When the economy gives you lemons, open a lemonade stand

Just read an article in Forbes about the state of early stage venture capital investing, and it’s not pretty. Shocker. Among other things, 60% of early stage VC funds aren’t making any new investments. I haven’t seen any recent data on the state of angel (amateur) investment activity, but it’s probably not looking rosy either. Still, keep in mind that the vast majority of early stage companies are financed by investors themselves, and their friends and family. 

Call me crazy, but I think there’s a silver lining in all this. 

  • Survival of the fittest. Fair-weather entrepreneurs are sprinting for the exits, but those choosing to stick it out are more likely to have the kind of tenacity and resourcefulness that drives success.
  • Bootstrapping rules. If you don’t have a lot of investment capital, you are forced to do more with less…. to make smarter decisions, and focus on cash flow. Need to raise outside capital? Prove you’ve can get traction first (e.g. build your prototype, grow your user base, close distribution deals, land some paying customers…). That’s the way it should be. See my post on boostrapping for more.
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