"You Can't Let Them Self-Medicate"
Bill Bryant of DFJ & Steve Hnatiuk of Yaletown had a little chat on the state of venture capital in today's environment. Bill came up with the line of conference - read on . . .
Steve: Is this a good time to start a company?
Bill: Entrepreneurs don't start companies based on timelines. They start companies because they have ideas and passion around ideas. However, they need to be more patient with the exit, and they need to do more with less money. They'll likely have to build entire companies, from soup to nuts for $12 million.
Steve: Cleantech is all the rage. Where does that leave software & IT in the eyes of VCs?
Bill: In the enterprise market, a global market has many global 2000 companies downsizing the number of vendors it is willing to work with. I know of one company that has gone from 950 vendors to 4. This makes it tough for startup enterprise plays. In addition, valuations for consumer software plays based on advertising revenues will be tough.
Steve: How do you manage a near-death experience at a venture?
Bill: Just like patients that have just had a stroke, you can't let them self-medicate. You need to step in as an investor and help lead the way.
Steve: Do you see huge opportunities in the market turmoil?
Bill: Sure, but the problem is, exits are tougher in this environment. 6 - 8 companies have gone public in 2008 vs. 80 - 90 last year. In the near term, things are going to be tough.
BIll: Investors should take a DNH (Do No Harm) approach. Try to add value, but don't get in the way.
