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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Will 2013 Be Harder For Startups Than 2012?

Comments (71)

tl;dr: Fuck, I don’t know. I’m not in the prediction business. But plan for it. And behave accordingly.

A lot of people have been talking about how 2013 will be harder for startups and fast growing companies. Tiresome things like the endless discussion about the Series A crunch, more conservative behavior from VCs due to the performance of Facebook, Groupon, and Zynga in the public market, and overall concerns about the economy dominate. Counterarguments prevail as different people try to predict and justify what’s going to happen.

All I know is that I have no idea what is going to happen. The macro is exogenous to me – I can’t impact or control it. So rather than try to predict what is going to happen, I’m going to assume a tougher 2013 for startups until I have evidence that it’s not.

I sent Fred Wilson’s post Advice for 2013: Deliver On Your Promises out to our CEO email list. I felt like Fred’s punch line was powerful.

“So if I can give entrepreneurs a single piece of advice for 2013 it would be to deliver on your promises. Not just to your investors but also to your team and ultimately to yourself. This is no time to be in denial. That is a lethal attribute in times like these.

That generated a response on the email thread about actionable advice. So, I responded with two examples:

1. Recognize that your expense plan will be linked to your promises. Tighten the time frame – do what a lot of successful companies have done in the past. Rather than having an annual 2013 plan, have a 1H13 and 2H13 plan. Lag your headcount growth behind what you need by a quarter, running “hot” on all fronts as you try to get the growth you expect. Hire only when this growth materializes. Then, replan 2H13 and 1H14 at the end of 1H13.

2. Make sure you know exactly how much money your EXISTING investors have reserved for you and are willing to fund you in 2013 independent of any new outside investors. Don’t ever be in a position where you need a new outside investor to continue operating your business.

I’ve got a bunch of others, but I’m curious what you think. Operate under the hypothesis that 2013 will be harder for startups than 2012. What are you going to do different in 2013?

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