Sun Microsystems Co-Founder Says Startups Should Launch Now
Sun Microsystems Co-Founder Says Startups Should Launch Now
(Bloomberg) -- One of Silicon Valley’s founding pioneers is joining a new venture capital fund to back startups on the notion that the highest unemployment since the Great Depression makes it an optimal time to start a company.
Scott McNealy, who co-founded Sun Microsystems Inc. and then sold it to Oracle Corp. for $7.4 billion in the wake of the financial crisis, said the current downturn is the right moment to launch a business.
“It’s really an outstanding time,” McNealy in an interview. “History has shown that the best time to build a company is after a significant reset.”
Venture capitalists are often quick to point out that game-changing tech pioneers like Uber Technologies Inc. and Airbnb Inc. started in the last recession.
McNealy said he expects the cost of starting a technology business to shrink because of lower salaries and rent. Also, with the coronavirus pandemic making a remote workforce the norm, companies can hire more employees in regions that are less expensive than New York and the San Francisco area, he said.
While it’s a difficult time for commercial real estate, McNealy said he’s optimistic about startups that are relevant to financial services, health care and government.
McNealy will be investing in startups as a limited partner and adviser at Conversion Capital, which is raising a $50 million early stage fund. Creative Artists Agency co-founder Michael Ovitz and Glenn Hubbard, a chairman of the Council of Economic Advisers under President George W. Bush, are also investors in the fund.
Eugene Marinelli, a co-founder of mortgage platform Blend, will be making the investments alongside the firm’s founder, Christian Lawless. McNealy has invested in earlier Conversion Capital funds.
Founded in 2012, the firm has invested in startups including Booster Fuels Inc. and Provenance Blockchain Inc. The firm is also starting Conversion Labs, grouping engineers, designers and other experts to advise its portfolio companies.
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