Now they're talking deflation

Well, the mainstream media is now mentioning deflation as a possibility.

 

I did a quick google search on this blog, and realized that I never mentioned inflation.  And prior to this posting, only mentioned the word deflation once Easier VC where I said that the job gets easier if everyone's expected return drops.

 

Now we might be entering a time when the best thing an investor can do with their money is wait, the last time was during the dot-com bubble crash.

 

This is going to be a hard time.  Many folks are saying, if you get a term sheet, take it.  Don't negotiate too hard.  Granted that's on the investor side, so they are a bit biased.  But fewer termsheets, lower dollars, and more companies going back to earlier stage investors looking for money.

 

For companies that are driving M&A activity, everyone is calling on them.  And if you have your choice of the best deals, why rush?  The good deals will still be there next week.  And the bad deals might die out by then.

 

In these times, cash is king.  So how do you show/prove to your potential investors that your deal is better than anything else they can put their money to work on? How can you show that it's better to put the cash to work in your company than it is to keep the money on the sidelines?

 

Both short term and long term values have to be taken into account, otherwise things go bad in a hurry