If not now, when? Two founders argue for a new era of entrepreneurship

From Miriam Wohlfahrt and Valentin Stalf

Is it a bad time to found a startup? Quite the opposite, if you ask us! In fact, the current crisis comes with great opportunities for founders. We speak from experience––our businesses were founded in the midst of the financial and COVID-19 crises. 

Here are 8 reasons we believe now might be the best time to start your own business.

When Ratepay was founded 10 years ago in the middle of the financial crisis, it accelerated the creation and growth of several large platforms like Uber, Airbnb, and the App Store. The COVID-19 crisis has been a similar catalyst, revealing shortcomings in certain areas of the economy––including which business models are outdated and which ones will thrive. Even politicians are alert, hungry, and open to discussion.

During the financial crisis, Miriam was working at a bank that ended up filing for bankruptcy. While being a banker was becoming less and less attractive, it was also becoming clear that the entire sector was headed online. Miriam started working at a little-known online payment service provider called Ogone––and later, armed with this experience, founded Ratepay. Without the disruption of the financial sector, Miriam might today be sitting in some office at a mahogany desk, taking the cap on and off her gold-plated fountain pen. 

Crises not only give rise to new business models, they also lead to a diversification of existing markets. The success of food delivery services during the pandemic––which have experienced growth rates others can only dream of is a great example. And yet, despite the demand, there are only a few players who have tapped into this burgeoning market. Now is a great opportunity for new actors to enter the scene.

Right now, the less money you have, the more you can achieve. Large companies and banks may have enormous budgets, yet the bigger the company, the more money they need to invest when a crisis arises. And although many banks have a lot of catching up to do in terms of digitization, their budgets for it are relatively small, with a considerable portion spent on eliminating outdated technical problems. Younger companies don’t have this baggage.

We’re in the midst of an economic crisis due to COVID-19, yet the market is currently being flooded by capital. Thus, founders can benefit from the ECB’s low-interest policy, which forces investors to think beyond traditional asset classes and put their money elsewhere. Sure, investing in a startup might be risky, but on average these investments yield more returns than traditional capital investment. After all, the days of investing in solid government bonds with 6% interest rates are gone.

In a crisis, chances of recruiting top employees from other companies are especially high. While at Banxware, Miriam saw first-hand how many workers were open to leaving an established company in order to build something new at a startup. When a crisis challenges the status quo, an innovative product or visible market gap can motivate potential employees to jump on board. 

In the beginning, you’ll spend many long days and nights with your co-founders at the office. The two founders of N26 had already known one another for over 15 years when they started their company. This level of foundational trust is all the more important during a crisis, as it reveals how people respond to extreme stress. Things become difficult if—on top of all outside challenges—you have to worry whether you and your co-founder are truly acting in concert.

Too many people worry about failing, and therefore never even try to make their business idea a reality. And yet, we would personally always opt to employ a failed entrepreneur over someone with 10 years of experience in an established company. Tech companies need employees who are daring and innovative. If someone has the courage to go into business on their own during a crisis, they’ve definitely shown the right attitude.

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