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November 03, 2014

Anna Ruth Williams

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Partner

This is the third and final post in a three-part series on the intersection of PR, startup funding and burn rate.

As you might recall - I predicted in my last blog post that the conversation on burn rate was just beginning - and that it would continue to drive the narrative with tech media and across social channels for some time to come. My calculation has so far proven true.

On October 23, the University of San Francisco unveiled its Silicon Valley Venture Capitalist Confidence Index, which for the first time in over two years, showed a decline in confidence among those surveyed. According to an article by Bloomberg’s Denni Hu:

Venture capitalists’ confidence fell to 3.89 on a 5-point scale in the third quarter, down from 4.02 in the prior quarter, according to the Silicon Valley Venture Capitalist Confidence Index, which is compiled by the University of San Francisco. It was the first drop since early 2012, said Professor Mark Cannice, who manages the index.

Nobody claims this index to be the world’s most scientific survey nor have investors actually pulled back funding as of yet; but the decline is truly reflective of current market conditions and heightened investor concerns over burn rate.

University of San Francisco professor Mark Cannice, the survey’s director, recently told the Wall St. Journal that he “attributed the decline in sentiment to high valuations and an ‘overheated’ market.” In the same article, Joe Soberg of Expansive Ventures explained that:

‘Bubble’ talk has grown louder, especially discussion about high valuation and burn rates…I expect VCs will be more conservative in the coming months and will fulfill the predictions of things slowing down.

As mentioned, investment dollars, for the time being, remain high and every article I read made sure to mention that most of the index’s participants were still more confident than not in their investments and in their funding pipeline.

But how long before time expires on all of the positive sentiment? Was this index the first domino to fall or is it an outlier amongst what are still favorable conditions? The truth is, I don’t really know. The market is the market. Its peaks and valleys will continue to spur from global events that nobody can accurately predict.

There is always going to be uncertainty. Some of that uncertainty derives from things that investors, startups nor PR firms can control. So lets focus on what can be controlled – and that is burn rate.

Last week, Alloy led a webinar for dozens of startups about the importance of annual planning to a tech company’s bottom line, tips and tricks on how to start, and best practices for following that plan throughout the year, while still remaining a nimble early stage company. There is some very relevant information in our presentation relevant to startups at any stage.

If you missed our webinar, click here to view best practices on using PR/marketing planning to control burn rate, earn buzz and attract VCs. Your investors will thank you for doing so.