As venture capital dries up, tech start-ups discover frugality

Tech start-up Appthority’s office has plush conference rooms, soundproof phone booths, an enormous kitchen and a view of San Francisco Bay. It has ping-pong and foosball tables, beer on tap and 11 types of tea.

The cybersecurity company owns none of it. And that’s how the company’s president and co-founder, Domingo Guerra, likes it.

“Any time you have flexibility and you don’t have a liability, it looks good on the books,” Guerra said. Although his 30-person company has raised $20.25 million from venture capital firms such as Venrock and U.S. Venture Partners, it operates out of a WeWork co-working space, where amenities such as Wi-Fi and office furnishings are included in the rent.

As investor sentiment in the tech industry cools, start-ups are facing a new reality: Money doesn’t always come easily. The abundant venture capital funding that convinced companies they could stay private longer is now harder to come by — such funding in Silicon Valley fell 19.5% in the first quarter of 2016 compared with the same period in 2015. And Wall Street has grown so skeptical of Silicon Valley that not a single tech firm has dared to go public so far this year.

In this climate, having good-looking books is now top of mind for

Article source: http://www.latimes.com/business/technology/la-fi-tn-tech-downturn-20160429-story.html

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