The Trickle-Down Effect: One VC’s Perspective

Earlier today, I talked with CMEA managing director Faysal Sohail, an entrepreneur turned tech investor, about which startups would be hardest hit by this week’s implosions on Wall Street —  and which might benefit from the fallout.

Sohail had a few ideas about who might die and who might thrive. In his view, the hardest hit startups will be security system companies, network equipment providers, and computing systems providers that count bulge bracket banks and other big financial institutions among their major customers. “It’ll be a while before I’m excited to see any startup selling infrastructure pieces to the surviving big banks,” said Sohail. “Who knows how long their budgets will be frozen.”

As for new opportunities, Sohail, who invests in both software and hardware companies, said he’ll be looking for new kinds of transaction companies, debit cards, and other startups that are finding new ways of processing payments more cheaply than big banks or credit card companies. He’s also bullish on startups that are innovating the process of moving money around globally. “Trillions of dollars move around outside Western Union,” observes Sohail. “As we become increasingly stricter about money laundering, new ways to move cash in clear and legal ways becomes more interesting.”