I know, I know. I’m not the first person wondering what will the world look like after Covid-19.
The business of predicting the future is fraught with dangers. Plus, predictions rarely come true. Remember that the world was supposed to end in 2012?
There’s a whole article on Medium about how most post-pandemic predictions will turn out to be false. Nevertheless, I persist ;) in this endeavour. Here are my 6 Predictions.
In the startup world….
1. Nope to growth at all costs
Move away growth at all cost. “Profits at all cost” is now in town. Don’t get me wrong, growth will still be important especially in these troubling times, but startups burning their cash as if there’s no tomorrow will no longer be tolerated. We’ve already seen it with We Work, even pre-crisis: the market wasn’t too keen on a company with a weird governance structure and that was losing money left and right. And now we’re seeing it with plenty of tech companies of all sizes and stages having to let people go. Airbnb comes to mind, having let go of 1,900 employees, and so does Uber, having fired ~7,000 people since the pandemic started. So yes to growth, but we’ll see an era where startups, even those with some funding, will have to be conservative with their cash and learn to be scrappy.
2. Valuations will continue to go down
Will we continue to see crazy high valuations? Perhaps we might, in sectors that are still growing despite the pandemic and its economic consequences. But if you’re not one of the lucky ones who find themselves riding a wave of growth when economies around the world are tanking… bye. Case in point: Monzo, valued at £2bn last June, is now raising cash at around a 40% discount.
So if you’re a startup, especially if you’re not in one of those hot and essential industries, expect your valuation to stop rising — if it doesn’t fall. Expect VC friendly terms creeping in on those previously founder-friendly term sheets. And…