Venture-Backed Companies Hunker Down
One of the biggest differences between the dot-com crash and the current financial crisis is the data center sector’s exposure to venture-backed startup companies. That’s not to say that data center and colocation companies haven’t leased plenty of space to venture-backed companies; only that startups play a far smaller role in the overall client mix than they did in 2001.
That’s a good thing, as major Silicon Valley venture capital firms are telling their portfolio companies to cut costs and prepare for lean times ahead. GigaOm was ahead of the curve with its coverage Wednesday of Sequoia Capital, which called a meeting to warn portfolio companies of grim times ahead and urge them to cut costs and become cash-flow positive as quickly as possible. Sequoia isn’t alone, as Benchmark Capital and angel investor Ron Conway have shared similar sentiments with their portfolio companies.