The so-called "nuclear winter" that entrepreneur Marc Andreessen predicted back in April has arrived. And nobody in the Valley -- neither venture capitalists nor entrepreneurs -- know when the market will bottom much less when it will recover.
"There's something going on here other than subprime mortgages," said venture capitalist John Doerr, while speaking at a VentureBeat-sponsored roundtable discussion on the downturn, in Menlo Park, Calif. "We've not only got a debt crisis but a crisis of confidence . . . With the current level of uncertainty, it's really hard to forecast what's going to happen going forward," concluded Doerr, who held his head in his hand for much of the panel discussion.
Angel investor Ron Conway (above) thinks it could be at least two years before "the storm" ends, in which case any company with fewer than 6 months worth of cash, needs to either sell out, get a bridge loan, or "prepare for an orderly shutdown."
"Don't put your team through the agony of arriving to work one day and saying, 'Guess what? We ran out of cash.' You need to face reality. It's not easy, but it's basic," said Conway, speaking on the panel.
Conway shared a somewhat dire outlook, but he also claims there is still plenty of VC funding looking for a home this time around, unlike the recession of 2001.
"All of us have to admit we shut down. Everyone stopped investing in 2000. The VC community is not shutting down this time," he said.
The entrepreneurs on the panel, however, were somewhat skeptical.
"The VCs are lying when they say they're open for business," said Jason Calacanis, founder of Mahalo. "It's a hits-based business . . . They're going to focus on the winners."
Photo: Flickr/Somewhat Frank
