The Sequoia investor who left to start his own VC firm says startup founders can table their plans to raise funding. Here’s what they need to do instead.
- Chris Olsen, a former Sequoia investor who left to start his own VC firm in the Midwest, says startup founders can expect their access to funding to dissipate because of the coronavirus outbreak and its ripple effects.
- The companies that will survive will take drastic measures, quickly, to conserve capital over the next year.
- “If you overcorrect now, the cost of doing so is relatively minimal when you consider that the alternative is you gradually discover that you’ve gone out of business,” Olsen said in a video message to portfolio company CEOs.
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For startup founders, any plans to raise funding are evaporating as the threat of a financial recession becomes inevitable.
Already, funding for private companies has fallen dramatically — by 12% — in the first quarter over last year, according to CB Insights. There are also reports from founders saying investors are using the COVID-19 pandemic to renege on deals.
A venture capitalist based in the Midwest is telling his portfolio companies that if they want to survive the next 18 months, as capital dries up, they need to act now — no half-measures.
“If you overcorrect now, the cost …continued .
[Source: Business Insider]