December 11, 2008
- Waltham, MA
[Editor's note: Since the economic downturn deepened several months ago, VentureBeat has been receiving advisories and commentaries from all sides prescribing one-size-fits-all solutions for startups to survive to slump. But this overlooks the fact that companies will experience tough times differently based on who they are and what they sell. Below, venture capitalist Michael Fitzgerald offers several more tailored strategies.]
With liquidity and credit drying up, startups face the prospect that the next 12 or even 24 months will be extremely difficult. No one knows for certain how long or deep the downturn will be, or exactly how it will unfold. But in this environment, it’s all about staying alive, not out-sprinting competitors.
Sure, almost all companies can improve their chances of survival by crafting conservative plans aimed at breaking even; quickly adjusting tack as market conditions change; taking a longer-term view than usual; and substituting “time for capital” (after all, time is plentiful and capital is becoming dearer every day). But startups in particular will have to address challenges that are specific to their particular stage of development and market sector.
When planning with their startup management teams, VCs must consider how market conditions will impact each of their portfolio companies individually, and advise them accordingly. Some may suffer as others weather the storm, and still others may even prosper.
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