Economic downturn. Recession. Bear market.

For many people, it is something very scary. Something that can eat you alive.

Well, that might be partially true. 

The bull market can make startups a little carefree and encourage them to spend more than they should. As a result, many companies are feeling the bite of the bear market now. 

Fundraising tends to slow down, the round sizes become smaller, and valuations become lower. All that can negatively affect many (unprepared) companies and leave them only a few paths forward.

Spoiler alert: not every company will make it to the other side. 😬

To survive in a bear market, companies need to adjust. Founders and CEOs are forced to reassess their choices, change their priorities, and make difficult decisions to stay afloat.

It's the survival of the most adaptable. And if you're not willing to adjust, you will be forced out of the game.

Yeah, the bear market sounds cruel, but that's not all it is.

In fact, many unicorns were born during bear markets.

For example, while Microsoft was founded in a recession, other companies such as Apple, Airbnb, Amazon, Facebook and Uber were shaped during challenging times such as the ‘dotcom’ crash and the ‘great recession'. 👇

Krishna Kunapuli (LinkedIn, August 20, 2019)

Although an economic downturn was an obstacle, it was also a crucial part of their story. Success was no accident - tough times can also be good times that present *unique* opportunities for founders.

Sometimes market factors can be out of your control. But, you obviously can’t avoid the problem and hope for the best. Adjusting to the current conditions becomes crucial. You need to deal with it and use it as an opportunity to build something bulletproof. 

So, should you fear a bear market in totality? The short answer is no.

A sudden economic shift like this presents a big opportunity if you know *where* to look for it.

To get a sense of the opportunities in the bear market, we asked several UK-based VCs and scaleups to share their view on the situation.

We asked:

So, what opportunities are there?

When we hear the phrase "bear market", we inadvertently think of downturns, lay-offs, fundraising difficulties, and stagnation.

Well, fair enough.

But, if you scratch the surface and look deeper, you might find new avenues for growth, much like the companies formed during the economic meltdown did.

Some opportunities are more straightforward than others; some might require out-of-the-box thinking. But if you want to have a chance of survival in this recession, you have to do what it takes. 

Mattias Ljungman, Founder and Managing Partner at Moonfire Ventures, highlights the following areas of opportunities for startups and scale-ups during the bear market:

- Hiring as the war on talent becomes less intense

- Marketing costs will come down as companies reduce their expenditure

- Competition reducing as not as many companies will be funded

- Companies not looking to expand their offering but rather become more focused

Mattias Ljungman - Partner at Moonfire Ventures

Likewise, founders see this, too. Sumanta Talukdar, Founder and CEO at Gardin - who announced a $10.8m seed round in Q4 last year - emphasises similar benefits in the bear market:

There are certain tangible benefits of a bear market, and some of these are – 

●     Thinning the crowd – competition will noticeably get quieter and eventually fall away. Companies with sub-par economics will not have the staying power

●     Heightened awareness – companies with demonstrated value creation in necessary fields (food, ag, medical, infrastructure etc.) will get more attention. Don’t get distracted!

●     Talent – as sub-par companies struggle, good people will become available.

●     [Funding] – whilst deployment might slow, [funding] will remain and value creation will attract it.

Sumanta Talukdar - Founder and CEO at Gardin

So, what do we have?

Hiring opportunities, weakened competition, and reduced costs, among others. 

These are probably the most straightforward consequences of the bear market, but let's have a deeper look at each of the potential opportunities out there.

How is the recruiting situation?

Recruiting becomes less competitive, which gives you a chance to hire top talent that you otherwise might struggle to find or afford.

While thousands of employees are being made redundant, this is an opportunity to find highly skilled and experienced talent that was previously unavailable (or you simply couldn't compete for them due to higher offers on the market).

Well, one (wo)man's loss is another (wo)man's gain. Now is the time to capitalise on the available talent.

Teemu Mattila, Principal at DN Capital, also believes focusing on recruiting right now is a good idea: 

The number one success factor in early-stage tech company building is talent attraction and given the significant decrease in tech valuations, there are many top operators whose compensations (options) are not aligned with what they are bringing to the table at their current companies right now.

So as an early-stage founder, I’d be fearlessly aiming at a level higher with my talent outreaches as I think top operators are more open to having conversations vs. a year ago.

And in general or more tactically, I’d aim to invest 2x more time, energy & effort in recruiting right now vs. in a “normal” market environment.

Teemu Mattila - Principal at DN Capital

Cleo Sham, Partner as Stride.VC shares the same view:

Not only can startups look to hire strong talent who were unfortunately made redundant - there may also be more people who are open to changing companies, as valuations have generally come down.

While immediate funding rounds are likely going to be more modestly priced, it also means that for talent that is getting hired now, they could more plausibly see higher equity upside down the line.

Cleo Sham - Partner at Stride.VC

If you have trouble hiring employees due to cash restraints, consider other tools at your disposal to incentivise employees, such as offering more equity compared to salary.

Harry Stebbings, the founder of 20VC Fund, gave similar advice on Twitter:

Seeing more talent leave high-priced private companies in the knowledge that at best, they will get 2x their stock options on IPO. 

Startups, there has never been a better time to be aggressive on talent. 

Be generous on equity, responsible on salary.

Harry Stebbings, Founder of 20VC

So, the fight for talent has begun.

But... don't go around hiring too many employees, of course. You may push your burn rate too far!

What's happening to the competition?

With inflexible and inefficient companies failing, the weakened competition will open up more space for new, innovative businesses to stay afloat. The ones who 'make it' will come out stronger and with one or two lessons learned for the future.

Graeme Foux, CEO at Knexus - a seed stage startup - predicts natural selection in the SaaS industry, in particular. He expects companies with unproven solutions to disappear leaving space for other players to step up their game.

It's a case of every cloud has a silver lining. For sure, more access to the best talent, together with a potential slow down in SaaS industry-specific cost inflation, are beneficial.

There will also be less ‘noise’ in the market coming from vendors promoting poor solutions.

Finally, products like Knexus platform, that optimize revenue from existing shoppers and can reduce costs through automation, are getting more attention as brands narrow their procurement criteria.

Graeme Foux - CEO at Knexus

Mattias Ljungman has an alternative view.

He sees the weakened competition not only as the means to survive and reduce noise but also as the opportunity to consolidate and grow. Here's what he posted on Twitter:

This is a time for growth companies to consolidate. The opportunity to bring strong companies together to dominate a market will drive incredible returns.

Mattias Ljungman - Managing Partner at Moonfire Ventures

So, if you've been thinking about consolidation, perhaps this is a good time to make use of weakened competition and consider your options?

What about the runway?

It doesn’t come as a surprise that companies are desperately trying to extend their runway, which inevitably means cutting costs for everyone. This means, the expenditure will go down, so you can reduce costs without lagging behind. 

According to Nic Brisbourne, Managing Partner at Forward Partners, companies that prioritise their runway over hypergrowth will be the ones thriving.

The opportunity this market creates for entrepreneurs is to win by being the last man standing. Smart founders and CEOs are now trading growth for runway allowing them to survive and then thrive whilst competitors go to the wayside.

Nic Brisbourne - Managing Partner at Forward Partners

Alex Mifsud, Co-founder and CEO at - who announced a $40m Series A in Q1 this year - advises against scaling down. Here's what he says: 

During bear markets, CEOs - especially of venture-backed companies - are caught in a tough dilemma.

They need to stretch their runway, but if they do so by scaling down investing (in building new stuff, marketing, hiring sales, etc.), they risk becoming no-growth zombies that no one will invest in once the market picks up.

The way out of this dilemma is to invest with a frugal mindset - to take smaller bets with quicker outcomes, and put more capital in those that work out.

This mindset creates selling opportunities for B2B vendors during bear markets - those vendors who can help CEOs take these smaller bets, and validate impact quickly, are an advantage over those that require a big financial commitment that will only deliver value in a year's time after months of implementation effort.

Alex Mifsud - CEO at

Whatever approach you decide to take to protect your runway, it is clear that staying laser-focused on survival becomes a priority if you want to stay afloat.

Still, many companies will be forced out of the game due to the lack of funding, unfortunate timing for their products/services, or simply for making mistakes. And the ones who pull through will come to the other side undefeated.

So, what does it take to thrive in the bear market?

As you embark on the journey to build a viable business in this recession, you need to re-examine and change your priorities (if needed).

A bear market is not the time for vanity metrics that make you look cool. Instead, you need to focus on KPIs that help you build a sustainable and efficient company. 

Sumanta Talukdar, CEO of Gardin, believes the market conditions should be generally unimportant for the companies with the right metrics.

For companies built on old-fashioned economics metrics such as profit and a team with a clear mission, bear/bull should be irrelevant...

Sumanta Talukdar - CEO at Gardin

VCs seem to agree with that.

Mattias Ljungman writes on Twitter:

Founders who are capital efficient saying “I don’t need that much money to build my business” are going to win in this market. 

Backing founders at the earliest stages with that mindset is just invigorating. They are controlling their destiny.

Mattias Ljungman - Managing Partner at Moonfire Ventures

Favouring your runway is a necessity, and everything else is simply the means to the goal. Entrepreneurs that play smart and safe increase their chances of surviving this downturn. And they will (hopefully) enjoy the consequences of their decisions in the future. 

Bear markets require you to think long-term, and if you know how to play the game, you're on the right path to sustainable growth.

Cleo Sham considers bear markets to be a good time to learn. Indeed, it's easier to succeed when resources are abundant, but operating with the mindset of scarcity is a useful skill at any time.

Bear market times is an opportunity to double down on building, and sharpen focus on fewer things that move the needle for the business.

Having an environment and mindset of scarcity can actually be a blessing in contrast to times when resources are abundant when there could seem to be so many competing priorities for the team at any given time.

As we saw briefly in 2020, startups that stayed on their front foot, were scrappy and who were willing to reassess their strategy could place themselves in a stronger position in the long run...

Cleo Sham - Partner at Stride.VC

Eze Vidra, Managing Partner at Remagine Ventures, also believes entrepreneurs should look at the bigger picture. According to Eze, they should build healthy habits and focus on the metrics that can support their sustainable and long-term growth:

We’ve all heard the saying “never waste a good crisis”, and the current economic situation is no exception.

Startups and scale-ups that survive the next year could be faced with a number of opportunities: from highly experienced talent suddenly becoming available to cheaper acquisition options for the scale-ups.

Th biggest opportunity I see, however, is using this time to develop healthy habits for the company: focusing on margins and aiming for profitability vs. growth at all costs.

Eze Vidra - Managing Partner at Remagine Ventures

Likewise, scale-ups know it, too.

Sam Soares, Chief Growth Officer at CyberSmart - who announced a $10m Series A last year - sees a default thrive mode as the way forward.

The constraints presented by a bear market will actually mean that businesses must forget about being default dead/alive, as it provides the opportunity for startups to move to a default thrive mode. 

What does this mean? Well, it’s time to maintain capital efficiency; increase experimentation across business functions; capture top talent at the right time for the right package; and, ultimately, continue growth at pace in this evolving landscape.

The ones that do this, will come out stronger, more dominant in their categories, with the right people to propel them forward even more.

Sam Soares, Chief Growth Officer at CyberSmart


It's become obvious that building a lean, efficient, and flexible business is the only way to go.

The never-ending cycle of changing economic situations, from bull to bear and back, is not a curse but a blessing. It makes you keep your hand on the pulse, forces you to stay flexible and prepares you for anything that comes your way.

The market constantly changes, and many factors are outside your control. So whatever the market is, you must be ready to adapt. Those who lack this flexibility have lower chances of survival. It's a natural selection at play. 

If you take away one thing from the article, let it be this: don't be afraid of the bear market.

The innovative nature and flexibility of startups make them perfectly suited and well equipped for any economic chaos. And don't get hung up on the disadvantages of the bear market - the opportunities and learnings it provides are much more valuable than they might seem at first sight.

What matters is the mindset you operate with.

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