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Source:TechCrunch
A lot of criticism has been aimed at venture capitalists the last few days. The VCs are telling their portfolio companies to get ahead of the curve and conserve cash right now, and companies are starting to take their advice.

The criticism is coming from people who don’t understand that the world has changed in the last week and that companies need to change with it. And so they’re asking why VCs waited until now to tell everyone to conserve cash. Others are saying the boom is the VCs fault, and for them to lecture companies on conserving cash is ironic.

Fred Wilson wrote about this issue today and says VCs have a responsibility to give their best advice to their portfolio companies: “It’s all about acting responsibly and making sure we all survive to fight another day.”

But he doesn’t address the issue head on. I will. What we’re talking about is the goal of profit maximization, which is what every for profit business needs to aim for or go out of business. In the good times, that means growing intelligently. In the bad, it means maximizing your chances of survival.

This entry was posted on Saturday, October 11th, 2008 at 9:30 pm and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.