Cartoon: Dancing in the rain

“Dancing in the rain” by Ian Foley

This new cartoon illustrates how different companies are dealing with the onset of the recession. This week, the US technically went into a recession, recording two consecutive quarters of declining growth.

The last six months have seen a steady deterioration of confidence by tech business leaders built on a narrative of declining venture funding, M&A activity and hiring. Most notably, Sequoia Capital, in a presentation to its portfolio companies, laid out the case for a long and drawn-out recession and instructed founders to “do the cut exercise” immediately.

However, a closer look shows that some of this worry might be overblown, and there are significant growth opportunities for those businesses that want to take advantage of the new environment. For example, three venture funds have raised crypto-only VC funds of over $6 billion (Bain, a16z and Haun) and M&A in the first half of 2022 is up 58% year on year.

Companies with a strong product-market fit, strong cash-burn discipline and strong leadership who can navigate turbulent bear markets are going to be benefiting from these times to build successful businesses, such as AirBnB, Square and Netflix did in the Great Recession.

You can find more of Ian’s cartoons here.