Billionaire Investor: "Current Economy More Severe Than Financial Crisis and Dot-com Bubble"

[Image source=EPA Yonhap News]

[Asia Economy New York=Special Correspondent Seolgina Jo] American billionaire venture capitalist Douglas Leone warned that the current economic situation is more severe than during the 2008 financial crisis and the 2000 dot-com bubble. He advised startup founders to view this crisis as "the best lesson to learn" and to turn it into an opportunity.

According to the economic media CNBC, Leone, a partner leading venture capital firm Sequoia Capital, stated on the 23rd (local time) at a startup conference held in Helsinki, Finland, "We are experiencing a global crisis." Leone, an Italian-born American venture capitalist, is a billionaire with assets amounting to $6.1 billion (8.2 trillion KRW) as of August. Sequoia Capital, which he leads, is well known for having invested early in big tech companies such as Apple, Google, and Airbnb.

Leone diagnosed, "The current economic situation is more difficult and challenging than the financial crisis in 2008 or the tech crisis in 2000." He mentioned, "Interest rates are rising worldwide, and consumers are starting to run out of money. There is an energy crisis, and geopolitical issues are also present."

Ultimately, his concern is that corporate executives and investors cannot ignore the high interest rates and worsening macroeconomic conditions. Central banks around the world, including the Federal Reserve (Fed), have shifted from easing policies during the pandemic to implementing high-intensity tightening, causing the New York stock market to plunge this year.

Leone said, "Think about what has happened over the past 2 to 3 years. Whatever you did, you were rewarded. But now, everything has disappeared." Advising startup founders to reduce costs and focus on fundamentals, he added, "What you will learn from now on will be the best lesson for our business as well."

In particular, Leone expects this recession to continue until the year after next and predicts that the value of tech companies will be difficult to recover at least until 2024. He said, "I do not expect these problems to disappear overnight," recalling, "Looking back at the 1970s, there was instability for about 16 years, and in 2000, many companies did not recover their value for 10 years."

He also emphasized, "We believe that now, with consumers running out of money, demand decreasing, and tech companies' budgets shrinking, we need to prepare for the long term."

Additionally, regarding the aftermath of the cryptocurrency exchange FTX's bankruptcy protection filing, he mentioned, "It may affect investment principles in the short term." On the previous day, Sequoia Capital apologized to fund investors for a loss of $150 million due to its investment in the cryptocurrency exchange FTX.

This content was produced with the assistance of AI translation services.