What’s a company to do when it runs out of funding in these tumultuous times? Unfortunately for everyone associated with technology firms, the go-go days of the late 1990s and early 2000 are long gone. To the extent that the third and fourth quarters of 2001 held out any hope for a reversal or recovery, the tragic events of Sept. 11 guaranteed that venture capital financing would remain tight in the near term.

Of course, these are hectic and chaotic times. Employee morale may be low; directors may be resigning because they fear potential liability related to a failing company; and vendors and suppliers may be pressuring the company for payments. All of these factors are difficult to deal with in a booming economy, but are extremely trying in an economic downturn.

Many high-tech companies are reducing their burn rate by curtailing expenditures and laying off employees. Companies are stretching out payables. Several companies in the Valley have endured two, three, or even four rounds of layoffs. One enterprise software company decided to lay off its entire sales force because none of its prospective customers were making any purchasing decisions.

What does a company do when it reaches this point? When a business runs out of cash, it generally has the following options:
- Raise a round of “desperation” financing.
- Sell the company to a third party. or
-Go out of business by closing its doors and/or filing for bankruptcy.

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