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What Sequestration Will Mean For DC Startups

What happens when thousands of government workers and contractors are furloughed? What will sequestration mean for DC Startups…. There will be good, there will be bad there will be ugly.

The furloughs are going to be particularly difficult in the DC Region and will have a definite effect on the DC Startup Scene.

The Good

  1. The Lure Of Government Work – The fate of commercial companies in the region have been subject to the ups and down of economic cycles while government employment plodded forward. Many of our region’s top technical talent were lured to the job security and large budgets to work on fascinating projects. Would you rather be a ruby on rails developer for an e-commerce coupon site riding the Living Social roller coaster or design the software to drive a mars lander? Now the safety of that government work is not quite as secure and budget cuts will lead to less interesting government research opportunites  (see point #3 in Silicon Valley Wanabe).
  2. Talent – Ask any startup founder for their top 3 challenges and finding technical talent is going to be on that list. There will be more talent available.
  3. New Ideas – Of the hordes of unemployed, some will finally follow their dream. While searching for work they will be afforded a low-risk opportunity to build a company around that new idea that’s been germinating in their risk-adverse brains. There’s not much risk building a company while looking for work as opposed to jumping off the cushy job cliff.

The Bad

  1. More Turds Less Gold – If you take every business plan of every company seeking funding and pile them on top of each other from worst to best the spot where the good plans meat the bad defines the turd to gold ratio. In times of strong economic growth and full employment, when leaving a good job means giving up an income, the gold outweighs the turds. Many people are going to be starting companies that shouldn’t be started.
  2. Belt Tightening – When people are out of work and people with work nervously tighten their belts a drop in spending has a ripple effect throughout the economy. Angels will tighten their belts .

The Ugly

We are about to see more stupid startups perhaps rivaling ideas like Taco Copter or these.

Summary

So here’s hoping that that the goods outweigh the bads and that one or two of those new companies change the world and put DC back on the startup map, bringing us back to our former glory during the rise of the internet age.