{ 30 MARCH 2009 } Negative growth in Europe and the U.S. and weak growth in Asia: During this global recession, even firm orders are being cancelled and established and well regarded customers are defaulting on their payments. These are developments that pose a fundamental threat to the prospects of start-ups. As a consequence, many of them are facing the painful task of scrutinizing their cost base in order to reduce their cash burn. Today, financial strength is taking the place of such formerly common key arguments as uniqueness and growth prospects in partnerships and strategic discussions. Some industries are being hit strongly Semiconductor » Nevertheless, if we take a closer look at the technology sector we find that the impact of the recession on start-ups and growth companies tends to differ. The semiconductor industry, in particular, is suffering. It is suffering a double whammy by at the same time being hurt by overcapacity and a slumping demand, leading to dramatic price erosion. Large companies like Hynix in Korea or AMD and Freescale in the United States are having to fight for survival in these markets whilst Qimonda is facing outright bankruptcy. The investment in new technologies in such a period is very limited, leaving very little room for young growth companies to breathe and grow. Hardware and Software » Another example consists of hardware and software vendors who are suffering from their customers’ reduced IT budgets. Sales cycles are being endlessly extended, leaving young growth companies with a great deal of uncertainty about their 1–2 year forecasts. Resource planning is becoming an unmanageable task. In this kind of market, it is very difficult to differentiate or to find an angle to nevertheless prosper.
E-Commerce » Another sector in which opportunities prevail is European e-commerce. While overall retail revenues are down in Europe, the transformation from brick-and-mortar to online shopping is more than compensating for the impact of the recession. This holds true particularly in Europe and other markets where online penetration is still much lower than in the United States. Here, growth companies with a strong focus on customer service and strong execution on the supply chain management side are able to grow strongly and gain market share – without too much competition. Established retailers need to focus on solving the problems in their core market first. And competition from new start ups is likewise limited, as funding remains a scarce resource. Cleantech » Finally, we are seeing less impact from the recession at this point in the cleantech sector. Despite the recent slump in the solar industry we believe that the overall megatrend to seek alternative energy sources is still offering a very attractive opportunity for companies to grow. It is driven by the fundamental need to replace the currently still available fossil energy sources over the coming decades and fueled by an increased willingness on the part of societies to pay for the green factor. Those who had thought that the economic crisis would lead to reduced attention to environmental problems on the part of political leaders have thus far been proven wrong with Obama´s recently published act being a case in point. Time to act No matter which sector the growth companies are in: The ones who will emerge from the crisis as the winners in the future have to react today. A broad set of measures have been implemented. Precautionary cost adjustments and planning for limited growth are a part of almost every boardroom discussion today. And it has become equally commonplace to switch the focus to different customer groups or to change business models to reflect different customer buying behavior. In some cases, we are seeing companies begin to execute a more aggressive buy-and-build strategy, picking up weak or defaulting competitors. Which shows once again: Financial strength is an extremely powerful argument in times of recession. |
