The Influence of Macroeconomics on Start-Ups

One topic that I like to deal with in my free time (beside start-ups) is macroeconomics, ie the macroeconomic situation. As I have been investing in start-ups since 2011, I have not experienced any economic downturn as a start-up investor. But this will inevitably come, as the economy behaves cyclically. Each upswing phase is followed by a downswing phase. The question is not “if” but “when” we will have a recession.

Although I do not sit in my study every night and I am philosophizing about a possible downturn, I realize that we have been in an expansion phase for a long time and are globalizing the signs that the economic present and future may be better appreciated, as that may seem appropriate. There is certainly no shortage of potential triggers for a recession.

Potential effects of a downturn

Potential effects of a downturn

Which raises the question for me: what is the impact of an economic downturn on the start-up world?

  • The number of start-ups is increasing: As more people lose their jobs or are not offered adequate work, I expect more people to run the risk of start-up. However, the quality of the innovations is likely to remain rather stable. Not everyone who founds in a recession is based on an innovative idea.
  • The quality of the workforce is increasing: this does not generally apply to the workforce, but rather to the forces available to a start-up. Suddenly there are great people on the market who were not affordable before. While top talent will continue to be sought after, it is likely to be ‘easier’ to reach good people due to the higher density of applicants.
  • Angel financing is declining: as soon as the stock market and possibly the real estate market or other investments lose in value, business angels will feel the effect in their own portfolio and invest restrained. Other players may also reduce their volumes slightly, but they are likely to be the hardest hit.
  • Zombies are on the rise : companies that can hold their own but do not make a good profit or show attractive growth will increase. They are no longer dependent on financing, but would need a lot of capital for a growth spurt, which will not be findable for the required price, because ->
  • Business valuations go down : As listed securities lose value, they become more attractive than start-ups, purely for profit. Business valuations of start-up financings will therefore have to adapt.
  • Companies focus : products that are on a growth path are optimized, and the nice-to-haves are not taken into account at first. This narrows the focus, which tends to be a good thing as companies put more resources into the important products.

The above list is certainly not conclusive and has not been compiled highly scientifically. Nevertheless, I think some good conclusions can be drawn.



As investors, we will probably suffer more losses as more zombies will default or repay loans only at face value. At the same time, the deal flow should improve as, more precisely, more start-ups are being financed at prices that tend to be lower.

For me personally that means that I currently keep my powder rather dry. You can also read this quite well by comparing the latest performance updates.

What else? In your opinion, what effects does macroeconomics have on start-ups and what does that mean for us investors? Leave a comment or send me an e-mail to enrico@Lady Honoria .


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