Oh my god! What will happen to startups?

This is the common thought right now: “Oh my god! What will happen to startups?“. We have heard a variation of this question from all over the place – bloggers, media, investors, startup employees, startup founders, folks considering doing startups, etc.

YC’s Paul graham has published Why to Start a Startup in Bad Economy

Here is what MVP partners and founders of MVP companies think:

It’s an absolute opportunity for startups and situations like this always separate ‘the wheat from the chaff’. There will be a set of “Not so good” startups that may panic and succumb to an early death. At the same time the good startups with good teams will figure ways to stick it out; last thru’ the current market scenario and come out STRONGER on the other side.

We don’t think startups will stop happening. India has been seeing a good momentum of quality and quantity of startups. Though the quantity may drop somewhat, we expect the same quality to continue.  This is one of the best times to work with early stage startups as the valuations are favorable and the weaker startups are automatically disappearing, leaving behind quality startups.

The VCs are saying they intend to continue doing deals but they will look harder and deeper and hence spend more time on each deal.  The startups today need to make more progress than before in order to secure funding, will need to make the same money last longer, reach cash flow positive and figure out ways to do stuff without spending money.

Below are some of the measures startups should implement:

  • Closely re-examine all costs and eliminate costs which are not needed or which are optional. Also squeeze costs in necessary areas as well

  • Think harder before making any significant cash investment/commitment

  • Increase priority of revenue generation activities and initiatives

  • Get to positive cash flow scenario asap

  • Come up with a product / service which can allow the startup to take advantage of the current market conditions. A good product which can allow people to save money, which is what most customers/enterprises will look to do, will have an good potential to succeed

In a nutshell, nothing really changes, there still remain a lot of problems to be solved and as long as that is the case entreprenuers and startups will continue to happen and succeed.

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