Is Now a Good Time to Start a Company?

Bismuth Crystal grows like this. It can levitate frogs.

The fundraising markets have infused more cash into startups in 2015 than in any year since 2001. But, the venture backed IPO markets touched five year lows and whispers of a bubble have become a meme in the past six months. What’s really going on? And should that impact when founders start companies?

No one can time the financial markets. If you can, you should be trading stocks, bonds and options and retiring very soon. The financial markets will rise and fall, and shouldn’t factor heavily into when a founder decides to start a business.

One founder I admire greatly left Google to start a business only after he saw the signs the public financial markets had soured. He rationalized he would have a much easier time recruiting the best talent. In addition, the turbulence in the stock market would keep risk averse candidates from clogging his recruiting pipeline. Only people in love with an idea or with startups would take startup risk as Lehman imploded.

When potential founders ask me the right time to start a company, I remember his advice to me. The best time to start a company is when you have a unique perpective on a market, you have developed a strong network of people who can form your founding team, and you can convince a few of these friends that the idea is worth pursuing. These people form the kernel around which the company will crystallize.

If you can’t hire a great team, there’s a problem. The idea may not be well refined enough or bold enough. You may not yet be able to sell yourself or the vision well enough to convince someone to take the risk. You may not yet have developed your network of people passionate and skilled in your startup’s area.

Investors will always chase great teams pursuing unique ideas. That is a constant, despite the vacillations of the financial markets. The best time to start a company is when you can nucleate a team around yourself and your vision.

Published 2015-12-14 in Startups 


I'm a partner at Redpoint. I invest in Series A and B SaaS companies. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 18,000 others receiving these blog posts by email.


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