Is the climate heating up for startups?

(written by Lawrence Krubner, however indented passages are often quotes)

On one hand, it seems odd that the worst recession in living memory would be a good time for startups. On the other hand, with bank CDs paying 1% and Treasuries offering around 0.12%, there must be a lot of investors who are desperate for yield. To the extent that some of that money ends up chasing startups, it becomes possible for me to imagine how a recession might also be a good time for startup funding. The rhetoric of True Ventures is the kind of rhetoric I would mostly expect during an era when things were tilting in a direction favorable to the people launching startups.

A lot of our industry has lost it way in the current environment and on this debate. We’ve seen this movie before. It was playing on every screen in 1999. Back then, as now, the market was feverish and investors were judged by the checks they were writing. It was deemed most important to be in and around all the “hot deals” if even for a tiny amount. Everything got funded, and there was constant talk of early checks as “options”. “Just get in, ’cause it just might work,” was the thinking. At True we’ve tried to steer clear of this mentality, largely because we recognize that it’s really easy to write checks, and it’s even easier to write lots of checks. What’s hard is committing to a 3-10 year relationship with a Founder and working over that period of time to build something real. It’s hard to bring checks back. I wish this business were as easy as funding everything that looked good, but it’s not. It’s not about the funding, it’s about the building, and Founders build companies, not VCs, not super-angels. Founders.