A recession is the best time to invest in startups, but not the best time to raise funds

Invest in early stage startups in a recession

A recession is the perfect time to invest in startups because

1) You get MUCH better deals with valuation
2) Each dollar gets you more stuff
3) A much bigger talent pool (not just labor pool) that are unemployed and ready to move to a startup
4) Competition Haven: large companies are not expanding but shrinking; new companies are scared to start

One of the few problems with startups in a recession, is that they have no cash to take advantage of the benefits. But if you are an investor, you solve that problem! Before your cash was just necessary to not fall behind. Now your cash becomes a competitive advantage!

Startups should not waste time raising money. Focus on being lean and sustainable

Raising money is time consuming and dysfuctional for growth (like digging for water in a dessert). Instead of begging for money from people who don’t want to give you, focus on making your business more valuable.

Be as lean as possible. Your goal is not to run fast like a cheetah and burn out. Your goal is to be a cockroach and survive lava. As time goes by and the economy recovers, you will be the last man standing. Battles are won not by how many enemiese each side has killed, but who has the last men standing.

6 thoughts on “A recession is the best time to invest in startups, but not the best time to raise funds”

  1. Like the video. Am following you on twitter (@ColinAC). You sound like a a smart young entrepreneur and I like that you are into social media. Look forward to your tweets and any new updates.

  2. That’s why the recession holds so much opportunity, but only to the people that see it. For every downturn you get an upturn.

  3. Good post. Recession is what separate the contenders from the pretenders. I don’t know if you’ve heard Jack Ma (founder and CEO of Alibaba.com) talking about how his company survived dotcom crash. He basically said:

    “There were three reasons why we survived, We had no money, we had no technology, and we had no plan.”

    Like you said, “Your goal is to be a cockroach and survive lava.”

    1. Thanks Bill!

      I agree a recession is when opportunities happen and all saturated markets will be flipped around.

      Jack Ma is one of the people I respect the most. I enjoyed the quote you shared 🙂

      Cockroaches rule.

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