Why starting a business amid recession concerns isn’t actually a bad idea
Businesses born from the global financial crisis have been hugely successful. Explore why, and how founders should think about startups today.
Adele is responsible for leading Scouting and Angel fundraising. Scouting is a pivotal function for Antler to secure exceptional founders to build businesses with the Fund. Turning to fundraising, Antler holds a powerful angel community that deploys post Antler's initial investment. Prior to Antler, she was an early hire of now unicorn SafetyCulture and with corporate VC the Boston Consulting Group (BCG) Digital Ventures.
Adele is responsible for leading Scouting and Angel fundraising at Antler Australia.
March 14, 2023
Share this post
In January, 95 people joined Antler Australia ready to launch their own startups. This is one of the biggest cohorts we’ve ever had.
These people joined, knowing that it's a requirement to participate full-time, meaning they don't have a job to fall back on. In most cases, they join without a co-founder or team, and sometimes even without an idea as to what they will build.
And not only that, they did so despite concerns about a looming global recession sparked by war in Ukraine, a global energy crisis, soaring inflation and cost of living.
So, why do this in the face of such potential risk?
Historically, businesses born from uncertainty thrive
Many household brands we know and love today were born during the last global recession - think Uber, Airbnb and Square. These companies were founded and funded between 2008 and 2009, the peak of the global financial crisis.
Born from necessity, their success can be attributed to their adaptability and speed to move with shifts in consumer behaviour and answer service demand when incumbents couldn’t react as quickly. This environment in turn bred a more resourceful and resilient founder type who in improved operating conditions outside of the recession went on to flourish.
Similarly, the global Covid-19 pandemic saw unprecedented disruptions in supply, demand, and productivity, which had monumental health, social, and economic implications across the world.
But the question remains: Has history repeated itself, and are unicorns set to emerge off the back of this crisis?
Antler has data that can shed light on what might be to come.
Let’s take a look at Antler’s Australian portfolio companies born in 2019
For those unfamiliar with the Antler model, we work with ambitious individuals looking to launch their own businesses. To do this, we introduce them to a cohort of like-minded and skilled peers also ready to build their own startups. And with a little help from our team of startup and VC experts, these people can have a high-potential, validated and funded business up and running in a matter of weeks.
In Australia, the Antler cohort most affected by the Covid-19 downturn was that which launched in mid-2019.
Despite that, that intake remains the largest-ever cohort with 99 founders signing up to participate. And from that group, 15 businesses went on to gain Pre-Seed investment from Antler.
Are these companies - launched in the midst of crisis - showing early signals that we are set for a repeat of the early 2008/ 2009 breakout successes?
After just two years of operating, these six companies are showing an 8x multiple on Antler’s initial investment securing additional capital from top local VC SquarePeg and institutional American investors.
Carolina Dreifuss, co-founder of SyncTechnologies (SyncTech), an Antler portfolio company that launched in 2019 says, “Founders building in downturns usually often face restricted funds, fewer resources and a rapidly changing environment which is why they need to work smarter. To reach your goals, founders must think creatively and explore smart ways to get from A to B in the fastest possible way, with the lowest cost and the highest return.
“In the early days of SyncTech, the environment was constantly changing and we had to adapt and use it to our advantage. We worked with ‘small experiments’ to learn fast and we made adjustments on the go.”
SyncTech capitalised on changing environments. It created a digital twin of construction sites meaning employees did not have to be sent to in-person inspections as Sync could bring the digital version to wherever needed. As such, in periods of lockdown, it enables work to efficiently continue and remains valuable with free movement as it provides a huge cost saving to companies, in particular, insurers who often need to send multiple people to gather the needed on-site assessments.
Born from difficult times, these startups just a couple of years on are thriving and attracting significant capital.
Tough economic conditions can have a number of adverse impacts on many industries, and as a consequence often result in hardships for individuals and their families. So, by no means, do we wish to minimise that experience, however, we do hope to highlight that despite difficult situations opportunities to innovate are present and can be highly rewarding.
Let’s take the recent wave of tech layoffs as an example.
As we know, redundancies are a brutal reality of turbulent market conditions, and over the last few years, many job cuts have been concentrated in the tech sector following massive industry growth, IPOs, and more.
According to US data published on NerdWallet, more workers in tech were laid off in 2022 than in 2020 and 2021 combined.
In the article, the author pens a grim list of the big-name tech giants such as Meta, Amazon, Microsoft, Alphabet, Spotify, Dell, Zoom and Twitter cutting between 600-12,000 employees each in the last six months alone.
Even over the last couple of weeks, this reality has played out locally across established and promising ANZ technology companies.
What we have seen at Antler, is that hard times often correlate to larger cohort sizes. Many see redundancy as the opportunity to finally launch their own business. Even as I write, individuals are forming teams and validating ideas as they prepare to pitch to the Antler Investment Committee in April.
“My team [and I] were made redundant at the end of 2022,” he says.
“In hindsight, it was the best thing that ever happened, because through the redundancy it gave me some personal runway to explore my long-term dream of founding my own company”.
And it seems this is somewhat of a shared experience with those who aren’t laid off but working for companies making redundancies.
John Velasco, who is also currently participating in the cohort, says as his former employer scaled back operations he felt his career prospects were stifled, and as such saw Antler as an opportunity to keep moving forward.
“My previous company scaled back and growth was deprioritised,” says John.
“Whilst they were doing great things, the period ahead for me meant little progress, so I realised there was no better time to switch to entrepreneurship.
“It has been a long-held dream that, until now, I had been putting off. It's liberating and exciting to have started the journey with Antler.”
And it’s not just Antler that presents an opportunity for those impacted but recent market conditions.
Rise of entrepreneurship
Entrepreneurship more broadly is on the rise on a global scale, undeterred by economic uncertainty.
Access to low-cost, high-impact technologies has made it possible to reach vast segments of the population faster than at any time in history.
To highlight the speed that companies can now scale; the airline industry took 50 years to reach 50 million customers, Pokemon Go took 19 days and it is possible that ChatGPT, which launched in November 2022 and has claimed the spot as the fastest-growing app in history, could have reached the same size audience in a matter of hours.
Founders can now start a business from any location and we are seeing top tech companies originating more evenly distributed across the world. As an example of this, the global unicorn club is bigger than it's ever been with over 1,200 private companies. According to CBInsights, this has more than quadrupled from 269 in 2017.
At the same time, the need to create impact has never been more pressing as we as a society begin to align on and reach global carbon emission targets. This alone has catalysed a new generation of companies in emerging categories such as battery storage startup Amber, through to carbon measuring and offset seen in Antler’s portfolio with PathZero and Trace.
And if current studies are right, the rate of entrepreneurialism is only going to increase.
According to a recent Nielsen study published in Forbes, more than half of Gen Z want to start their own company. Their reasons? They want more control, they want to be debt-free, and lead a purposeful, impactful life. Compounding this, a significant portion of this demographic also believes that attending university, and its associated cost, isn’t a requirement for them to achieve their goals.
“About one in five Gen Z and young Millennials say they may choose not to go to college. Many others see a less conventional path through education as a good idea,” the report finds.
62% of millennials have considered starting their own business
55% believe their generation is more entrepreneurial than past ones
Complementing this founder mindset is the sheer amount of resources, grants and community support at the hands of the public to help them on their journey. From community hubs funded by the government such as the Sydney Startup Hub, or full-fledged ecosystems such as LaunchVic and grants such as the NSW MVP Ventures. To co-working spaces such as Tank Stream Labs, dedicated publications such as Startup Daily, meet-ups, conferences and more. If people are looking for ways to launch a business or meet like-minded people, the opportunities are readily accessible and available.
Overall, we live in a time of immense disruption but from this period opportunity will rise. As we have seen, uncertainty leads to innovation, and those looking to harness it can realise potential.
If you would like to build a company with Antler visit our website for further information on our founder offering: www.antler.co. Applications are currently open for our May 8 intake.
Subscribe to our newsletter
Get the latest news and views from Antler’s global community
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Share this post
Must-read articles from Antler
Browse our collection of founder stories, industry insights and latest startup successes from Antler Australia
The Nordics have produced some of the most successful tech unicorns in Europe—and the world—with Spotify and Klarna securing some of the highest valuations ever achieved by European tech founders. As the tech flywheel spins faster and faster in the region, Antler is excited to publish the largest study of tech founders in the Nordics ever conducted.
Our content series "It All Starts with People" delves into the passions, motivations, and vision of the exceptional founders we have the privilege of partnering with around the world. Read the story of Manuel Schönfeld, founder and CEO of PowerX, on a mission to help businesses waste less energy and money while combatting what he calls "the largest threat to our planet since the meteor wiped out dinosaurs.”
As AI technologies evolve at a breathtaking speed, founders have an unprecedented opportunity to leverage those tools to solve complex, meaningful, and pervasive problems. Antler is looking for the next wave of visionary founders committed to using AI to disrupt industries and improve how we live, work, and thrive as individuals, organizations, and economies.
Our Window into Progress digital event series continues with "Under the Hood"—a deep dive into the rigor and scale that makes Antler unique as we source and assess tens of thousands of founders across six continents.
On the heels of publishing A Window into Progress—a global report that looks inside Antler, the world’s day zero investor—we are excited to present a digital event series offering deeper insights into our portfolio, investment approach, and unique views of the world. Our first event is "The State of Building Today," featuring perspectives on the state of VC and the startup ecosystems in Europe, the US, India, and Brazil.
Our content series "It All Starts with People" delves into the passions, motivations, and vision of the exceptional founders we have the privilege of partnering with around the world. Read the story of Abraham Burak and Bahadir Ozdemir, co-founders of Airalo, who are on a mission to make connectivity around the world accessible and affordable.
As unicorns and later-stage companies are battered by the economic climate, the overall health of the European tech ecosystem looks stronger than ever, with more founders coming from big tech and unicorns to build new startups with significant growth potential. Dive into our report and get to know the new generation of European tech founders.