Famous entrepreneur and venture capitalist Marc Andreessen just put out a tweetstorm telling people to worry that many startups are spending excessively. While the overall landscape is nothing like the dot-com hey day, there are a number of signs that things have over heated. If funding dries up and a number of startups shut down, startups that have meaningful growth metrics or are profitable do see several benefits:
- Talented people hit the market (right now, there’s a shortage of experienced sales people and software engineers)
- Recruiting becomes less competitive (until the next hot area emerges)
- Investors will make fewer investments and flock to higher quality startups (though valuations will be lower)
- Subleases for cool office space become readily available
- Noise in the marketplace from competitors dies down (assuming a number go out of business)
Downturns are never pleasant but strong startups will benefit from a correction. Of course, this only affects markets that have had access to large amounts of risk capital, and there aren’t too many of those.
What else? What are some other benefits during a downturn for strong startups?