I’ve got good news and bad news.
The good news is that the price of oil fell below $100 per barrel for the first time since the start of May.
The bad news is that this drop in price is fueled by fears of a forthcoming recession.
This is far from the only indicator of such concerns.
Copper, the barometer of the overall economy’s health due to its widespread usage across disparate industries, just hit a 17-month low.
If this trend continues, copper will officially enter a bear market. A copper bear market has preceded every recession in the past 30 years.
So, yeah, things look grim in a broad sense.
Thankfully, the price of gas isn’t the only good news we can offer.
Despite a recession looming overhead like a thundercloud, we’re fortunately positioned in a financial subsect that’s been afforded more rain cover than most.
In fact, for startups, it’s arguably a positive.
Before you roll your eyes, don’t misconstrue that statement as an attempt to convince you that access to capital isn’t important for early-stage companies.
Of course, for any startup to succeed, it will need the runway necessary to reach its end goals, and runways are often determined with dollars and cents.
However, let’s compare the paths of a company founded this year to one founded in late 2020 or early 2021.
The latter was born during a time of opulence for startups. All it took was an idea for venture capital firms to jockey for the right to invest, and this caused valuations to skyrocket despite there being few tangible benchmarks for these companies to hang their hats on.
When companies get funded early on, at lofty valuations, they tend to get the carriage a bit in front of the horse.
You’ve likely read recent headlines about startups being forced to lay off large percentages of employees. This is a byproduct of growing too big too soon.
Talk about a Catch-22.
Once you’re valued at such heights, you have to operate as such. However, at that early a stage, this can cause companies to overextend themselves and grow at an unsustainable pace to keep up with the perceived expectations.
It’s sort of like deciding to introduce a new liquor brand a few months before the start of Prohibition. Good luck.
While it may seem counterintuitive, a number of companies started during a recession emerged on the other side well established. Many continued growing to become some of the most familiar names in business.
Uber, Airbnb, Slack, Venmo. All of these companies were founded in either 2008 or 2009.
Taking things back even farther, Microsoft – which currently boasts a market cap of just less than $2 trillion – was founded on the heels of the 1973 recession.
When operating in a cautious financial landscape, companies must be extra careful and measured with planning and capital.
That’s much easier said than done for companies that already put expensive, long-term plans into place.
However, companies with the benefit of laying groundwork with a 360-degree view of the macroeconomic landscape are far nimbler.
And thanks to the relative venture capital cooldown, more and more of these companies will be turning to crowdfunding for capital. This means more and more opportunities for angel investors to secure stakes in the companies of tomorrow at relatively discounted valuations.
These are exactly the financial factors that turn investments of a few hundred dollars into multi-generational wealth.
Don’t get me wrong, not all companies founded in the next few years are going to win. But there will be more than a few that emerge from these ashes and become the household names of tomorrow.
That’s why access to a deal flow of highly-scrutinized investment opportunities is more valuable now than ever.
With the number of companies turning to the crowdfunding space continuing to grow, the need for a discerning eye is paramount.
At the Angels & Entrepreneurs Network, we stake our reputation on this discernment and are dedicated to bringing you the best of the best Reg CF and Reg A+ investment opportunities.
While due diligence is necessary for every investor, you can feel confident knowing a lot of the legwork is already done before the deals hit your inbox.
All that’s left is to learn about the opportunity and decide for yourself.
These uncertain financial times don’t have to be doom and gloom.
Turn the odds back in your favor today.
The Angels & Entrepreneurs Deal Team
This article is a very informative read and well worth the time to read it.