Last week the world of venture capital received a summary of an apparently dramatic CEO meeting at Sequoia. In these notes, the senior partners of the VC firm elaborate on the consequences of the worldwide financial crisis for their portfolio companies and urge the CEO’s to preserve cash and extend their runway: “RIP good times”. Although nobody is sure about the full implications of the crisis and whether the old models will still apply, there seems to be a consensus that the old motto remains valid: “Cash is king”.
We noticed that several of our portfolio companies had already taken the appropriate action without waiting for the wisdom spread by the Sequoia report. Different contingency plans are being prepared taking into account different scenarios of market development. Each business has to adjust its roadmap depending on the depth and length of the crisis in its relevant market. These plans have to be reviewed at least on a quarterly basis.
Gimv Technology agrees that actions should be prepared to defend the current portfolio. We believe however that this crisis also provides the basis for attractive new investment opportunities, the basis for future wealth. Any fundamental crisis provides scope for disruptive innovations, led by smart and daring entrepreneurs, either to solve the issues at hand or to lead the economy into totally new area’s of growth. Given the strong and cash-rich balance sheet of Gimv and given our evergreen structure, we are well positioned to capture such opportunities and support international technology companies, not just to weather the storm, but also to capture market positions left open by others. Our message towards the technology leaders of the future: Gimv Technology is willing to support you in building your business and capture the market opportunity !
“Every disadvantage triggers an advantage” said Johan Cruyf, the famous Dutch soccer player. We believe this also applies to the current market.
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