Last year, I ended my Outlook 2008 with the following sentences: “As we head into 2008 my best advice to entrepreneurs is to be flexible and creative. This is going to be a very interesting and probably volatile year.”  Talk about understatement.  Well, as 2008 draws to a close, I can safely say that one thing is certain: if you scare the stuffing out of consumers and businesses, they will stop spending money.  That’s pretty much where the certainty appears to end. As we head into 2009, uncertainty is the order of the day. That being said, there are some data points out there which I will try to connect to provide some guideposts for the coming year.

President-elect Barak Obama is one of the most entrepreneurial presidential candidates in American history.  He has shown himself to be an optimistic self-starter who can create and sell a vision to others.  His campaign and transition activities demonstrate his exceptional communication and organizational skills.  As a country that is based upon entrepreneurial behavior, it is not surprising to see that Americans elected an entrepreneur to lead them through a difficult economic crisis.  Professional investors back entrepreneurs who have the characteristics that Mr. Obama is showing.  The question now is whether this most entrepreneurial of Presidents will support those most like him.

This week brought a new low in day time programming to America. In case you missed it, mixed in with Days or Our Lives, Oprah and countless Swiffer commercials we had the Secretary of Treasury do his best Emily Litela imitation. And, if that wasn’t enough hilarity, there on the large screen were the heads of the Big Three (plus their Union Leader sidekick) going to Congress with their hats in hand.  It was just riveting, sort of like watching a train wreck in slow motion is riveting if you are not on the train.  Problem is – the last time I looked we were on the train, and worse, the train is being run by the some folks that give us Amtrack.  

You ever have one of those Grinch moments?  You know, the one when you are in a room with a group of people and you find yourself about to shout out “bah, humbug!” or the modern day equivalent?  Ever feel that?  Thought so.  Well, I had one of those moments a few days ago.  And, it’s been rolling around in my mind ever since.

Years ago, back before time began and there were dinosaurs roaming the earth (well maybe not that long ago, unless you ask my kids) I studied political science, particularly the American Presidency.  I learned many things that felt useful and interesting at the time, and, although I didn’t really think about it that way then, was actually studying patterns of entrepreneurship.  Two recent events crystallized this for me. The first was watching President Elect Obama’s first press conference and the second was talking with a friend of mine who had lost a hard fought Congressional election.   

In each instance, I thought about what had made me a supporter or friend, and why I thought that they would ultimately be successful.  And, I realized that what I had really been doing was evaluating them as if they were an entrepreneur I would back.

One of the frustrating things about running a venture capital fund is that your ability to help entrepreneurs is generally tied to your ability to deploy capital.  That’s the business of venture capital – investors make fine distinctions and try to back companies that in your business judgment have the best chance – at the time of investment – of being successful high growth companies.   While that is the right way to approach things for a venture investor, there are two big problems with that business model  from the entrepreneur’s standpoint– company and entrepreneur picking is at best an inexact science, and in the course of the year an investor will meet many more deserving entrepreneurs than could reasonably be funded. 

As I thought about this problem last year it came to me that one of the best ways that I could help entrepreneurs was to combine my own network of relationships with the types of technology Amplifier Ventures was investing in:

It’s a sad, sad time for entrepreneurs, at least it is if you read the press.  Here’s just a small selection:

·         The VC boom is ended – entrepreneurs should forget about raising “easy money,” so says Sequoia one of the best regarded venture capital firms in Silicon Valley.

·         “It’s just too hard”, says an entrepreneur in a press release announcing the closure of his start up.

·         Early stage businesses won’t be able to get capital due to the current market down turn, says the National Venture Capital Association.