Affectionately as “Bunny,” Warren Weiss has had decades of success uncovering tech giants in their emerging stages. His work on SilverSpring Networks earned him a spot on the Forbes Midas List of Technology’s Top Investors. He’s a four-time CEO of venture backed companies, and worked with Steve Jobs at NeXT.
Bunny serves on the Board of Binarly for WestWave Capital. He remains a General Partner on past fundsat Foundation Capital (where he no longer makes new investments) and serves on the boards of ForgeRock (IPO) and Visier. Bunny is also on the board of the Weiss Scholarship Foundation, a charity that provides education to children in Kenya.
With Warren’s experience and perspective, we figured this would be a quick and insightful read as we head into the new year.
M.R. RangaswamiI: What is your take on investing in early stage companies during a recession?
Warren Weiss: Its very important to have two years cash runway to give early stage companies the time to build a great product and get paying customers. We hear a lot about product lead growth however this usually takes longer than most startups plan for.
There is historical precendence that you can build some of the best companies during a market recession. As a venture investor I have learned you can’t time the market so if you continue to invest
in the very best companies in a down market there is a good chance you will have good outcomes for your investors.
Customers only buy in a recession when it’s one of their top priorities to either cut cost or drive revenue which is one of the main reasons only the strong companies survive.
M.R. How much should early stage companies try to grow their business vs burning cash in a recession?
Warren: Each new series of fund raising comes with milestones around ARR, SaaS metics, product
market fit, sales motion etc. You have to understand as a startup company what these
milestones are and have a plan that gives you enough time to achieve these goals.
In a recession market you won’t raise money from good investors if you don’t build a plan that
shows 100 percent growth in the first couple of years. You should try to keep you monthly net
cash burn in the $300k to $400k range during those first few years. No cash no company!!!
M.R.: What areas of early stage investing are still drawing strong customer demand in the Enterprise market?
Warren: This is likely to evolve the longer this recession last. In the Enterprise venture early stage market we still see strong momentum in security, cloud infrastructure, analytics and Web3.
M.R. Rangaswami is the Co-Founder of Sandhill.com