In Depth

Starting Up in a Down Economy

Venture capital investments are down and many financial institutions are struggling. But security entrepreneurs Doug Camplejohn, Aaron Turner and Mike Rothman say if the idea is good, the time is right to launch a company.

By Joan Goodchild, Senior Editor

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Mike Rothman: Less cost to launch

While money is tight, these days entrepreneurs don't need nearly as much to get started as they did just a decade ago. It's a factor that has more to do with progress and technology than the recession, but it helps just the same.

"What's different between start ups today and the early days is how quickly and how cheaply you can get a product out and try things out, " said Camplejohn. "When I started my first company (MyPlay), I think we were one of EMC's largest customers. We had about 12 terabytes of storage and it cost about $2 million. Now I can buy that same amount of storage it for about $10,000 or I can rent it pay-as-you-go from Amazon."

Mike Rothman, senior vice president of strategy and CMO with eIQnetworks Inc., agrees.

eIQnetworks, while not technically a startup (it has been around for 8 years), is fresh off the trail for funding. The company is recasting its business model to appeal to a different area of business than it did previously. Its security and compliance product initially aimed at small and medium-sized organizations. Now the company are going after enterprise-level clients and just closed on a first round of institutional funding at the end of December.

"It's a lot more cost-effective to build the company these days than it was in the 1990s when I started my first company. You don't need a lot of infrastructure to prototype and get out there and start selling to customers," said Rothman. "And that is what it comes down to, especially in this environment. It really is about getting the customers. The folks that are able to raise the money are the ones that don't necessarily need it. We didn't need to go out and raise money. We just thought we would be able to execute on our plans a lot faster if we were able to make some proactive investments."