was about 18 months (2007-2009), but most were in the 8-10 month zone. I imagine once you're almost a year into a recession you're going to be able to get a better feel for it and change tack if needed, though, if you're prepared to weather longer.