• San Francisco Chronicle, Monday, December 22, 2008 11:30 AM

Entrepreneurs, listen up: When entering an economic slump, make sure you've built yourself a substantial war chest -- even if you don't need the money. That's the advice startup whiz Max Levchin shares with the San Francisco Chronicle's Verne Kopytoff. The Slide, Inc. founder, "who's made a habit of thriving in bleak times," says it's best to raise lots of money ahead of a recession because one of the best ways to beat back the competition when times are rough is to acquire them.

Last year around this time, just before the U.S. descended into recession, Levchin secured an extra $50 million in funding. "We didn't really need the money," Levchin recalls. "I just had this thought -- what if the world comes to a screeching halt?" Now, equipped with a substantial war chest, Levchin says Slide is ready to go on an acquisition tear. "It's actually the best time to expand when it's a downturn, because literally every single competitor is laying people off and having trouble meeting payroll."

Levchin should know a thing or two about growing a startup. After all, the 33-year-old is also the co-founder of PayPal, the online payment service which eBay acquired for $1.5 billion in 2002, and chairman of Yelp, the San Francisco Web site for posting user reviews. PayPal, in particular, was one of the few online services to prosper after the Web bust in the early 2000s. Sensing that the bubble was about to burst, Levchin and his fellow PayPal founders raised VC funding a week before the stock market started to plummet.

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