Business

Why More Entrepreneurs Are Funded During Recessions

It may seem counterintuitive to start a business enterprise during a global recession, but in reality, the opposite is actually true. In fact, one study conducted by the Kauffman Foundation determined that the timing of a company’s origin had little effect on its eventual viability. Some very successful corporations were begun during recessions, including:

  • Krispy Kreme
  • Microsoft
  • Burger King
  • Apple
  • Walt Disney
  • Morgan Stanley

Companies like Anhelare have the foresight to see the potential in the startups they decide to fund. When an excellent proposal comes their way, they won’t let a recession stand in the way of success. 

Less Competition Narrows the Field

You have to crunch the numbers when you are looking for seed money to launch an entrepreneurial venture because the laws of supply and demand definitely still apply even in uncertain economic times. During a recession, fewer startups will be launched simply because many potential business owners are afraid that the risk of failure is too great.

But if you are sitting on a really great idea, the fact that the country is in a recession should not necessarily prevent you from moving forward. There are certainly some businesses that tend to fare better during sluggish markets. They include:

  • Food sales and services
  • Resume-writing businesses
  • Accounting services
  • Repair businesses

Slow Markets Can Be Good Time to Invest

Venture capitalists and others who fund entrepreneurs understand that they are not likely to reap much, if any, profit during a recession. Instead, they frequently use these times to invest further, then await a later payoff when the cycle shifts and the economy stabilizes once again.

Lenders often drop interest rates during recessions to allow consumers to continue their normal spending patterns without undue hardship. This can be used to the advantage of entrepreneurs who borrow necessary funds at these lower rates.

Strike While the Iron’s (Not) Hot?

Put yourself in the shoes of an angel investor. During a bullish market, the competition for startup funding is fierce. They are forced to wade through hundreds (if not thousands) of requests for seed money to fund entrepreneurs’ ventures. Certainly, most business proposals will wind up cast aside.

But fewer entrepreneurs have the audacity to launch their startups during leaner bearish markets and recessions. Those that have that certain chutzpah can be the ones to attract the investors to their ideas in the first place. Those investors may just decide to bet on the boldest horse to win the race.