Thursday, October 22, 2009
Wednesday, October 14, 2009
Catalyst
Well, I worked real hard to get Catalyst off the ground, only to have the majority shareholder pull out before it was able to stand on its own. We were three months in on a 6 month plan, albeit with a higher burn rate than I expected, and outside forces caused the financial backer to pull out.
This, unfortunately, is all too common nowadays.
I talked with the President of a technology venture yesterday, a super sharp guy with a good plan, and a good product, who's been in business for two years and hasn't broken even yet. It's only a matter of time until his funding sources decide not to throw any more money at it.
In this environment, there are good ideas that won't make it because the burn phase of all these ventures has been extended. Then, of course, there are mediocre ideas that will make it because they have a lot of cash at their disposal. I suppose it's always been this way.
The deflationary mindset has taken hold. it can be characterized in one small sentence that I've heard a few times now: "...I'm going to wait a little while and see what happens..."
In the venture world..even at my lowly level...it means that the time to get a company up and running at operational break-even is longer. Investors haven't really ratcheted down their expectations to that reality yet. It's like everything else in the capitalist system...when times are good and credit is free, prices are quick to expand. when times are hard and cash and credit are tight, nobody wants to believe that their building is worth less, their used car is worth less, their home is worth less...and so it takes a long time to get down to the "right" levels...more rational "recalibrated" levels. And, the slower we all are to adjust our expectations, the longer it will take.
This, unfortunately, is all too common nowadays.
I talked with the President of a technology venture yesterday, a super sharp guy with a good plan, and a good product, who's been in business for two years and hasn't broken even yet. It's only a matter of time until his funding sources decide not to throw any more money at it.
In this environment, there are good ideas that won't make it because the burn phase of all these ventures has been extended. Then, of course, there are mediocre ideas that will make it because they have a lot of cash at their disposal. I suppose it's always been this way.
The deflationary mindset has taken hold. it can be characterized in one small sentence that I've heard a few times now: "...I'm going to wait a little while and see what happens..."
In the venture world..even at my lowly level...it means that the time to get a company up and running at operational break-even is longer. Investors haven't really ratcheted down their expectations to that reality yet. It's like everything else in the capitalist system...when times are good and credit is free, prices are quick to expand. when times are hard and cash and credit are tight, nobody wants to believe that their building is worth less, their used car is worth less, their home is worth less...and so it takes a long time to get down to the "right" levels...more rational "recalibrated" levels. And, the slower we all are to adjust our expectations, the longer it will take.
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