Techcrunch have a story up this morning: To date, US online holiday spending up 12% to $16.8bn, in fact revenues of ecommerce companies have grown consistently through two recessions since 1999 (source Ray Kurzweil, The Singularity is Near). A recession is obviously never good news for anyone, but these stats are a timely reminder that if a startup has picked its market well it shouldn’t worry too much about recession.
The quintessential venture backed startup is in early at the beginning of a new market opportunity (either a genuinely new market or a re-segmentation of an existing market) and raises money to grow as fast as possible to lock down a leadership position – a process that will likely take five years or more from the date of company formation. If they have picked their market well, during that time it will go from tiny – usually sub $10m, to substantial – usually $100m+, and sometimes way bigger than that. In other words for the company to be successful its market will need to be growing at near exponential rates over five years or more. If a recession hits during that period (which is pretty likely) then market growth might slow, but it should still be significant – as ecommerce companies are seeing now.
To read the full, original article click on this link: The impact of recession on startups – not as much as you might think « The Equity Kicker
