According to recent research in venture funding, different media outlets seem to agree on the leaner times to invest in startups. Therefore, based on the information, many investors are reconsidering their move to reinvest in the economy. The alignment to economic trends projects that different markets have experienced turbulence which has significantly distracted startups from getting the chance to land promising deals. However, here are some reasons why now could be the right time to invest in startups.
Some researchers have examined that the valuations of the startups are back to reasonable levels. The levels can be attributed to the sustainability of the pandemic, which had wreaked havoc in the previous year. However, the lower valuations pose a challenge to established businesses whose equity is being impacted. In the long run, it is forecasted that there will be lower entry points for startups which grants them the room and freedom to grow and develop economically.
Despite the economic situation seeming to decline, digitalization substantially positively impacts the progress of startups courtesy of the high technological capabilities. As such, startups can meet their client clients’ and societal expectations in the formative stages of their operation. Technological advancement also provides better platforms for transactions, resulting in problems for startups.
History has also been a significant reflector of the success of startups. For instance, the economic recessions and declines experienced before were a period of creativity and innovation for startups. The majority of Fortune 500 companies are a product of economic crises. Examples include LinkedIn, GE, and Microsoft. In such periods of economic crisis, people begin startups to care for society’s needs.
Lastly, investors tend to appreciate the value of cash during economic downturns. A startup is prone to succeed at the formative stages because the entrepreneurs are obliged to be more capital efficient. Consequently, large businesses tend to lay off and cut down their manpower during these hard-economic periods. Therefore, startups are faced with less market share and talent competition. There is also the potential for negotiating better deals on space and other subscriptions that aid the success of startups.
Dil Bole Oberoi
