After the housing bubble in the US, Ireland, Spain and the UK, and after the default on mortgage loans at financial institutions, there are still many uncertainties about where additional losses will occur.
As a result, financial institutions are reluctant to make or to buy loans; insolvency risk raises the risk among firms; and fear of runs lead financial institutions to seek liquidity. Meanwhile Sequoia Capital’s R.I.P.: Good Times* is traveling around the world, causing entrepreneurs to fear that it is not the perfect time to seek VC funding.
The speakers at the Berkeley Entrepreneurs Forum agree that we are going through a “moment of extreme schizophrenia”. Limited partners are very stressed and this makes fund raising very difficult for GPs. Start ups that do not have revenues, will find it hard to get follow on rounds. From the investors’ point of view, now is perhaps the moment for making long term investments, always looking for very large returns.
However, “difficult times always create opportunities” and thus it can be a good moment for entrepreneurs to think of “making something out of nothing”. In the current global world, perhaps it is an opportunity to go to international investors for getting funding.
The future? It is not predictable. The results will be different than in 2000. Then, we suffered an equity crunch and now we are going through a credit crunch. Most likely after the crunch the situation will become more stable and clear, which means that the financial institutions and the loans will be carefully regulated.
* Sequoia Capital: R.I.P.: Good Times (http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation?type=powerpoint)
As a result, financial institutions are reluctant to make or to buy loans; insolvency risk raises the risk among firms; and fear of runs lead financial institutions to seek liquidity. Meanwhile Sequoia Capital’s R.I.P.: Good Times* is traveling around the world, causing entrepreneurs to fear that it is not the perfect time to seek VC funding.
The speakers at the Berkeley Entrepreneurs Forum agree that we are going through a “moment of extreme schizophrenia”. Limited partners are very stressed and this makes fund raising very difficult for GPs. Start ups that do not have revenues, will find it hard to get follow on rounds. From the investors’ point of view, now is perhaps the moment for making long term investments, always looking for very large returns.
However, “difficult times always create opportunities” and thus it can be a good moment for entrepreneurs to think of “making something out of nothing”. In the current global world, perhaps it is an opportunity to go to international investors for getting funding.
The future? It is not predictable. The results will be different than in 2000. Then, we suffered an equity crunch and now we are going through a credit crunch. Most likely after the crunch the situation will become more stable and clear, which means that the financial institutions and the loans will be carefully regulated.
* Sequoia Capital: R.I.P.: Good Times (http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation?type=powerpoint)
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