Working in a newsroom, there’s basically no escaping the current carnage on Wall Street–watch CNBC or Bloomberg long enough and you will become convinced the world as we know it will come crashing down sometime before the next commercial break.There has already been a fair amount written about how tech VCs are reacting to the current carnage on Wall Street, but what about the start-ups themselves?
I talked to CEOs of about a half dozen Internet start-ups both here in NYC and in the Valley and the overriding sentiment seems to be stay focused on your core business, close your funding rounds and don’t talk too much about it (almost if you make it a big deal it will become a big deal).
But this sentiment should not be confused with a head in the sand approach.
“Are we paranoid as we try to close a round? Of course,” says the founder and CEO of one Silicon Valley start-up. “And obviously no one wants another recession, but if you’ve already operated in a recessionary environment, it’s just not as scary as if you just launched and funded your start-up when money was flowing freely earlier this year.”
Jordy Leiser, co-founder and CEO of NYC-based startup STELLA Service echoes that sentiment: “Launching things in a down economy and building for the long-term is not necessarily a bad thing.” Leiser said he was taking the advice of others like Tom Evslin and VC Brad Feld of Foundry Group and is doing everything he can to “ignore the Dow.”
It is with the larger raises of $50 – $100 million where start-ups perceive hand-wringing and second-guessing on the part of investors. But a number of start-up CEOs take solace in the fact that a number of highly successful start-ups–Zappos and Diapers.com spring to mind–were able to grow, build value and take in significant VC funding even in the depths of 2008 and 2009.
“If we were trying to file [for an IPO] it might have an impact, but we’re not” says Tom Phillips, CEO of NYC-based Media6Degrees. “The bigger question is how would a renewed recession impact our core business. We haven’t seen a near term impact, but only time will tell.”