You could argue that we are always in a downturn. Even when things are on the way up, a smart entrepreneur realizes that it will be followed by the downward sloping of the curve. It goes up, it goes down.
So here we are. I posted just a few weeks ago that I thought things were rough, and were going to be rough. I have to say, even though it was only two weeks ago, things have changed a lot since, at least in terms of people’s outlook.
So here is the trick. It is time to use this period to your advantage.
A handful of VCs in Canada have put together “seed” options in their funds when they raised them a few years ago. These range anywhere from $250k to $500k and are usually simple convertible debt notes. Until now it hasn’t been very cost effective for them to spend much time issuing these. Either an opportunity was good enough that they wanted to invest in it full-tilt from their regular fund, or they just didn’t like it. Most didn’t want to spend much time with the “it might work” group of startups (which is where all good ideas start!).
My sense is that this is changing. Some of these VCs are starting to think that these might be just the right instrument to get some startups off the ground in the next little while. Those are the smart VCs, the ones who adapt quickly and who understand that the upside will be coming back in to focus.
This is your chance to start to hustle while others are taking a breath on the sidelines. The challenge for we startups is to structure our companies in a way that makes sense for the current environment, and for VCs the challenge is to realize that this is a critical point for the industry in Canada, and those who are left have to jump in the game and send a signal.
And this isn’t all about getting funded. This is the time to hustle even more if you are going to bootstrap. Build your product now and test it, when the upside comes again, you will be ready with a product and some customers, then you can focus on going deeper in to the market.
The truth is, we will never know when the bottom of this situation will show up. Like it or not, the upside of this downturn is coming and the best way to lose is to stop working hard right now.