2022 was a shitty year...

...But surprisingly not for the start-up industry. It seems more stable than ever before. There are good reasons for that.

Unfortunately, the great pop magazine Spex has been gone for several years. Its creators were able to regularly translate diffuse trends into clear headlines, often in such a way that they reached far beyond the music and culture scene. In 2014, for example, they wonderfully titled their annual review "Alle happy? A Shitty Year Is Coming to an End."

And yes, that's how it felt at the time: IS and Boko Haram were on the rise, Ebola was rampant across Africa, Russia annexed Crimea, and not one but two Malaysian Airlines planes crashed under the worst circumstances. Sure, Germany became world champion, but somehow that didn't outweigh the rest.

But if we are honest now: Actually, almost every year since then has earned the title of "shitty year," with escalating sovereignty. 2022, for instance, had war in Ukraine, Corona foothills and monkeypox, a brutal heat wave, and an energy crisis in Europe. And this year we didn't even become world champions.

That makes you glad to work in a start-up newsroom. Because no other industry is so good at spreading a little optimism even in the worst of crises. Sometimes it may be whistling in the forest. But this year, it was justified. Startups, in the face of the most difficult macroeconomic environment since the financial crisis, have proven that they are now much more resilient than in past crisis periods. Three reasons for this increased resilience? We have them ready.

Number 1: The venture capital base is more stable.

It remains to be seen whether the amount of venture capital issued in 2022 can reach the record level of 2021. But one thing is already clear: There was no major slump. And this despite recession fears and the interest rate turnaround. Quite a few experts had feared that in the event of higher interest rates, rather risky capital investments such as shares and VC funds would suffer. That didn't happen, because German startups have rightly earned a reputation for being able to succeed over the long term. Sure, investments that primarily serve the goal of quickly pushing the company's value and then cashing in big at the IPO suffered. But such quasi-pump-and-dump schemes do not make up the majority of start-ups, thank goodness. Just recently, for example, logistics startup Sennder cracked the two-billion valuation mark. Those who have a sensible business model and can prove that they can and want to make money in the long term will get money even in times of crisis. That's a good sign.

Number 2: Individual bankruptcies do not trigger a domino effect

Startups also went belly-up this year. The crypto crash, for example, meant the end for a whole series of fintechs. But the industry is now so broadly based that difficulties in one sector do not sweep away all the other young entrepreneurs. Unlike in the New Economy days, not everyone is doing "something with the Internet." The business models are more differentiated and investors understand this. Accordingly, there are no panic-like sales movements as soon as something goes wrong in a start-up. This also speaks for a level of maturity that has not existed for so long in start-up Germany.

Number 3: Consolidation has a healing effect

This year we could observe it with fast delivery services, in the past already with "normal" delivery services or e-scooter providers: Crowded startup fields have remarkable self-cleaning powers. Some may consider the Highlander-like war of attrition for market share a waste of resources, but it usually leads to the most efficient market participant prevailing. Just recently, for example, Gorillas went to its competitor Getir.

Granted: That is still no guarantee that the market as a whole will ever be profitable. But it does show that a healthy contraction of an overheated sector is at least theoretically possible. In other words, a lack of capital inflows does not automatically mean a collapse.

Here's to a new one

Now we can only hope that the startup sector's resilience will not be unduly strained. Some indicators suggest that the long-term recession that threatened at the beginning of this year will be shorter and milder after all. That would be welcome, because even if existing companies may survive, it is still completely unclear what the changed conditions will mean for new startups. In the first half of the year, there was already a minus here, as reported by the Startup Association. Unsurprisingly, in uncertain times, fewer people dare to become self-employed and investors also find it easier to continue supporting long-standing partners than to entrust themselves to new ones.

Thank God, every trend is broken once in a while. In this respect, there is hope that at the end of 2023 we will not look back on a shitty year.