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Thursday, October 6, 2022

So are we in a startup recession or something? – londonbusinessblog.com

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don’t know what’s going on in the startup market and it’s kinda annoying.

The larger US economy, home to the largest technology start-up and venture capital markets in the world, could be in recession right now. We do not know. To hit a technical recession, we need two consecutive quarters of negative GDP growth. That’s what we got in the first quarter, when the United States’ gross domestic product fell 1.6% after growing 6.9% in the fourth quarter of last year.

goldman thinks that we’re going to avoid a recession with meager growth as the Q2 data settles. The Atlanta Fed thinks we could be in a recession. We’ll see, but smart money isn’t quite sure yet which way the economy is headed.

The startup market feels similar. Venture investors have been ringing alarm bells for months and the IPO market is as dead as hopes of a post-Brexit boom. It’s easy to find comments from various actors in the start-up — both those who build and those who invest — noting that the market is a mess and many tech start-ups are taking a beating.

There’s a good reason for that. The incoming valuation collapse at Klarna is a good example of how part of 2021 does not translate into 2022. Many a unicorn is expected to struggle to raise more capital at an acceptable price, so many downward and last-ditch rounds are expected .

Still.

Funding totals have fallen, but far from it. And with unicorns still being born with a good clip, how much trouble is there for startups anyway?

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