Silicon Valley Startups Cut Back

Following Sequoia’s terrifying pronouncements and the market’s continuing plunge, Valley startups are turning tail. Cue the Wall Street Journal trend piece: “Venture Capital Financing Slows Amid Economic Downturn.” The bullet-point version, below. 

  • Ben Smith, founder of online ad services provider MerchantCircle Inc, wanted to raise $50 million in New York and Europe. Now he just wants a refund on his plane tickets. “Now it’s all about cash flow,” he says.
  • Wireless equipment manufacturer Ruckus shut down a $150 million R&D project. CEO Selina Lo called it “nice” but not “material.” She and other execs took a voluntary 10% pay cut and canceled plans to expand the office from 5,000 to 10,000 square feet. Ruckus is a Sequoia company and Lo says their presentation “freaked people out.”
  • Music Web site wanted to expand from 35 to 70 people but now founder Bill Nguyen thinks 40 is more realistic.
  • Chat/IM provider Meebo, which raised $25 million in April, plans to hire another 10 staffers before 2009, but canceled plans to open a new data centre.

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