Ask HN: How would a recession affect venture-funded startups? I'm curious to see what people think of how the current startup ecosystem will fare if there is a real recession. |
Ask HN: How would a recession affect venture-funded startups? I'm curious to see what people think of how the current startup ecosystem will fare if there is a real recession. |
That said, this time it's really hard to say because we still have historically low interest rates and not a whole lot of places for people with money to invest it at higher returns, so that's sure to have an impact.
Ok, maybe an overstatement. Fewer companies will be funded, many many will die. The market will viciously slaughter any weak business plans. But the few that survive will THRIVE. With brutal market pressure, only the best ideas will move forward... there will be a complete inability to hide from the reality of bad plans or execution. High quality employees will be more willing to join for less salary, extending runway. When the economy recovers, those scrappy survivors will already have market share and will be in the best possible to ride the wave upward to absolute dominance.
Seriously, if you want to join a startup, definitely consider looking for companies that seem to be doing well (or even doing pretty-much-ok) in the depths of the recession.
Startups have developed a bad habit of overspending (at least in Asia) where they're offering unsustainable discounts, playing bait and switch, swarming competitors with false reviews and calls, or things like buying phones and offering generous contracts for partners, who quit their job, and then find that the startup is not so generous 3 years later.