Strategies for Startups in a Rebounding Market

In the tumultuous seas of entrepreneurship, every founder dreams of the wind changing direction, signaling an upturn after the storm. But as history teaches us, the calm seas are always preceded by tempests. The question then becomes: how do you prepare for the inevitable upswing?

Bilal Baloch, Partner at the firm, leading the value creation and strategy team, emphasizes this point: "The best founders will shift their mindsets just ahead of the new information. They will prepare for the upswing. They will move into a play-to-win mindset. A play-to-dominate mindset."

Shane Shin (شين شن) 유근, Shorooq Partners' Founding Partner, concurs, adding, "The advantage of being a few months early can compound over weeks and months into a permanent defensibility, and the chance to build something that matters."

Sailing Through Uncertainty

Survival mode served its purpose during the downturn, but as the winds change, so must your mindset. From playing not to lose, shift gears to playing to win. The shift requires tough decisions – layoffs, frugality, and a relentless pursuit of excellence.

As Baloch highlights, "At the beginning of the downturn, the best founders shifted their mindsets in a few weeks to get tough, get frugal, do layoffs quickly and with grace, and plan for the worst."

Capitalizing on Opportunity

Capital is the lifeblood of startups, and timing is everything. Don't wait for the upswing to begin fundraising. Pound the pavement with VCs now, positioning yourself to seize opportunities as they arise.

Shin advises, "Shake the money out of the tree before others do. Pound the pavement with VCs now. Don’t be as sensitive to valuation, show the best metrics, paint the picture of good times ahead, and explain why you’re raising now – to get ahead, to dominate."

Mastering Resilience

Frugality isn't just a virtue during downturns; it's a strategic advantage in any market condition. By staying lean, you not only weather storms but also emerge stronger when the sun breaks through the clouds.

Baloch underscores this point: "Here’s perhaps the hardest and most valuable mental gymnastics you can do as a Founder: staying really frugal while playing-to-win. If you stay frugal through a boom you win twice."

Driving Growth

In uncertain times, sales are the lifeblood of survival. Don't rely solely on the hope of a rebounding market to drive revenue. Instead, integrate sales into the fabric of your startup, leveraging every opportunity to connect with customers.

Shin recalls, "Since your customers will linger in their own frugal mentality, the answer to this problem for your startup is to get more commercial. Make sales part of your DNA now, while others aren’t thinking as hard about it."

Harnessing Opportunity

In every downturn, there are channels waiting to be exploited. By identifying and leveraging these underpriced opportunities, startups can reduce customer acquisition costs and gain a competitive edge.

Baloch illustrates this, stating, "There are some channels right now that are probably underpriced because of the downturn – everyone has cut their marketing spend, and few are leaning in."

Cultivating Strength

Culture shapes the trajectory of startups. Use this moment to review, refine, and reinforce your company's values, ensuring alignment with your goals and aspirations.

Shin emphasizes, "Your culture has probably been damaged. If not by layoffs, then by overall downturn malaise. With this leanest possible team, now is the time to review your culture and fix it."

Building Versatility

As startups evolve, so too must their workforce. Instead of specialists, seek out decathletes – individuals capable of excelling in multiple domains.

Baloch elaborates, "Companies are going to be smaller, and the people you hire will be decathletes, doing lots of tasks at a high level."

Maintaining Focus

The scars of past downturns serve as reminders of the perils of complacency. Resist the temptation to abandon discipline as markets rebound, staying true to the lessons learned in adversity.

Shin cautions, "Don’t let your ego and hubris get the best of you in the next upturn. Keep your back against the wall."

As the storm clouds dissipate and the horizon brightens, the path forward may seem uncertain. But by embracing a play-to-dominate mindset, seizing opportunities with strategic capitalization, and cultivating a culture of resilience, startups can navigate the shifting tides and emerge stronger on the shores of success.

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About Shorooq Partners

Founded in 2017, Shorooq Partners is the leading alternative investment manager across the Middle East and North Africa regions. The firm’s venture capital and private credit funds invest in the most innovative seed stage and early stage startups. The firm has built deep sectoral expertise in Fintech, Platforms, Software, Gaming and Web3.0. Shorooq Partners has backed market leading disruptors including Pure Harvest Smart Farms, Nymcard, Tamara, Sarwa, Lean Technologies, TruKKer, Mozn and Lendo. Since its inception, Shorooq Partners was built on the principle of being founders’ partners, company builders and value investors.

Shorooq Partners is a pan regional firm with direct and indirect presence across Abu Dhabi, Dubai, Riyadh, Egypt and Korea.

Shorooq Partners refers to a group of companies that are affiliates of each other and which operate under this business name, of which Shorooq Partners Ltd (regulated by the ADGM Financial Services Regulatory Authority FSRA Registration) is a member

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