Sunday, September 28, 2008

Bad US economy to have effect on startups and hotels

Just read this on alleyinsider:

It's my believe that the economic downturn will be much worse than it is today, and that 50-80% of the venture-backed startups currently operating will shut down or go on life-support (i.e. 3-4 folks working on them) within the next 18 months.

Is it a bad news? Will be the same happen to start-ups in Vietnam? Maybe. It depends what kind of business plan they have - and if they have one. There are so many companys just collecting money from ventures but don't earn one cent. That's part of the problem, that banks and funds are investing in expections but not in fundamental business. There is no difference between a 5-million Dollar investment in a twitterclone and a 100 Million Dollar Hotel project in Cambodia. Both will never pay back, because there is now real return on investment. The Hotel needs renovations every 2 years on a risky market and the start-up needs news ideas every 2 months in a overheated market.

So, even if some start-ups will shut down and some hotel projects in asia will be delays or stopped, at least it's necessary to bring the market back to reality.

1 comment:

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