Monday, October 27, 2008

Business Busts Will Be Booming

A specialist in winding down failed startups drops some hints on why the IPO market will stay comatose for several years (end of article):

During the bubble, something like 1,600 companies were funded. I hear in recent years there’s between 1,200 and 1,300, including some older investments. I see VCs clearing out a minimum of one-third plus of those investments. The banks will tell you the same thing. It’s why you have to keep your powder dry. You really have to watch what’s going on.

Startups that want to survive will hopefully heed Sequoia Capital's advice and have a year's worth of cash on hand. On the other hand, there's money to be made in business liquidation services. Maybe all of those unemployed homebuilders and mortgage brokers can find work packing up the assets of bankrupt startups.

The good news is that serial entrepreneur Jason Calacanis thinks that zero-cost online startups have enormous advantages in a recession. We here at Alfidi Capital couldn't agree more.