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VC Doerr Offers Downturn Survival Tips for Start-ups

SAN FRANCISCO, Nov 5 (Reuters) – What doesn’t kill you makes you smarter. That was the message from well-known venture capitalist John Doerr, who offered start-up companies tips on surviving the gloomy economy. Speaking at the annual Web 2.0 Summit in San Francisco on Wednesday Doerr gave survival tips to entrepreneurs who may be worried […]

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Channel Insider Staff

Nov 6, 2008

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SAN FRANCISCO, Nov 5 (Reuters) – What doesn’t kill you makes you smarter. That was the message from well-known venture capitalist John Doerr, who offered start-up companies tips on surviving the gloomy economy.

Speaking at the annual Web 2.0 Summit in San Francisco on Wednesday Doerr gave survival tips to entrepreneurs who may be worried that their start-up companies will not be able to withstand the economic downturn.

"We will emerge out of the economic downturn, and people who do this will emerge smarter," said Doerr, whose firm Kleiner Perkins Caufield & Byers made its name backing success stories like Google Inc (GOOG) and Amazon.com Inc (AMZN).

He urged start-ups to secure more financing and focus on their business. "Act now," said Doerr, one of Silicon Valley’s leading proponents of clean technology.

"Make sure you have 18 months of cash," he said, adding that this was a good time to reach out to existing investors to make sure the money’s there.

And for the cash currently on a company’s books, Doerr said it makes sense to invest it in Treasury securities and other government-backed securities, rather than money market funds or other vehicles.

"Don’t spend on money on facilities or technology infrastructure or software upgrades" if they are not essential, he said. Cost-savings also could come from reevaluating research and development budgets.

Doerr said companies should reach out to suppliers and customers to see if savings can be squeezed from existing contracts and leases.

Give employees bonuses in the form of equity rather than cash, he said.

"Remember, everyone in the company should be selling," Doerr said. All employees, from the receptionist to the chief executive, and investors should be aggressively marketing the company’s unique selling point, he said.

It’s also a good idea to communicate internally, Doerr said. "Overcommunicate with everybody. Don’t sugarcoat it."

Keeping employees, family members and business partners informed about where the company stands also allays stakeholder fears, he said. (Reporting by Anupreeta Das; editing by Carol Bishopric)

VC Doerr Offers Downturn Survival Tips for Start-ups

Channel Insider Staff

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