All startups have to navigate the turbulent economic climate of 2023. But whether your business can survive depends on many factors, including the viability and originality of your idea and the amount of cash you have in the bank.
There are, of course, ways just to survive, to crouch down and get through the bad economic cycle. Long runway companies can handle fluctuations in the market, but you need to have an idea that solves a real business problem to really grow and prosper.
At the start of the 2020 pandemic, many VCs extolled the virtues of “just putting your head down and building a product”. If you’re at that stage, it’s not a bad way to look at this moment. Try to weather the storm in development, and by the time you have a product ready to go to market, things will have improved.
But if you’re trying to sell or maintain your position within a customer base, it’s a different story. While several CIOs say they’re likely to keep or increase corporate spending in 2023, that doesn’t necessarily mean good news for startups. You still need to convince key decision makers that your product is worth staying in the mix at a time when every line item in the tech budget is under scrutiny.
Two trends in the corporate startup space have emerged from this environment: There is a range of niche startups – with venture capital funding in hand – that focus on specific issues facing businesses. And there are existing companies that are expanding to be more like platforms than single-issue solutions.
Does this mean 2023 will be a great year for start-ups with expanding product suites and long-term contracts? Will one-trick startups struggle – or even fail? As expected, in this case it depends on which part of the enterprise stack a company operates in.
But there are perhaps even more important questions: How crucial or unique is your product — what sets it apart? And will you survive the cut? We spoke to several early stage investors about the kind of startups that are in good shape despite the recession and which could struggle in 2023.