Home 5 Tips for Startups and Entrepreneurs

5 Tips for Startups and Entrepreneurs

Startups – want to be innovative? Go back to the garage. That’s the message venture capitalists at the Dow Jones VentureWire Technology Showcase in Redwood City CA today, are offering to entrepreneurs and startups.

In the midst of one of the worst economic crises the world has seen, investors are in the main optimistic, and agree that to weather this storm and come out on top, today’s entrepreneurs need to change their mindset and go back to basics: go back to the garage, and success will follow.

Citi analyst Mark Mahaney explained that today’s market brings new opportunities if you’re willing to look for them. In the late 90’s when all looked bleak, one company that broke through was eBay(EBAY); it went public in the fall of 98. “While the bar is exceptionally high right now, it doesn’t mean someone can’t break through it.”

Pointing out that even though this is going to be a tough period, William Tai, Charles River Ventures anticipates the companies that will show up in VC portfolios will be born now. “If you look at returns on venture funds that were invested during a recession, they offered the best return. Companies that are being built now have fewer competitors, have the ability to address bigger markets and can hire high quality people that charge less.”

Five Tips for Startups and Entrepreneurs

1. Don’t focus on growth; focus on cash preservation

David Cowan, Bessemer Venture Partners, recommends companies move toward cash preservation rather than growth. “Spend less time worrying about what competitors will do in terms of features, it won’t be your biggest problem because competitors will have same issues in terms of growth,” he said. “Move toward cash preservation.”

2. Work out how to monetize social networks

Mahaney said the opportunities he sees are in social networks. “At the moment, no one has figured out how to monetize them, but they can – absolutely,” he said.

3. Don’t make new commitments, look for opportunities in mobile technology

Cowan also recommends to avoid new commitments, and to make money he suggests looking at new ways to use media. Taking out his iPhone, he played a tune for the audience using the new Ocarina application. “Six people developed this and it’s sold tens of thousands.” This is only one idea; there are lots of creative ways to use the Internet and mobiles.

4. Strike while there is less competition

Tai sees opportunity in going forward, and is most excited about Internet technologies, mobile and open source. “Everything is bigger and happens faster when stuff hits in this environment,” he said. In the environment of a few years ago, you’d have 20-50 competitors; in this market you have fewer competitors and an opportunity to shine.

5 Look to the virtual world and expect to nurture your product for 7 – 8 years

Basil Horangic, North Bridge Venture Partners said that they’re seeing excellent growth in companies that are working on social networks, virtual world space and the monetization for virtual goods. “There is a lot of innovation in those areas,” he said. As for startups looking to be acquired, he tells the audience that the data shows companies go public and get sold at seven or eight years of age.

Page and Brin in Wojcicki’s garage, 232 Santa Margarita Ave, Menlo Park CA

If a simple garage was good enough for Larry Page and Sergey Brin to start goliath search engine Google, it should be good enough for new startups trying to break out at a time when the odds are against them. So the advice of the day? Stop paying $5 for a latte, invest in a basic coffee machine and start innovating.

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