economic meltdown – no VC? WRONG

So its official (ok I think it has been for a while) – the world is no longer the same is a phrase used again and again. Some of our friends in the valley (name begins with S and have a lot of cash) have also sent the SOS out to “invest in consolidation…hold your cash”…

I have met a lot of budding entrepreneurs in the last few days and all seem to be growing white hair thinking there is no more cash; infact in 80% of the interactoins I have had with press (more on this in next post) in the last 2 weeks the first or last question is always – how does the current economic climate effect your funding situation… and I think this is a worry a lot of startups are sharing so let me give my two cents worth after having spoken to some of the guys being accused of “holding cash”. Note:

  • Most of the funds the world’s VCs are actually sitting on under utilised funds – infact I know of some that are less than 25% pledged of total assets created in particular funds
  • Big pockets are still there – so there is no dirth of cash
  • However…the rules are now harder so if you think you have a new cheese making machine that you are looking to raise $10m for then the time is sadly no longer the right one but if you have a bonafide business that has real potential then there is plenty of cash
  • Note well… that valuations are a very “bearish” and most people will be hard pushed to give you top valuations from 2 years ago.
  • Present well… VCs will be a lot less forgiving – they need an excuse not to give you cash right now – not because they dont want to but lehman changed the world in september; the subprime crisis shocked the world over and like they say “things are not the same”

if any of you are still worried – pop me a message and i’ll try to calm  you down!