How Bad is the Weather?
I live in a remote area of San Diego County which is itself larger than some states and a few of the smaller nations of Europe. Presently I am in the middle of a nasty windstorm. These "Santa Ana" winds bring a lot of fear to the small community of Julian where I live because they happen during our October fire season. I've been evacuated three times during very bad fires over the last five years. There is a lot of fear, uncertainty and doubt during our fire seasons. Currently a couple of fires are already causing trouble in the County. One of them is at Camp Pendleton, the huge military base near the ocean. The fire is so big I could see the flames from my deck last night even though I am an hour or more away by road from the Camp (but maybe 30-40 miles as the crow flies.)
When I moved here five years ago there were 600 homes in my town. 300 of them have been destroyed by fire so far, so now there are only 300 left, not including the few that have been rebuilt. The last major fire burned all the way from the mountains to near the beach, taking out homes as it moved rapidly down the mountain. Many homes in the city of San Diego itself were lost. It was a hurricane of fire, as it were.
Right now, in the business world, as you know, a fire storm of sorts is raging. How is all of this mess effecting the world of start ups and the venture capital community?
The fact is, we don't know, because the numbers aren't in yet. It will take a quarter or two for us to figure out if the number of start ups, and the over all amount of money being invested by VCs, are down compared to previous years. Early 2008 appeared to be robust for investments in start ups. Third quarter stats will be revealing. Those stats we have now were accumulated before the Wall Street meltdown led to a locking up of the world's credit network.
However, I am expecting to see an even greater number of start ups to be created, despite the trouble on Wall Street, and really, because of the trouble on Wall Street.
A lot of people are losing their jobs right now. Many of the people who lose their jobs will find themselves feeling all "entrepreneurial" and create their own start ups. They may find it more difficult than normal to seek out venture capital funds, but they will fund themselves first with money from friends and family and angel investors still appear to be a good avenue for investment funds for early stage companies.
I have a feeling that some very successful companies will be founded during this "economic crisis." Expect, too, for a general feeling of hope in the marketplace to ensue after the election if Obama is elected, which is almost sure at this point to happen. Time will tell if Obama, if elected, can lead the USA (and the world) to solid economic ground. I'm pulling for him. Anyway, expect November to show some new hope for the world's economic situation with related upticks in the Market.
Remember this, as well, the formal angel investment groups and the formal venture capital groups exist, and can continue to exist, only by handing out money to worthy start ups. While the flow of cash might diminish, I don't expect it to dry up completely.
No storm lasts forever.
I agree, the "Storm of Correction" will not last forever. In fact, once a fire burns a forest, the forest grows back stronger and better for years to come. We often forget that in matters of money and in life, a bit of correction now and then is often the genesis of a new and better path. Is the correction voluntary or involuntary, that's the real question. We know that if you make the decision to change, it somehow feels better than being forced into new standards, such as we are experiencing now.
Whether a new political team truly makes a difference is to be determined. My thought is that the new president is merely the catalyst that brings about the state of renewed hope.
It is renewed hope, coupled with other economic factors that will propel us forward into better times. Of course, the fact the government is throwing all kinds of money about, does not hurt matters either. I feel sorry for our children who will be paying a long time for the government's "generosity".
By the time we find the rhetoric of the new administration caustic to our ears, the economy will have found its way back on track and cycle will have once again come full circle. We can go back in history many times to observe this ebb and flow.
As a baby boomer that has worked in the corporate world for more than 20 years, I know that it is going to take more than few years to see my 401K recover. While I toyed with the notion of retirement within the next few years, I know that is not going to happen unless I find a retirement source of income to supplement my savings. I think the latest plunder of our hard earned riches is going to push a lot of us to dig deeper, refine our skill sets and venture into directions for ourselves, to boost our earning potentials into retirement.
Perhaps, a career of our own design, may turnout to be the most fulfilling one yet.
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Right on, Rod - agree with you completely. Necessity is the mother of all invention - what better motivation to finally make the leap and do a startup than a bum economy.
I think comfort is a big deterrent for people with startup aspirations, especially once they break the six-figure mark, from my personal observations. It's tough to voluntarily walk away from a nice salary for a leap of faith.
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