Venture Capital Firm Warns Startups of Impending Credit Crunch Effects

 
 
By Chris Preimesberger  |  Posted 2008-10-09 Email Print this article Print
 
 
 
 
 
 
 

Sequoia Capital is one of the first venture capital firms to issue a strict advisory warning to both startups and established companies in their portfolios to trim expenses, cut ancillary jobs and contractors and tighten budget belts.

Venture capital firm Sequoia Capital, known for backing IT mega-hits such as Google, Apple and YouTube, Oct. 9 became one of the first VC firms to issue a strict advisory warning to both startups and established companies in their portfolios to trim expenses, cut ancillary jobs and contractors and tighten budget belts.

Web 2.0 blogster Om Malik reported that Sequoia started a board meeting Oct. 8 by showing an image of a gravestone and the phrase "R.I.P.: Good Times."

"The credit crunch is hitting tech land like the proverbial Category 5 hurricane," Malik wrote.

The message delivered to those in attendance was that things could get a lot worse than people think, and it will be a more protracted downturn, Malik wrote.

"To give a historical perspective, Sequoia had a similar meeting back before the last bubble unraveled. We know how that turned out," he wrote.

Sequoia is not the only VC investor involved in IT startups to issue this advisory. Angel investor Ron Conway also has advised the startups in his own portfolio with similar ideas on how to cut costs to survive until it is possible to raise funds again.


 
 
 
 
Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz
 
 
 
 
 
 
 

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