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And while Sequoia and other left-coast VC firms are asking their firms to tighten up, and strategically leaking their own advice about surviving the economic downturn (nevermind their investments into some ridiculous companies that don’t need to survive this anyway), our own former investor Alan Patricof, founder and managing director of Greycroft Partners, is asking for some restraint in the doom and gloom. His main advice: “This is not a time to panic, cut off all investment in the future, and burrow into a dark hole.” The full statement from Patricof, below:
“The comments made by the partners of Sequoia Capital at their recently held ‘CEO Summit’ have been widely covered by leaks to numerous bloggers. These bloggers have disseminated the details and spread the contagion of the sentiments to the public at large, unfortunately running the risk that the words become a self-fulfilling prophesy. Without challenging the comments, which expressed a heightened degree of doom and gloom for the economic prospects of young start-up companies particularly, I do think it calls for a somewhat more restrained response on the outlook and required action before throwing the baby out with the bath water. Certainly, we are going through a period of enormous economic and political uncertainty. The loss of confidence, primarily in our financial system, as a result of the excess of the past five to ten years (if not longer – we may never know how long some of the flawed practices have been going on) is one of the leading contributors. We are also at the moment looking for leadership on the political front and both because of very low public support for the President and because we are in the midst of a heated election for his successor, we have no real voice of authority to provide some guidance, reassurance, and inspirational confidence that the bus has a driver who knows where he is going.
Nevertheless, aside from an over inflated housing boom that had to collapse sooner or later and a complicated financial system that arose in part to fuel this engine, the basic economy was in reasonable shape with GNP growth and productivity gains supporting a solid, if not vibrant outlook. (I know the automotive industry is also going through bad times but it no longer pervades the economy as once conveyed in the expression