How do VCs think about funding companies through the downturn?
Tuesday, I attended the Open Source Business Conference panel titled "After Wall Street's Chernobyl: Funding Open Source through the Downturn," featuring some well-known open-source venture investors to hear what they are thinking about. The OSBC is taking place in San Francisco through Wednesday.
Larry Augustin (moderator)
Robin Vasan, Mayfield Fund
Peter Fenton, Benchmark
Ryan Floyd, Storm Ventures
Tim Guleri, Sierra Ventures
Just how bad is it from the venture investment perspective? Are the good times really over?
Robin Vasan: Sequoia did a favor by putting the tough message out there. People want to buy in a different way. Open source, SaaS, and free-mium are things we are looking at.
Any software vendor that has a lower friction model gets the benefit of potentially flying under the radar from a budget standpoint. It's a philosophical change where IT doesn't want to be sold. They want to make the decisions of how they buy.
Peter Fenton: I thought it was potentially negligent to have this presentation get out there. It was very different than the way we would want to communicate with our CEOs.
We're in a good position to recover as our businesses are not debt-laden. We (venture-backed companies) have a better chance of recovery than many other companies.
Tim Guleri: It's not about growth right now, it's about cash and cash management.
Ryan Floyd: Most people who survived the downturn understand much better how to survive this time. There are companies that we are clearly pressing for growth, but we need to make sure the businesses are run in a profitable manner.
What industries are the right places to think about?
Tim Guleri: Data center--there are tons of opportunities just around the growth of data. The move toward cloud infrastructure (thanks to virtualization) and trying to drag costs down, lead the charge via noncritical processes.
Robin Vasan: We used to spend a lot of time with CIOs of companies. Now we're seeing a shift--we are very bullish on the scale of the "Internet 500." It's a radically different architecture and a great sandbox for new companies.
Follow me on Twitter @daveofdoom