When the economic environment gets more challenging, you’d think fewer opportunities to invest in game-changing innovative companies spring up, right?

Now, this might surprise you.

Some of the best-known businesses backed by venture capital were formed in the doom and gloom of uncertain periods.

There’s Zoopla, Uber, and Airbnb. They all flourished in the wake of the 2008 financial crisis.

So, what’s going on?

Periods of recession bring about difficult conditions for all businesses.

What you might not realise is that for investors in early-stage businesses, these very same conditions can also create compelling conditions for entrepreneurs.

Malcolm Ferguson, a fund manager at Octopus Ventures, explains:  “We may be in the best period in over a decade to start, and therefore invest into, a new company.”

“Some of the biggest household names were formed the last time we faced a challenging global economic environment.”

“Although new challenges and headwinds exist in 2022, there are a number of very powerful tailwinds.”

“As unemployment rises, we expect to see better availability of top talent. Scarcity of funding should reduce the level of competition around investing in the best businesses. And we’d expect incumbents to cut investment in innovation, creating windows of opportunity for new start-ups.”

“All in all, we’re very excited about what the next few years have in store for the UK venture capital ecosystem.”

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