AustinStartup

Now that the new year is here, everyone is certainly hopeful and optimistic about the funding environment as it relates to startup technology ventures. The most common theme that I’m reading is that there is a big expectation that once in office, Obama will initiate some sweeping stimulus legislation that will regain consumer confidence and jobs. I don’t follow politics that closely, but from the news snippets that I do read, economic stimulus is the top priority of our elected officials.

That can be a great thing if it works, but it doesn’t change the fact that active angel investors in Austin (and everywhere really) have seen the value of their recent investments decline probably 30% - 50%. To make matters worse, if those investments were depending on Series A investments in the form of venture capital their investments may decline 100%. I hear from angel investors frequently that they are interested in investments that don’t require an additional round of venture capital to reach profitability. One reason would be dillution, but the other reason would be economic conditions like we’re seeing today. Most angel investors have probably been around the block a few times, and have lived through downturns in 2000 or 1987.

Does this mean there will be no angel investments in 2009? Absolutely not. But it does mean that entrepreneurs are going to have to take their venture further down the road before seeking investments. I hear more talk about bootstrapping these days than ever before. A savvy bootstrapper will make sure that it’s the right time in the lifecycle of their venture to take in outside money. These days you don’t have to be savvy, because the funding environment will make sure you’re really ready for capital.