Slowdown in Silicon Valley this can happen in Seattle too

The New York Times is reporting that there is a major slowdown in M&A as well as IPO activity happening in Silicon Valley the first quarter of 2008. The question we are asking is can this same thing happen in Seattle. The answer is most likely yes, but over the last 8 months people have been talking about how to survive a recession in Seattle, as well as other places. If the company here in the Seattle area was smart, they have been hoarding cash so that they have enough money to ride out the next 18 months at the very least.

If it lasts through this year, he said, “it will be far more than an inconvenience for all companies.” The dried-up market for public offerings and acquisitions is affecting not just the atmosphere of innovation but also the lifestyle of its participants. “Less cash coming into the Valley means less cash to purchase homes, and go out to nice dinners, spend on consumer products and go on vacations,” said Hans Swildens, founder and principal of Industry Ventures, an investment firm that buys stakes in start-up companies that need infusions of cash. Source: NYT

The Seattle startup index run by Seattle 2.0 is a way to track the changing winds for what is happening with startups in the Seattle area. You can catch the March 2008 list here, and catch a list of bloggers, news sources and other groups here at Sampa.

Overall though, what is happening in the valley is going to happen eventually here in Seattle as well. That is just a given, we might be a bit late to the pink slip party, eventually though it will happen. Those companies that have been holding on to cash and working on a “smart growth” process rather than a “growth at any cost” will be able to weather the storm much better than the more flashier companies. Some will actually thrive as they latch onto the foreclosure market, and other markets that do well in a recession.

It is unlikely that this will lower the cost of living in Seattle, but you might be able to pick up a house for cheap. The other interesting aspect of all this, much less fire sales for computer equipment, most startups are using some form of AWS. Who owns the data that these companies generate for their customer lists should be in the news again, who owns it, and what is its value when it is the only asset a company has.

Web 2.0 has made this more interesting, with a lot of the value of a company being user generated content.

Keywords: web 2.0, content, recession, Seattle, silicon valley, slowdown, economics, hard times, IPO, M&A