Small or Big? What Size Companies Will Weather Recession the Best

Science project companies are the place to be.

That’s the word from a few VCs I met with this morning. The credit crunch has made it extremely difficult for semi-established solar or biofuel companies to raise the tens of millions to build commercial-scale factories. Some of the deals were still taking place in late September and October, but the spigot is running dry. If your company is in this group but didn’t get its cash, it could be in trouble.

By contrast, science project companies don’t need a lot of money. Investors also don’t expect them to produce anything commercially for a couple of years. By then, the economy could be rolling again.

But, before you quit your job to run off to a company exploiting bacteria to make tennis shoe adhesives, remember that not all start-ups survive. A lot of companies died during the dot.com crash, but Intel and IBM made it out.