Andy Sack from a Sack of Seattle has an interesting article up on the idea of no new money coming in for some classes of startups. Andy States:

I asked him how the raise was going and he told me it was the toughest capital market he had ever seen. I think he’s right about the capital markets. I’m telling the companies that I’m involved in that they need to assume that they receive no more cash for the next 12 months. I don’t know if it’s true or not but it’s a good mind set to have. Source: A Sack of Seattle

Knowing that he is with Founders Co-Op, an early stage investment group, hearing this from him really means something to the Seattle VC community. It is not so much that they are turning people away, but given that three months ago they were talking 9 months out, and now Andy is thinking 12 months out, and we are in a recession, if you need money, the time to start planning this is now. It is also time to start planning on the strategy that you need to make it thought the next 12 months or longer if you have no other money than what you have already.

This will have an influence on the Seattle VC and Startup Community, but it also means that as everyone becomes more risk avoidant, preferring the clearer home runs, it does not mean that there are not alternatives out there. The thing to remember especially about the VC community is that they are a small group of people who really do talk to each other and share stories. If one turns you down, take it gracefully and start working on the next deal. Don’t go off and try to do them in for not seeing the brilliance of your idea, rather thank them for their time, ask them what you could do better, take the advice and start with someone else.

That would be the best way to approach this process right now. While you have their ear, it is always a good time to ask them what they think, and what their advice is. If they are not going to fund you, they should at least tell you why, and if you take what they are saying to heart and act on it, the next time around might end up that you do get funded. Also make sure that the group you are looking to get money from has a track record or an interest in what you are doing. Sometimes it might just end up being a rejection based on a bad fit.

Tags: sack of Seattle, funding, vc, money, time, energy, effort