Inflation is an economic concept that most people are familiar with but few people really understand. Its effects, while very real and tangible in some regards, can be difficult to predict and anticipate. With its effects on the cost of goods and services, it is not surprising that inflation is a regular source of concern for everybody. However, inflation can be more than just a concern for entrepreneurs and startups as its consequences can not only be especially significant but also potentially determine the success or failure of their ventures.
Ever since the COVID-19 pandemic hit, concerns about inflation getting out of control got to an all-time high as countries like India and China saw inflation soar. While the United States was able to keep the inflation rate at 1.4% in 2020, it would be 7% in 2021 and 6.5% in 2022. This, of course, has resulted in the Federal Reserve taking action and raising interest rates frequently, which in turn has had an impact on the entirety of the startup economy.
2022 was an especially difficult year for startups looking to raise funding as venture capitalists become more risk-averse as their own funding decreased and interest rates raised. Suddenly, investing in startups has become not only more dangerous but also less profitable than investing in traditional financial tools like bonds. From $681 billion in 2021, global venture funding would drop to $445 billion in 2022 according to Crunchbase data.
This year has come with its own problems for entrepreneurs looking for funding and to keep their businesses afloat, with events like the Silicon Valley Bank collapse further muddying the waters. Unfortunately, what most experts and entrepreneurs fail to see at times like these is not only that there are lessons to be learned but also possibilities to be explored.
This was the topic of discussion in the “What Does Inflation Mean for Startups?” panel during this year’s edition of Grit Daily House at SXSW. The panel featured Profitability Strategist & Best-Selling Author Michelle Jacobik and Charge Ventures’s Co-Founder & Managing Partner Brett Martin. They sat with The Milk Road and former Business Insider Writer Katie Canales to talk about how startups can use inflation to their advantage.
Michelle is a prolific speaker and bestselling author who has been part of the startup and entrepreneur ecosystem for over 2 decades. She is an expert at helping entrepreneurs set a successful cash flow strategy that avoids common financial pitfalls, helping them transform their businesses and personal lifes.
As Charge Venture’s Co-Founder, Brett is well versed in both sides of the entrepreneurship coin after having founded, funded, and helped get off the ground several successful startups. Brett describes himself as a pragmatist and optimist, which is why he constantly looks for ways to help entrepreneurs find opportunities where no one else would attempt to, often being successful at doing so.
Having worked with some of the biggest publications in the world, Natalie has been part of the journalism industry for almost a decade. She has specialized in the tech, blockchain, and startup industries, having established connections in all of them and talked directly to the people who are shaping the world every day.
To learn more about what this panel of experts had to say on the challenges and opportunities that inflation entails for entrepreneurs, make sure to watch the video on our YouTube Channel or below.
Juan Fajardo is a News Desk Editor at Grit Daily. He is a software developer, tech and blockchain enthusiast, and writer, areas in which he has contributed to several projects. A jack of all trades, he was born in Bogota, Colombia but currently lives in Argentina after having traveled extensively. Always with a new interest in mind and a passion for entrepreneurship, Juan is a news desk editor at Grit Daily where it covers everything related to the startup world.