Last month Sequoia Capital gave a presentation to its startups entitled ‘R.I.P Good Times’ in which they argued that (their) companies must cut costs fast to survive.
Whilst we know that there are lots of VERY (okay, INCREDIBLY) bright people at Sequoia it’s a real shame that this (sentiment) seems to have become accepted wisdom among investors cos’ bottom line this (often) short sighted strategy has led to layoffs in scores of companies as even well-funded companies start to reserve their cash.
Many folks we speak to disagree with our views here and say, quite correctly, that they (the investors) have every right to conserve their cash, that the networks and the vendors didn’t need to take the VC money in the first place, etc., etc.
Our take however is that VCs and HNI’s not wanting to hand over their cash at the moment – even for those who were committed to say funding $40M a year or so ago – is actually going to be the death knell for several (more) big digital OOH networks in early 2009.
Already in the US we hear of two networks who are looking to be quickly offloaded / or acquired as they are both cash starved by their initial investors – rather than by the current economic climate (which somehow will surely make their demise even sadder?).
A lot of the consultancy work that we do is with the investment community so we would be stupid to ‘bite the hand that feeds it’ but as we see more and more layoffs, it’s hard to keep quiet and not say how disappointed we are with those who are pulling back when they should in fact be pushing forward.
Surely then it has to be a special new year ‘hats off’ to STRATACACHE who seem to be leading the way with their ‘Technology Acquisition Fund‘ and also several of the Scandinavian early stage investment groups whom we know who are also actively investing in these trouble times.
Fortes fortuna adiuvat