Sequoia Capital, the storied venture capital firm known for playing doomsayer ahead of recessions, has one word for the startup industry: Cash.
Less than a month after Sequoia Capital’s first presentation, in which it told founders to brace for a “crucible moment,” the VC firm has made public a series of slide decks it has used in recent weeks to prep its portfolio companies for the worst. Many of the action items center around cash flow.
“2022 is pacing to look a lot like 2001,” reads one of the slide decks, which was put together by partners Ravi Gupta and Pat Grady. The slides indicate how, during the Internet bubble, it took about three years to get back to a “reasonably normal funding environment.” Venture funding dollars were sliced in half in 2001—so founders should plan to have at least 36 months of funding on hand.
“We’ve been living in an environment of abundance…” one slide reads. “The challenge is that the world has changed. The thing that worked yesterday may not work tomorrow, which creates a problem.”
Sequoia has become known for its ominous warnings to startups, which have prefaced major recessions in the U.S. economy. In 2020, Sequoia told founders we were entering a “Black Swan” moment, although the beginning of COVID ended up being more of a blip ahead of a record year in venture capital.
But mid-2022 feels different to many venture capitalists, who are gearing up for a downturn that could last several years.
In total, Sequoia issued four presentations to help its portfolio companies prepare, including one that was obtained earlier by Fortune, that focus on forecasting, extending a company’s runway, and, most recently, how to lead during a challenging market.
“It takes many quarters to gain credibility from either your shareholders, your board, your investors, or your employees. And it takes all of 90 days, or one quarter, to lose it and start all over again,” says one slide.
You can read all four presentations here. The three new presentations are below:
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