
Ask HN: How would a recession affect venture-funded startups? - jihoon796
I&#x27;m curious to see what people think of how the current startup ecosystem will fare if there is a real recession.
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mdorazio
Well, I distinctly remember what happened the last time - investor capital
dried up really quickly, which significantly lowered early stage financing and
made deal terms quite a bit worse. Additionally, startups had a lot harder
time actually making revenue since both b2b and b2c spending lowered
significantly.

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.

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_ah
It will be GREAT.

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.

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muzani
It might actually be good. Companies need more funds not so much because they
need it to live, but because they want to outpace the competition. As one mid
stage VC put it, "There's war and we sell the bullets."

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.

