4 Reasons Why Now Is the Time to Launch Your Dream Startup
Like every other country, Pakistan has been hit hard by the global recession, seeing a massive downturn and a rapid depreciation of the rupee. The situation is only exacerbated by the country’s political instability. The entrepreneurial ecosystem has been hit particularly hard, with funding nosediving by a devastating 94% from last year.
With businesses rolling back operations and mass layoffs, things may seem incredibly dismal but there is hope yet. According to a study conducted by TouchdownVentures in 2020, 24% of the companies on the Fortune 500 in 2019 were founded during a period of recession. As counterintuitive as it may seem, this might be the best time to launch your dream startup.
Here’s why:
New Problems to Solve
As the economy shifts, a new host of problems and pain points emerge. From workers looking for more tailored work opportunities to businesses increasingly investing in financial planning, new startups can identify and work to fill in unique market gaps.
This is evident through disruptive unicorn and decacorn companies such as Uber, Slack and Airbnb, founded in the midst of some of the worst recessions in history.
Easier Customer Acquisition
Downturns usually mark a prominent change in consumer trends, with people cutting out luxuries and looking for more convenient and cost-alternative products and services. This means consumers are more willing to give small businesses a chance, often forgoing brand loyalty to bigger firms.
Launching your startup in a recession puts you in a unique landscape, where your business faces comparatively less competition from companies that otherwise monopolize the market.
A Replenished Talent Pipeline
ResumeBuilder surveyed a sample of a 1000 business leaders and found 1 in 3 companies anticipating laying off 30% or more of their workforce with 70% likely to implement a hiring freeze in 2023. In times like these, job security is a luxury a few of us can afford.
Unfortunately, this means a lot of highly skilled people might find themselves out of a job simply because of the circumstances. For hopeful founders this could be an opportunity to take the time they now have to launch their business, helping them regain control over their career and to hire from a job market replenished with talent.
Funding Opportunities
While funding has taken an overall hit, VCs still have dry powder to deploy. Investors are more cautious about not only who they’re investing in, but also at what stage. Series A and Series B have suffered greatly but seed and pre-seed have proven to be more resilient, being relatively smaller rounds. Majority of rounds raised in Pakistan in 2023 have been seed and pre-seed, the most recent example of which is our supercommunity member, Paismo, an HR tech startup founded in 2022, that raised $1.3 million from Indus Valley Capital.
According to Stephanie Simon, Head of Admissions at Y Combinator, one of the world’s top startup accelerators, “If you’re interested in starting a startup, we’re entering a counterintuitively good time to do it. It won’t be easy, but if you get through the early days, you’ll be better prepared than most. And if the challenge excites you, you probably have the right personality for it.”
If a startup can weather a recession, it can weather anything. Take the lead and turn this challenge into an unprecedented opportunity to disrupt the Pakistani startup ecosystem.
