It is not all doom and gloom in the VC land: reporting from the 2009 Canadian venture capital industry meeting.
I really dreaded receiving a fresh dose of recession-fueled doom while heading to Calgary for the annual CVCA (Canada’s Venture Capital & Private Equity Association) conference. But I was pleasantly surprised by the comments from the panelists as well as chatter during the networking sessions.
First of all, there is a general agreement that recessionary investment vintages are some of the best performing. In other words, investors with cash in the bank face phenomenal investment opportunities.
Why is that? Mainly because massive lay-offs free up skilled talent, making industry veterans available to young companies. When cash is scarce, companies need to be extra-creative and thoughtful when launching new products and business models.
Finally, established market ecosystems often undergo significant changes in the turmoil of global recession. As a result, it is easier for young companies to grab market share from the established players who tend to be distracted by many issues in their established businesses.
Tim Draper even provided slides illustrating how, over the years, the recession-boom cycles mirror the venture capital/private equity cycles. He summarized the opportunity with a simple: “It is our time, guys!”
Meanwhile, it is also a most challenging time to raise capital. Many traditional LPs put a hold on allocating capital to the asset class, waiting to see better certainty of return on already committed capital.
The entrepreneurs, the real heroes of the modern economy, were at the centre of discussions during the conference. This year, the winner of the prestigious CVCA’s 2009 “Entrepreneur of the Year” Award was Osama Arafat, CEO of Q9 Networks.