Don Dodge on starting a company during a recession

You've got to love this post from Don Dodge "Start a company in a recession? Absolutely". That's enthusiasm!

I agree with Don on the conclusion but for different reasons. IMHO, the main reasons are that it will be more difficult for competitors to copy you as everybody is focusing on their core activity and VC funding is (a bit?) tougher for new start-ups.

While Don's reasons are valid too, there is however a big "if". He argues that VCs are loaded with cash these days based on discussions with some of them. As I had mentioned in a previous post, US VC fundraising and investment was indeed more or less flat in the first half of 2008 by the credit crunch. However, the "treasury coffer" of US VCs was around USD 7bn end of 2007 vs. USD 21bn end of 2001. Hence, Don's conclusion is correct if institutional investors like pension funds continue to invest in VC funds. It will be interesting to see the figures for Q3 and Q4.