We are probably in a recession later, but we can’t know for sure for another quarter or so. With inflation on the rise and interest-rate hikes making less money available, it will be some time before things grow again.
In a blog post, Fred Wilson estimates it will be another 18 months before we see any improvement. Key indicators will be a bottoming out of public stock valuations before rising again (e.g. 1980 recession took 3 years to see stocks rebound).
- The interest rate fallacy shows that actually more money will be available not less as interest rates go up, but the demand side could decline
- Running a startup during a recession a key factor will be the availability of venture capital that is impacted by a recession
Links to this note
The probability of a recession in the near term based on estimates from economists at investment banks.
Prices of tech stocks soared during the COVID-19 global pandemic in part due to growth. Investors were paying 100x ARR multiples for some tech companies. However, that growth was not permanent and we are seeing tech stock prices revert to the mean.
There have been 115 tech companies with layoffs since April 2022 and a steep increase in May.