I attended a breakfast seminar today titled “Raising Funds in Turbulent Times.” It was a panel of VCs moderated by my former boss, Gene De Rose. (Gene used to be CEO of Jupiter Communications, the company that became JupiterResearch where I was president until the end of last year.)
The VCs on the panel were:
- Kim Bangash, Orchid Ventures
- Brad Burnham, Union Square Ventures
- Warren Lee, Canaan Partners
- Danny Schultz, DFJ Gotham Ventures
There was good discussion about how to approach a VC, what they look for in a pitch and an an entrepreneur, and how the economic climate has altered the fund raising process.
At a time of economic gloom, it was refreshing to hear Brad Burnham’s take on why New York is a good place to build a startup. His firm invests in technology enabled services in media, marketing and some other verticals. In Burham’s view, IT infrastructure is mature and doesn’t look like a promising sector in the near term. It was never NYC’s strength. Where the action and opportunity are, he believes, are in human factors, design, user experience and the like–areas where NYC is rich in talent.
He also sees a silver lining in the implosion of Wall Street, which will no longer be in a position to pay the unjustifiably large salaries that drew so many people with useful skills, from quants, Java coders, away from other more useful fields. It will become a fertile talent market for growing companies.
Warren Lee, of Canaan, agreed with this assessment and observed that in this period of financial austerity, large companies are cutting innovation budgets. They will look up in 3 years, he says, and ask, “What is our growth strategy?” and find they have none. They will then be induced to look for new exploitable oportunities to the crop of startups that have been developing the next wave of cool ideas, unleasing a period of acquisitions.
A positive take for entrepreneurs and the companies that back them.