There was one difficult year for entrepreneurs. Funding has been tight, top-level leaders have been harder to pull from secure corporate and marketing jobs, and discretionary spending has been stagnant. Economic crises are no fun for anyone, but when you’re trying to build a global business from scratch, headwinds feel like a typhoon.
However, if we take a longer view, there is good reason for optimism. Historically, the most exciting and generation-defining startups have been those built in challenging times. Think Facebook, launched in 2004 in the shadow of the dotcom bust. Google also raised capital in this period and managed to grow through the broader economic slowdown. Fintech companies like Square and Stripe were founded in the wake of the 2008 subprime crisis, which damaged confidence in mainstream finance.
Why could this be? First, different economic cycles attract different types of entrepreneurs. When the money is hot, investors meet a lot of “momentum” founders: people who are riding the wave and who can easily find another job if things don’t work out. But entrepreneurs who build companies after a downturn are a different group. They usually have a meaningful vision that they will achieve, no matter what, and tend to be relentless in pursuing it. With fewer jobs to fall back on, they—and their employees—will naturally be more tied to the company’s success. This kind of commitment filters through to those who can execute relentlessly and generates companies poised to better take advantage of opportunities when economic conditions improve.
A second benefit of starting a business in a downturn is the lack of competition. In bull markets, there can be a dozen other businesses trying to compete with you in almost every sector. But during a recession, there will be fewer people trying to get a break from the action. This leaves the space wide open for motivated entrepreneurs to seize first mover advantage and claim the market.
Finally, companies created after a crash also find it easier to get the talent they need. When the business cycle is on an upswing, attracting and keeping the right people to help you grow is often a founder’s number one headache. Talented workers are flooded with opportunities and tend to jump between companies more often. But with fewer well-capitalized companies competing for talent, you may have a better chance of finding the right executive hire.
These reasons show why, in 2023, we can expect the launch of the most transformative companies of the next decade. The type of businesses that will flourish will be a direct response to the many crises that have hit us in recent years: Covid, the war in Ukraine, record temperatures and fires caused by climate disruption.
For example, due to the pandemic and the pressure on healthcare systems around the world, expect to see an increase in companies seizing opportunities in healthcare and pharmaceuticals. These will include AI-powered medical technologies that address systemic problems of national healthcare systems and the use of mRNA vaccines to treat other diseases such as malaria and diabetes.
Another major trend concerns the climate and the environment. Many entrepreneurs today are preparing to address environmental problems and second-order consequences head-on, targeting sectors such as energy, transportation, manufacturing and finance, among others. Escalating geopolitical tensions, from China to Ukraine, have also brought issues of security, autonomy and stability to the fore. This new geopolitical environment will result in opportunities for new companies in strategic areas such as defense, hardware, cyber security, energy and food.
In 2023, businesses tackling the big challenges facing society may no longer look like world-beating companies. They will have to be nimble, nimble and lean. But you can be sure, in a decade, they will be the names on everyone’s lips.
