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Benchmark Capitalがスタートアップに資本の節約をアドバイス

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お財布を引き締めたい人はThe Expense Trackerを試してみて

昨日(米国時間10/8)はSequoia CapitalRon Conwayが投資先企業に、困難な時期を乗り切るための指針のメッセージを送った。今日はBenchmark Capitalがこの戦列に加わり、ある筋によればパートナー総代のBill Gurleyが投資先企業たちにメールを送った(今年の初めのGurleyと新パートナーMatt Cohlerのインタビュー記事を呼んでみてください)。

ConwayやSequoia Capitalからのアドバイスと同じく、Gurleyも企業に冷静さを求め、ただし今すぐ財務の引き締めに着手せよと言っている。

Gurleyはさらに、企業の評価額があらゆる面で減額することと、資本市場の引き締めで資金調達が困難になることを覚悟せよと言っている…“基本的に、資本費用は上がります”。スタートアップへの融資では、ヘッジファンドはまず見込み薄、また、提携、買収、エンジェルなどの資金源も減ってくると。

さらにまた、“倹約に努める企業に大きな機会が訪れるだろう”とも言っている。曰く“いちばん重要なのは、技術知識と経営知識の両方がするどくしっかりしていること、業界の動きを敏感に察知すること、そして素早く適応できる能力だ。事態が誰の目にも明らかになってから動き出すのでは遅い”。

以下が彼のメモの全文(英文)だ。


The recent downturn in the public markets (now known affectionately as “the U.S. Financial Crisis”) is obviously on everyone’s mind. Some of the entrepreneurs and executives with which we are privileged to work have reached out and asked what this means for private companies, the VC world, and Benchmark. As such, I thought it might be a good idea to send you our thoughts on the current situation, and specifically what it means for venture backed companies.

From a high level, this downturn is different from the Internet bubble of 1999. First, the last downturn started in our backyard. We were the speculators; this time it is someone else. This means that the “crash on the beach” wont be nearly as severe. In the Internet crash, many times the customer was actually another VC-backed company and as such, there was a strong negative spiral. That said, while this downturn might be shallower than last; it could last longer in terms of absolute time. The American consumer is super-leveraged which wasn’t true before the 1930’s or the 1970’s. The overall economy will have trouble gaining momentum with this debt anchor, and my best guess is the contraction is not finished yet. As such, it might take a long, long time before we see glory days again.

Like every major shift in the environment, this one will offer opportunities as well as risks. JP Morgan was able to buy two great assets as substantial discounts with government assurances, precisely because they played the game frugally while others were more risk seeking. The real key is to have a keen understanding of the game on the field and to be the one that adjusts swiftly, rather than the one that moves after it’s become blatantly obvious to everyone else it’s time to move. Many companies that thrived post 2001-2003 were simply “Last Man Standing” in their industry. It doesn’t sound all that glamorous, but it was the exact right strategy to deploy at the time.

In terms of defining our current situation, let’s start with the impact on the actual capital in “venture capital”. The institutions (limited partners) that typically invest with Benchmark and other venture funds are not the ones on the cover of the financial news everyday. In fact, these limited partners are typically quite conservative and have a very long-term perspective. Certainly, new precedents are being set every day, so it’s hard to say the word “never” in this environment. Still, we are unaware of any situation where capital availability for us or any other VC firm is in question.

With that said, I think access to other forms of capital that have recently been available to venture backed companies may be dramatically impacted. As an example, one would naturally assume that the hedge-fund rounds of late-2007 and early-2008 are no longer available. Additionally, we would expect that strategic/corporate investments, venture debt facilities, and even angel financings could all contract considerably. In all previous economic downturns, this was certainly the case.

One would also expect across-the-board reductions in follow-on financing valuations. As financial markets deteriorate three things happen. First, investors get nervous. As such, they tend to “choke up on the bat” and be more conservative. We have already witnessed skittishness on behalf of follow-on funders, as well as a lengthening of the time it takes to complete a fundraising. The second reason valuations will fall is that the public market comparable valuations have fallen materially. This will have a direct impact on exit prices, be they an eventual I.P.O., or M&A. In fact, I was recently at a gathering of corporate development execs, and their number one concern was that private company executives have not realized that the scoring system was just reset (expectations too high). Lastly, investors are more concerned that a protracted economic downturn will negatively impact each private company’s specific results, increasing the likelihood of a revenue or cash flow miss.

If we leave you with one message it would be this: financings as we know it just got a whole lot tougher. Basically, the cost of capital is going way up. This is, of course, a sweeping generalization. Some of you have tons of cash, and some of you are profitable, so the immediate impact will obviously be less. That said, if you do need to go to the market for capital in the foreseeable future, you should consider that the environment will be much less hospitable than it has been for the past 3-4 years which have actually been pretty benign, and that this less hospitable environment could persist for time measured in years not quarters.

Another obvious strategy is to extend the runway. Hopefully, everyone is aware of exactly how many “months of cash” they have at their current cash level and burn rate. If you have a method for increasing this runway, we think you should do it, and quickly. This serves two purposes. First, it gives you the opportunity to outlast the competition, and second, it puts more time between now and when you are forced to re-enter the capital markets. One could argue you should draw down your bank lines right now. Why? When you need the money, the funding source may just say no (they did last time). What are you going to do? Sue them? Take away their warrant coverage? So what. If they get cold feet – you won’t see the cash, I don’t are what the term sheet says. The bottom line is that you should watch “months of cash” as your most important variable.

Be calm, but pragmatic. The purpose of this letter isn’t to send everyone off in a panic. It’s simply to convey that the rules of the game have changed. One key problem is that during these market downturns, most people don’t adjust quickly enough. As an example, not hiring heads that were previous TBH isn’t really a reduction in expenses. Also, 10% cuts rarely lead to anything other than multiple rounds of cuts, which have a harrowing affect on culture. It’s easy to mentally understand this is the right thing to do. It is ten times harder to make the actual decisions to affect change. These are extremely hard decisions.

You may know that I am involved with Zillow. They did a survey of their users to ask what they thought was the current impact on home prices across America. The average answer was that homes in America were down 20-30% in value. The survey then asked what the user thought had happened to the value of their own home. Miraculously they thought their own home had retained value against the odds! Surprised? It is human nature. As most of you read this, you will be thinking in the back of your mind why your company is different than the average company like these homeowners) and why you are the exception that doesn’t need to take action right now. This could be a rationalization.

Recently, I spoke with an entrepreneur who as a CEO during the dot-com crash and oversaw a headcount reduction from 130 to 28 (through two major layoffs), and eventually back to profitability and an IPO. If you think a 10% layoff is tough, imagine laying-off 78% of your employees. It is one of the hardest things I have ever seen anyone do. I recently asked him how that experience has shaped the way he could advise people on running a startup. He had a list at the tip of his tongue(included now):

1. You don’t realize how fast things spin out of control. There are self-reinforcing negative affects in a downturn.
2. Don’t spend money until you have to.
a. Don’t move out of your office until you are sitting on top of one another.
b. Don’t hire any incremental employee until you just can’t stand it.
c. Don’t get more capacity in your data center until your site is going down.
3. Better to be “late to the party” than to be early and run out of money.
4. Line item review of the budget every month (legal, accounting, everything).
5. Not just a CEO mindset, but a company mindset.
a. Everyone must buy into the process.
b. But in a calm way – not run for the hills.
6. Create 2 or 3 different burn scenarios – know at any point in time how many months of cash is left.

I include this mainly because it highlights a “very high bar” in terms of frugality. It’s one thing to say you don’t “waste money” and another to live as lean as you possibly can. As mentioned before, in market downturns, frugality is not only a virtue, but also it could be the difference between survival and failure. Many great companies emerged from the 2001-2002 time-frame. Companies built during tough times typically have incredible focus, great cultures, and a true desire to compete and win in all environments. For many, this downturn period could be opportunistic: a real chance to differentiate yourselves from the other players in the market. However, it is imperative to understand that the environment has just shifted to one where differentiation will likely be defined not by aggressiveness, but rather by adaptability.

[原文へ]
(翻訳:hiwa)