Pre-IPO Profits

Never a Better Time to Be an Angel

Never a Better Time to Be an Angel
By Adam Sharp
Date March 24, 2020

Things seem grim right now. The economy is in shambles. And the novel coronavirus has shut down a large percentage of the global economy.

This is all happening at a bad time because debt levels have never been higher. It looks like a lot of companies that built up too much debt will have to restructure or go bankrupt. And investors are terrified.

But we will get through this. Humans are incredibly flexible and ingenious under pressure. Yes, a lot of companies will likely go bankrupt. But this is how the economy improves.

Some companies that took on too much debt, paid themselves too much or didn’t keep enough cash reserves will go under. I believe this will happen on a broad level, even with the Fed and U.S. government attempting to bail everyone out. They simply can’t help every company. Nor should they.

This will create an incredible opportunity for certain startup companies. Entire sections of the market will open up, allowing nimble startups to grab up huge chunks of market share across many industries.

Startup valuations for new deals are almost certain to drop. That means investors can spend the same amount of money to own a larger percentage of the company.

The flip side of this is that many startups will struggle to raise money in this environment. But the ones that survive and thrive will have a simply incredible opportunity in front of them.

I’m looking for lean or bootstrapped startups that can survive a rough environment. I’m paying particular attention to innovative software-based businesses, as I believe they should thrive in this world.

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