As expected, many startup companies are faring poorly in this economic downturn.  Venture capital funding is drying up as VC firms shore up market loses and become more reluctant to lend.  VC funding fell 28% from 3Q to 4Q of 2008, according to the WSJ.  Twitter stands as a counter-example, having raised $35 million in February 2009, despite having no known business plan for generating revenue.  

Right time to enter?  If not for the financing problem, this would be a great time to start a new company.  Although less capital is available, startup costs are drastically lower.  Quality labor is becoming increasingly abundant and cheap as many employees in Silicon Valley and on Wall Street get the pink slip and start looking around for alternatives.  Real estate prices are also near-rock bottom, and equipment manufacturers are offering large discounts.  

Start-ups may also face the problem of fewer and pickier early adopters.  Typically, early adopters have the greatest need for -- or greatest want of -- the start-up's product.  They are also the most tolerant of product shortcomings and more likely to provide feedback for product improvements.  These early adopters should still exist in a market downturn, but the general public's unwillingness to spend money suggests that early adopters will not only buy fewer products, but will expect discounts commersurate with those offered for more mature retail products.

Right time to exit? Although companies like Sherwood Partners, a "firm that specializes in winding down start-ups," are seeing more business, now may not be a great time to exit.  First, the average price for a startup sold in December 2008 is 20% of the price for an average startup sold 5 months before.  Second, that average price is showing signs of rebounding, rising 20-30% over the past month.  Further, no one really knows the speed and magnitude with which the recently-passed stimulus package will affect VC funding and start-up value.

After going to Mike Daisey's performance, "How Theater Failed America," at the Woolly Mammoth theater, I decided to test out his claim that theaters are increasing ticket discounts for young audiences (and stretching the definition of "young" in an effort to increase attendance). I am really excited by the discounts I found in DC: 

• Shakespeare Theater Company.  $10 tickets for people under age 35, for all of their performances!  These tickets are available every Thursday, starting at 10:00am, for performances through the following Sunday, by calling STC at 202-547-1122.  More info here. 
• Woolly Mammoth.  $15 tickets for people under age 25, for all performances except opening weekend.  Tickets are available anytime by calling Woolly box office at 202-393-3939.  More info here.
• Kennedy Center.  50% discount off full price for undergrad and graduate students, available through Kennedy box office at 202-467-4600.
• Theater J. Half-price tickets for people under age 25, with their upcoming performance, The Rise and Fall of Annie Hall, at half-price for all under age 35.
• Email listings.  Theaters have cross-promotional discounts.  For example, Woolly emailings this week give $10 discounts for Theater  J and Synetic Theater for all who enter the Woolly promotion code (sign up for Woolly mailings for receive code).

Updated.  Thanks Rebecca.

I recently found out that Dartmouth's World Outlook plans to publish my essay on democratization in India. Link will be posted once World Outlook uploads its latest edition.