Magnus Grimeland, founder and CEO of antlers, the day zero investor.
Unfortunately, as we approach the final stretch of 2022, the macroeconomic landscape has not cleared up. Inflation in many countries is still high, geopolitical tensions are running high and global pressure on energy supplies has sent ripple effects through the global economy.
While no one can predict how long and deep the current downturn will be, I believe one thing is certain amid all the uncertainty: this could be the best time for founders to build a company that solves a major problem.
This may be surprising to hear given the challenges the world faces today. But I believe there are huge opportunities in the current environment. Here are eight reasons why now is an ideal time to build a business.
1. Building the Revival
The early stages of building a business are less correlated with and affected by broader recessions, for example in public markets or late-stage private financing rounds. Plus, founders building their businesses now are likely to quit within five to 10 years. Even if this harrowing period lasts 12 to 24 months, you usually build your business into the next boom. Don’t wait too long with the current period or don’t think it will last forever.
2. Lots of available capital
There is still sufficient capital available for fundraising in the initial phase. According to data from Preqin Ltd. (paywall), venture capital firm “dry powder — money raised but not deployed — has risen more than $100 billion globally since late last year, reaching nearly $539 billion in July.” Although the closing of deals has been delayed, venture firms are still looking for high-quality companies and have record amounts to put to work.
3. The Advantage of Youth
The companies that struggle in hard times are those with high capital requirements – early stage companies don’t have that in the beginning. You have a great advantage if you are young and agile.
4. The benefits of a less heated economy
History is proof that many large companies are founded at the bottom of a cycle. Some of the defining companies of our time are built from the ashes of difficult times. Uber, Venmo, Slack, Airbnb, and Pinterest all emerged from the 2008 financial crisis. Remember the benefits of building in a less heated economy: hiring great talent becomes easier and there is less competition fueled purely by capital .
5. Rapid technological maturation
From IoT and AI to biotech and blockchain, technologies are maturing faster than ever and will disrupt any industry and create entirely new ones. We are now in an era where ideas that have only lived in labs or science fiction for the past 100 years are materializing as real products used in the real world.
Globalization is just beginning, meaning disruptive innovations are reaching a large global audience faster than ever before. While airplanes took 68 years and television took 22 years to reach 50 million usersTwitter only took two years and Pokémon Go did it in just 19 days.
7. Easy scaling
The cost of building a business has been drastically reduced by readily available technologies and resources such as the cloud and distribution channels including the app store, coworking spaces in labs, rapid hardware prototyping and much more. The compounding effect of this, combined with globalization, means founders can scale their startups around the world with much lower initial capital investments and a time-to-impact significantly shorter than just a decade ago.
8. Public Support for Founders
In times of crisis, the world’s biggest problems become more apparent – and founders are needed now more than ever to help solve them. these years Edelman Confidence Barometer reported that business is the only trusted institution these days, and people not only expect companies to stand up and solve societal problems, but also think they should do more. There is a tidal wave of support for founders to build companies that address the most pressing issues facing society.
I don’t see this as short-term trends, but as trends that will last for years to come through up and down cycles. As pessimism dominates the headlines and negativity is ubiquitous, there are many reasons for founders to be positive. In my opinion, there has never been a better time to build a great business.