2019 was one of the worst years on record for initial public offerings (IPOs)… and with the current state of the markets, I’d be surprised if 2020 turns out any better.
Last year, a series of big-name companies – think companies like WeWork – failed to launch in the public markets after a string of flopped IPOs.
The consequences of the tough IPO climate rippled through the private markets too, as more and more companies abandoned plans to go public, causing a significant backup in the private market funding cycle.
And while we wait out this economic crisis, companies will have to face the reality that the money they need simply may not be there.
In short, this means that companies will have to shift their focus tremendously.
And I recently came across a Crunchbase article that described this paradigm shift perfectly. Here’s what it said…
These days, volatile market conditions have deflated our confidence in finding that next big unicorn to hit the startup stage.
Now, that doesn’t mean it’ll never happen… but it means that for now, we’ve all got to look out for the strongest of the strong, and back companies that have positioned themselves to weather this economic storm.
What this really means is that instead of unicorns, we’ve got to search for “camels.”
Let me explain. Camels are extraordinary animals. They’re hardy, they’re resilient, and they’re built for survival in the toughest climate conditions.
And a camel in startup-land is a company with those same characteristics.
Companies who at one point were operating on a “growth at all costs” mindset will have to pull back and focus more on making every dollar stretch as far as it can.
This means that companies will have to embrace the idea of being more cautious and conservative than ever with their capital. These companies should shift their focus to building a business that’s set to last… which could mean relying on more than just their money.
A solid business development plan and commitment to sustainable growth is what’s going to keep investors – and consumers – attracted for the long run.
There’s no doubt that our global economy has been completely rattled this year. But I still believe that we don’t need to panic… things are going to get better, and there’s still plenty of growth potential for companies in the meantime.
And while you may have to wait a little longer to see the return of the coveted unicorn, it’s not a lost cause forever.
Startups that keep their company’s health and longevity top-of-mind now will be the ones that we could see break that billion-dollar milestone down the line. By shifting their focus from hitting unicorn status to maintaining camel status, companies can set themselves up to do just that.
I believe that one important way for companies to embrace this “camel” mindset is by choosing more equitable financing methods – like crowdfunding – to open investment opportunities to a larger playing field.
Because now more than ever, companies who attract more capital from wider ranges of investors will be better positioned to succeed. That money will build a steady runway for companies to outlast these tough market conditions… and it’ll prop up investors from more than just the most elite brackets of society.
Ultimately, the camel lifestyle is a win-win these days for companies and investors alike, and I’m excited to see you all benefit from the companies that embrace it.
Until next time,