With my lived experiences in the last 18 months as a software startup founder in Singapore, I hope to make a few points to support the argument that now, June 2024, during the funding winter, is the best time to start a company.
My five main reasons:
Money is plenty, especially in Singapore
The VC funds and family offices have only increased in weight over the last few years. The interest rate environment has only pushed the ecosystem to apply more scrutiny, but it didn’t reduce the overall fund size, and there is added pressure to find great ways to invest.
One little thing that helped persuade me to start the company right after the first Meta layoff was a simple thought: “Anyone I approach on Orchard Road can probably shed 50k easily to angel invest”. It’s hilariously naive, but it’s somehow on point; money is plenty enough for the early stage to get off the ground.
You stand out because good projects and teams are scarce
On the contrary, the founder population declined. I have a few hypotheses:
- Less “free money” resulted in less “tourists” venturing into the game
- Calculated folks are treasuring their current salary-making positions more, resulting in less risk-taking
Interestingly, I argue that it’s much easier for good founding teams, and good projects to stand out now. It means you have stronger commitment to the cause.
The focus you get now is unparalleled
You get less pressure to spray money just because of FOMO. In a bull market, everyone worries about being outcompeted by sheer capital, resulting in less solid strategic thinking, soaking in customer feedback and long-term behaviour, and solidifying good value propositions and strong plays. In a bear market, you get less external pressure to deploy money in a dumb way.
We (Heymax.ai) are super lucky at this point. I don’t think we have known exactly what we are doing for quite a long time. In the first 15 months, the luxury of simply exploring wild thoughts and the room to wiggle around and test out different ideas without the pressure to burn money and prove some fake results were critical to our eventual growth.
Also Read: Confessions of a founder: There’s no fun in fundraising in 2024
Bear market helps to dissuade quick followers. Whether it’s small company (no investors want to just bet on “money will fast track my portco over the current market leader”) or large companies (everyone worried about the potential of layoff, less risk taking, less room to change strategies just so that it can squash a smaller competitor) — you get more room to think, tinker and grow.
You can time your growth phase to warm the funding phase
This is the critical piece. For software companies, money helps to grow the company, not to build the company. Ideally, during funding winter, you build the value proposition, early traction and moat, figure out the growth strategies in a sustainable manner.
When spring comes, guess what, you’re the prime target for any fund who are looking to now quickly deploy their dry powder! It seriously took us 15 months to get some sort of clarity on what we are actually building, even though, along the way, we always pretend we know.
Don’t wait till spring to start!
Talents!
Do I need to say more here? Co-founders and early founding teams are the hardest things to get right in my past startup experiences. If it were not for the tech winter and specifically the Meta layoff, we would not have had the luck to quickly get so many talented people together to build the companies. I could’ve easily spent a year trying to find the right co-founders. Winter is a good reshuffle of resources, and it’s clearly in early-stage startups’ favour.
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