We have seen examples showing money was easy to get in previous years. According to Venture Monitor, the amount of money being pumped into startups skyrocketed in 2021. As reported by Financial Times, much of that investment poured in last year, as the valuations of private start-ups were hitting a peak.
Now companies have to increase the runway using the funding they have and prolong it from, for example 6 months to 3 years. In that sense, the companies scaling up will not go on a hiring frenzy. Speaking about the money and the economy, the Ifo Institute expects the German inflation to average 8,1% this year and 9,3% next year and those are not nice to hear news. In spite of all that, and the post-Covid effects, the demand for tech and knowledge workers is still present, and there’s still a shortage of talent. However, money speaks here too. The average tech salary in 2022 hit the six figure mark for the first time in 17 years, as per a study Tech Salary Report by Dice.
The bottom line is, businesses should always monitor the state of their work and finances and be ready. Having a business plan and a strategy is of utmost importance. New circumstances will, for example, make companies, both new and old, think about how to recalibrate their business in an uncertain demand climate. Your previous quarter earnings are a litmus test for what’s to come next. That being said, chasing capital might not be possible or on top of the list now. Chasing good and quality human capital might help you to prepare better for what is to come next. It’s about attracting high-quality and niche positions, ones that are not about the short term game.
We are still in the middle of our digital transition from centuries of an analog world to one that will be all-digital in the future. Moreover, there’s already greater enthusiasm coming out of the pandemic to adopt those next-generation technologies and that will be present after the recession. It’s time to build around that.
What awaits us moving forward is the ability to adapt to new circumstances. The tech sector, like others, is retrenching in the face of an economic downturn. The current slowdown has the tech sector regrouping to identify a clear path forward.
For much of what we’ve said here we can argue that at some point it is time for the technology boom to hit reality. It’s not fun to sail under those conditions, as our founder Moritz Drerup would say it, but you learn from this situation. “When on a good wind, anyone can sail and everyone will go forward, no matter if you are perfect at what you do or simply ok at what you do. However, when there is low wind, that’s when you see who is a good sailor. That’s when you have to adjust and show your expertise.”