What startup company revenues can tell me
Since I sit on the boards of several start-up companies, I get an opportunity to see first-hand the buying patterns of their customers. When start-ups sell well, that means that the companies to which they sell are willing to spend money to drive their own businesses. Often, they are trying to gain an edge over their competition.
About half of our portfolio companies have monthly board meetings, with the others bi-monthly or quarterly. During the board meetings last month, I noticed a very bothersome trend – almost all of the companies reported light revenues, saying that deals they expected to close in June and slipped into July. Because of that, I began watching closely specific deals – to see if they had really been delayed or if they had disappeared.
I’m sorry to say that purchases by large companies have not just slowed, in many cases they have been frozen. Large companies are still buying when they must to generate their own revenues, but not to gain efficiency or cut costs.
The salespeople in our portfolio companies report that they expect reduced sales at least into the fall. This tells me that the general economic slowdown is not over. It might even still be getting worse.