August 8, 2020

A Bad Time For Startups?

With the economy going deeper into it’s death spiral, many people are saying that it’s a bad time for start ups. Last quarter was the first in a while without a venture backed startup IPO, and many are predicting the trend to continue all year.

But that doesn’t mean it’s a bad time for startups. It’s just a bad time for most startups.

There’s still venture capital money out there, but it’s only going to go to the best startups with the best ideas. In order to get funded you’re going to have to have a solid business model (that doesn’t include the word adsense) and a clear path to revenue. “What new problem does your company solve?” is going to be a big factor in determining whether or not your startup gets funded.

When financial times get tough, only the good ideas will get funded. That’s good for the startups with good ideas though.

What separates a good idea from a bad one? Here’s some helpful don’ts:

Don’t launch a website with no clear path to revenue hoping that one will fall into place.
Don’t build something that is simply a mashup of other people’s APIs.
Don’t list “adsense” as your primary source of revenue.
Don’t just have a good domain name with no business plan.
Don’t just create a copy of another site with a couple new features.

It’s clear to me why all of these ideas will fail, most of it has to do with putting all of your eggs in one basket or hoping that your competitors won’t add the same features.

So what will succeed in this market? Startups that help companies save money will have a tremendous advantage over the next year. Think software as a service, cloud computing, or anything that saves IT costs. There’s a huge market for this now as companies are struggling to offload costs.

It’s often the case that “a bad time for startups” is really a great time for sound business ideas. A bad economy can let investors focus only on the good ideas. You may not have a quick exit strategy in place, but that won’t stop you from making money if you’ve actually got a good idea.

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About Ryan Jones

Ryan Jones is an SEO from Detroit. By day he works as a manager of SEO & Analytics at SapientNitro where his team performs SEO for Fortune500 clients. By night he's either playing hockey or attempting to take over the world with his own websites - which he would have already succeeded in doing had it not been for those meddling kids and their dog. The views expressed here have not been paid for and belong only to Ryan, not any of his employers or clients. Follow Ryan on Twitter at: @RyanJones, add him on Google+ or visit his personal website: www.RyanMJones.com