How will the financial crisis affect the global venture capital industry?
In general, (c) Shvonder financial crisis in the venture capital market will have a negative impact in the short term. This is due to the following factors:
1. During a recession, advertising budgets are cut first, especially on new resources that have not yet won the trust of advertisers - this will hit Internet-oriented projects.
2. The cost of venture money for entrepreneurs (the share of the company that the investor receives) will increase. Value startups will fall. It will fall due to the fact that it will become harder to do the exits-and these are additional risks.
3. With the growth of risks in the capital market, the risks of venture funds will grow even higher, the profitability will remain the same at best. This is a bad symptom for limited partners. So, at some time there will be a shortage of money for investment. All will run to gold or Swiss franc. Consequently, startups for investment will be selected more carefully, trading with them will become tougher.
4. Start-ups focused on the consumer market will face a decline in demand, while those focused on the corporate market will face budget cuts.
What will be good:
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1. If Silicon Valley corporations start cutting people, it will be easier for startups to find employees, and the employees themselves will try to create startups.
2. Start-ups focused on markets that are not affected by the crisis, or start-ups focused on saving money in a crisis, will have high chances of success.
On the other hand, the funds are formed with an eye for 7-12 years, the industry is cyclical for 8 years. So, what can due to the inertia of investment, everything will not be so dramatic.
Ps. All Internet start-ups I work with got the idea “do not focus on the advertising model, look for a model in which users will pay you for services, such startups will survive the crisis easier” - now they will understand what I said.
Pps. The crisis in the Russian venture capital market should not affect very much. He is in himself.
PPPS. There is an alternative view that investors will rush to invest in venture capital funds, since traditional investment tools will be very risky. Wait and see.
PPPPS. I would like to look at people from MS who made the decision to invest in Facebook on currency 15b, which is only three times (!!!!!!!) less than the cost of Yaha
Disclaimer The post was written based on conversations and correspondence with investors and entrepreneurs of Silicon Valley.
1. During a recession, advertising budgets are cut first, especially on new resources that have not yet won the trust of advertisers - this will hit Internet-oriented projects.
2. The cost of venture money for entrepreneurs (the share of the company that the investor receives) will increase. Value startups will fall. It will fall due to the fact that it will become harder to do the exits-and these are additional risks.
3. With the growth of risks in the capital market, the risks of venture funds will grow even higher, the profitability will remain the same at best. This is a bad symptom for limited partners. So, at some time there will be a shortage of money for investment. All will run to gold or Swiss franc. Consequently, startups for investment will be selected more carefully, trading with them will become tougher.
4. Start-ups focused on the consumer market will face a decline in demand, while those focused on the corporate market will face budget cuts.
What will be good:
')
1. If Silicon Valley corporations start cutting people, it will be easier for startups to find employees, and the employees themselves will try to create startups.
2. Start-ups focused on markets that are not affected by the crisis, or start-ups focused on saving money in a crisis, will have high chances of success.
On the other hand, the funds are formed with an eye for 7-12 years, the industry is cyclical for 8 years. So, what can due to the inertia of investment, everything will not be so dramatic.
Ps. All Internet start-ups I work with got the idea “do not focus on the advertising model, look for a model in which users will pay you for services, such startups will survive the crisis easier” - now they will understand what I said.
Pps. The crisis in the Russian venture capital market should not affect very much. He is in himself.
PPPS. There is an alternative view that investors will rush to invest in venture capital funds, since traditional investment tools will be very risky. Wait and see.
PPPPS. I would like to look at people from MS who made the decision to invest in Facebook on currency 15b, which is only three times (!!!!!!!) less than the cost of Yaha
Disclaimer The post was written based on conversations and correspondence with investors and entrepreneurs of Silicon Valley.
Source: https://habr.com/ru/post/19793/
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