It is known that a crisis usually creates new opportunities for growth. Why are startups good investments during market pullbacks? Let's get into the Top 4 reasons:
1. Long-term Horizons
Startup investments tend to not be affected due to being a 5-10-year investment
2. Growth Opportunities
A crisis helps identify startups with sustainable business models to solve problems especially those related to critical necessities
Startups take quick action in response to market conditions and improve innovative strategies decisively and resourcefully allowing them to be good investments during economic downturns
4. Recessions Create Unicorns
Some of today’s largest global companies were established mid significant economic downturns: Airbnb, Uber, Slack, WhatsApp, Venmo, and Instagram (which emerged during the Great Recession).
In Southeast Asia, it is also known that Unicorn startups (Grab, Traveloka, Shopee) saw traction in 2020 due to the global pandemic COVID-19.
*The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
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