Upside of the Downside ....

In San Francisco today for a lunch event with a presentation from Come Lague with Nueva Ventures about raising money for startups in this environment. What struck me is the sense of déjà vu for someone (me) who has been in the Valley for many years.

The market is basically saying that startups have to get back to fundamentals – tangible value propositions, bootstrapping mentality, friends and family funding, work for equity and nominal cash only for a while…. You know, this is how startups used to be 15 – 20 years ago in the Valley. People just seem to have forgotten this in the easy money days of the dot-coms of the late ‘90s and the internet-based social networking boom more recently. No doubt they’ll forget it again in the future, but right now this is where its at.

The good news today is that there are many, many more creative ways to build a business than ever before, and many more tools and resources to available to become successful. And now more people with great skills and talents available to help make it happen – the upside of the downside in the Valley!

Still, cash at some level is a necessary ingredient. I think Come’s firm, as a newer kind of “micro-cap” VC, has an interesting niche to help promising startups bridge between the bootstrap/friends and family/angels stages and getting investments from the bigger VC’s. They invest $100k - $1m or more at an early stage, sufficient to help entrepreneurs prove a concept, get traction in the market and so on before going to the big guys for their funding to then build something big from it.

In passing, one comment made at the lunch … something like, for startups, “the less the CEO is paid the greater the chance of success”. I don’t know if anyone has actually studied this but it’s an interesting assertion. Having a passion for the business and being hungry (not starving, perhaps, but motivated) for success THEN brings the financial reward. Not that I would turn down the big money offer mind you….!!!