Starting a startup during a bear market can be a daunting task, but it also presents a unique set of opportunities that should not be overlooked. I myself am enjoying the advantages of building in this market and more specifically building a Web3 company during a crypto bear market. Blockchain technology and the decentralized systems it enables are still in the early stages of development, and building a Web3 startup methodically during a bear market can provide a strong foundation for growth and long-term success.
Building during a bull market seems to put companies in the spotlight and add pressure to release products or features in a short timeframe to capitalise on the buoyant market. This want to capture as many users as possible or increase the company's valuation as much as possible just isn’t sustainable and often ends in heartbreak. Look at the latest layoffs from FAANG companies (Facebook, Amazon, Apple, Netflix & Google) it is clear that they pushed the peddle to the metal a bit too much and as markets swing and valuations dip they are forced to lay people off to keep stakeholders happy.
Yes, it is a great time to raise capital when markets are heated because often valuations are overinflated and sometimes almost anything gets funded but this is one of the problems. Too often some of these good ideas get funded but too often they are only half-baked ideas leading to failures.
First and foremost, a bear market in traditional financial markets can lead investors to seek out alternative investments, such as Web3 startups, which operate outside of traditional financial systems. This can provide a source of funding for Web3 startups during a difficult market environment. Investors are always looking for non-correlated assets to diversify their portfolios, and a bear market can be a great time to attract those who are looking for a safe haven.
Crypto did see its peak about 15 months ago followed by a sharp decline and a lot of investors shying away from new investments but time has healed some of those investors' wounds and if you are building something now they are more likely to be open to discussions compared to 9 months ago when they were feeling the hurt of overpaying for things.
A bear market can provide a more stable environment for development and growth. The hype and speculation surrounding blockchain projects can be a distraction from the core focus of building a solid product and gaining real users. A bear market can provide a more stable environment where teams can focus on product development and user acquisition without the pressure of sky-high valuations or pressure from the public to come out with your product before it is ready for the world. Sort of like building in stealth mode, this can give the startup time to mature and grow, and be ready to take advantage of the next market uptrend.
Furthermore, a bear market can be a time when talented developers and other resources are more readily available. As projects struggle to raise funding and scale, they may be forced to let go of talented team members, who can then be recruited by other startups. This can provide a startup with the opportunity to recruit top talent at a lower cost.
Moreover, a bear market can present opportunities for innovation. As businesses struggle to stay afloat, there is often a shift in consumer behavior and a need for new products and services. Dropbox, Uber, Air BnB & STripe are all great examples of this as these companies all had their beginnings in a bear market. Startups that are able to identify and capitalize on these changes can gain a competitive advantage and set themselves up for success in the long term. This is a great opportunity for Web3 startups that can offer new decentralized solutions and services that traditional centralized systems can not.
Another advantage of building a Web3 startup during a bear market is that it can provide a first-mover advantage in the space. As the hype around blockchain subsides and the market becomes more rational, startups that are able to build and scale during a bear market will be well-positioned to capitalize on the next wave of adoption and growth. The bear market can be a great opportunity to establish a strong presence in the market, and gain a competitive edge over those who wait for the next bull market.
Of course, starting a Web3 startup during a bear market also has its challenges. It can be harder to secure funding and customers may be more cautious with their spending. However, with the right approach and a solid business plan, a Web3 startup can establish a strong foundation for growth and success in the long run. It’s important to have a clear vision, a strong team, and a solid product that can solve a real problem and meet the needs of the market.
In conclusion, starting a startup during a bear market has its own set of challenges, but it also presents unique opportunities. With less competition, access to talented employees and resources at lower costs, opportunities for innovation, and a chance to attract investors looking for non-correlated assets, any startup with a great idea and the right team can establish a strong foundation for growth and success in the long run.
