THE ENTREPRENEURS REPORT:
Private Company Financing Trends
Fall 2008
Taking Advantage of the Downturn
By Greg Gottesman, Managing Director, Madrona Venture Group
Unless you have been avoiding your in-box
in the past month or so, you probably got the
widely circulated email containing “the
world is coming to an end” slide deck from a
major venture capital firm. The essence of
the presentation is that if you survive the
current economic meltdown, you win. That
means cutting heads and getting to cash-
flow break-even as soon as possible. The
advice is well timed and important, but
incomplete. The winners will not just survive
this recession—they’ll need to take full
advantage of it, strategically and tactically.
On the strategic front, companies should
revisit the basic questions they answered
when drafting their initial business plans,
this time with the words “in this market” at
the beginning:
• In this market, who are our
customers?
• In this market, what is our value
proposition?
• In this market, what is our business
model/how do we make money?
• In this market, who are our
competitors?
• In this market, what is our
competitive advantage?
• In this market, how do we
differentiate our product?
• In this market, what are our core
assets?
The answers to all of the above (and many
more) questions may have shifted in the last
three months. If your customers were small
start-ups, you may need to adjust your focus
to a customer base that has money to spend.
continued on page 5 . . .
Feature Articles
Taking Advantage of the Downturn
By Greg Gottesman,
Madrona Venture Group ........................Page 1
A Price on Carbon: Managing Risks and
Opportunities
By Aleka Seville, First Climate ..............Page 1
From the WSGR Database:
Financing Trends ................................Page 2
Control: The Critical Issue in Negotiating
Financing Terms ..................................Page 9
Navigating Down-Round and Dilutive
Financings ..........................................Page 11
The Do’s and Don’ts of
Compensation for Ea