For Challenge #1 of the 2023 Big50 Hot Startup Competition, I asked startups to discuss macro-economic pressures, such as inflation, geopolitical uncertainty, the recent run on regional banks, and more.
I selected 30 startups to feature throughout May based on their answers to two open-ended questions: 1) How is current market turmoil impacting your market sector? 2) Why is your startup well positioned to navigate the current market troubles and continue scaling up in 2023?
In total, 74 startups completed the survey. To narrow the field down to 30 winners, I again enlisted the help of ChatGPT to help me manage the selection process.
First, I selected 5 startups based on how story worthy I thought their answers to the open-ended questions were. I looked at the answers to see if there was some kind of hook, any backing evidence, and if their reasons for viability passed the sniff test. I then fed the first 5 startups I selected into ChatGPT and asked it to use those as models, while also prioritizing a few other factors, such as VC funding and named customers. I also asked it to deprioritize things like pre-product startups calling themselves “leading providers” and a couple of other triggers that always set off my B.S. detector.
I went back and forth like that with ChatGPT, feeding in 5 at a time, refining the AI’s output each round, until ChatGPT had both selected 15 startups. Today, Startup50 is featuring 5 startups that I selected. You can read about them here. On Tuesday, Startup50 will feature 5 from ChatGPT. We’ll continue to feature startups on Tuesdays and Thursdays this month until all 30 winners have been featured.
How macro-economic turmoil is impacting high-tech startups
Turmoil in the financial sector and inflation are two big challenges startups say they will need to overcome in 2023.
- 72% of respondents cited financial sector turmoil as a major challenge
- 41% cited inflation as a major macro-economic trend impacting their market sectors
- More than 90% of respondents listed one or the other of these macro-economic pressures as having a major impact on their sectors
Startups being startups, most respondents view economic turmoil as something that presents at least as many opportunities as obstacles.
When asked, “Whom do macro-economic pressures benefit, incumbents, creating more moats and barriers to entry, or startups, with the chaos creating new opportunities?”
- Mixed bag: 50%
- Benefits incumbents: 5%
- Benefits startups: 42%
- Not sure: 3%
While I expected startups to believe that macro-economic trends will indeed benefit them, I am surprised that so few see how monopolies and near-monopolies are using their resources to raise barriers to entry as markets continue to churn.
After financial turmoil and inflation, the other macro-economic trends that are having a broad horizontal impact include: AI, ML, and automation; geopolitical turmoil, and mobility/Work-from-Home.
Other macro-economic trends impacting startups:
- AI, ML, automation: 62%
- Geopolitical: 43%
- Mobility/WFH: 35%
- Lingering COVID-19: 32%
- IP theft and piracy: 30%
- Supply chain/logistics: 16%
Today, we take a deeper look at five Challenge #1 Winners and how they intend to navigate current macro-economic challenges.
