By: Navid Ladani
What 25 Years of Venture Capital Teaches About Resilience
Venture capital has a survivorship challenge. The funds that raise during boom times often disappear during busts, their track records erased from industry databases and their lessons lost. The investors who endure multiple cycles are rare, and their experience is correspondingly valuable.
Nenad Marovac has been investing in technology companies for more than twenty-five years, a span that includes three major market dislocations: the dot-com crash of 2000 to 2002, the global financial crisis of 2008 to 2009, and the valuation correction of 2022 to 2024. DN Capital, the firm he co-founded with Steve Schlenker, has navigated each of these cycles while continuing to generate strong returns for investors.
The lessons from this experience are relevant for founders, investors, and anyone seeking to build durable institutions in volatile markets.
Cycle One: The Dot-Com Crash (2000–2002)
DN Capital was founded in June 2000, just months before the NASDAQ began its precipitous decline from the dot-com peak. The timing could hardly have been worse for a new venture capital firm.
The firm’s early investment in Endeca, an enterprise search technology company, exemplifies the challenges of that era. Endeca had genuine technology solving real enterprise problems, far more credible than the vapourware that characterised many dot-com failures. But genuine technology offered little protection against a market in freefall.
Endeca’s valuation collapsed along with the broader market. Many investors would have cut their losses, but Marovac and Schlenker took a different approach. They stayed on the board, helped the company restructure, and waited for the market to recover.
“The dot-com crash taught us that the quality of the underlying business matters more than market conditions. Endeca had real technology and real customers. Our job was to help them survive until the market recognised that.”
Nenad Marovac, DN Capital
The patience paid off. A decade later, Oracle acquired Endeca for more than US$1bn. The technology still powers many of Oracle’s enterprise solutions today.
Cycle Two: The Global Financial Crisis (2008–2009)
The 2008 financial crisis presented different challenges. Unlike the dot-com bust, which primarily affected technology companies, the global financial crisis threatened the entire financial system. Venture capital, dependent on exits through IPOs and acquisitions, faced a frozen market.
Shazam, which DN Capital had backed at Series A in 2004, was badly affected by the wider market turmoil. The audio recognition company had revolutionary technology but struggled to find a sustainable business model. The financial crisis compounded these challenges, making fundraising nearly impossible.
Shazam went through more than five CEOs and more than five CTOs. Many investors would have written off the investment, but DN Capital remained engaged, helping the company restructure repeatedly and supporting management through each transition.
The decision to stay the course reflected a core principle: investors who abandon companies in crises forfeit any chance of recovery, while those who provide continued support can influence outcomes.
In 2018, Apple acquired Shazam for US$400m. The application has since been installed more than one billion times, becoming a core feature of Apple’s ecosystem.
Cycle Three: The 2022–2024 Correction
The most recent market dislocation – the valuation correction that began in late 2021 and extended through 2024 – differed from previous cycles in character if not in severity.
The preceding boom had pushed private technology valuations to unprecedented levels, fuelled by low interest rates and abundant capital – ZIRP as many called it. When interest rates rose and public technology stocks declined, private valuations followed. Many companies that had raised at peak valuations found themselves unable to raise follow-on funding at acceptable terms.
For DN Capital, which had maintained valuation discipline throughout the boom, the correction created opportunities to invest in new companies at attractive valuations, while supporting existing portfolio companies through further funding rounds.
The GP’s Role in Downturns
Marovac believes that how investors behave during downturns defines their value to founders and their long-term track records.
The natural instinct during a crisis is to retreat: to reduce engagement with struggling portfolio companies and focus on preserving capital. Marovac argues for the opposite approach. Downturns are precisely when founders need the most support: help with difficult conversations about restructuring, introductions to potential acquirers, bridge financing to extend runway, and honest assessments of strategic options.
“Anyone can be a good investor when markets are rising. The test of a GP is how you behave when things are hard. Do you disappear, or do you lean in? Your founders will remember.”
Nenad Marovac, DN Capital
Lessons for Founders: Building Downturn-Resilient Companies
Marovac’s experience has also shaped his advice to founders on building companies that can survive market dislocations.
- The first principle is to raise capital when it’s available, not when it’s needed. Companies that enter downturns with strong balance sheets have options; those that need to raise during crises often face punitive terms.
- The second is to build establish functional unit economics before scaling. Companies that grow rapidly on the assumption of future profitability are particularly vulnerable when markets tighten. Those with proven, profitable business models can survive extended periods without external funding.
- The third is to choose investors carefully. The track record of potential investors through previous cycles – whether they supported or abandoned portfolio companies – is a better predictor of their future behaviour than their promises during good times.
What Separates Survivors from Casualties
After 25 years and numerous major market cycles, Marovac has observed patterns that distinguish venture capital firms that survive, from those that disappear.
The survivors maintain valuation discipline during booms, avoiding the temptation to overpay for companies when competition for deals is most intense. They build diversified portfolios that can absorb individual company failures. They maintain strong relationships with limited partners, who continue to support them through difficult periods. And they develop pattern recognition that helps them identify opportunities in chaos.
The casualties, by contrast, often chase the hottest deals at peak valuations, concentrate their portfolios in trendy sectors, and lose the confidence of their investors when returns disappoint.
“Longevity in venture capital isn’t about avoiding losses – losses are inevitable. It’s about managing risk, maintaining discipline, and building relationships that survive bad times. The investors who last are those who can do all three.”
Nenad Marovac, DN Capital
For founders navigating uncertain markets, and for investors seeking to build durable franchises, the lessons of three market cycles are clear: discipline, patience, and commitment to portfolio companies through adversity are the foundations of long-term success.
Disclaimer: The content provided in this article reflects insights and lessons derived from the experiences of an individual investor in the venture capital industry. It is intended for informational purposes only and should not be construed as investment advice or a recommendation to engage in specific investment strategies. Readers are encouraged to consult financial professionals before making any investment decisions.
