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JPMorgan just raised recession odds to 60%!!
- Authors
- Name
- AbnAsia.org
- @steven_n_t
Quick take on what happens next
Layoffs come in waves, not all at once. First round in Q2 (10-15%), then again in Q4 (15-25% more) as companies realize the first cut wasn't deep enough.
VCs get quieter. LPs pull back commitments when markets drop, slowing capital calls. Megafunds like a16z weather this fine, but smaller funds feel the squeeze immediately.
Corporate spending gets cold/freezes. Every SaaS purchase suddenly needs CFO approval. "Essential" tools become "nice-to-haves."
VC-backed startups with high burn rates and 12-18 months of runway begin making tough decisions on headcount. Austerity is cool again!!
Consumer businesses face a double whammy: recession-wary customers spending less and tariffs increasing COGS. DTC/ecommerce companies with thin margins get hit hardest of all.
Valuations gradually compress. Not overnight, but steadily. Companies that might have raised at 50x ARR might be looking at 10-15x, if they can raise at all.
Cash-flowing startups and solo founders/teams of 5 or less thrive. The solo founder renaissance begins. As tech layoffs accelerate, talented people start bootstrapped businesses focused on immediate revenue.
AI funding continues to be STRONG and the exception to the rule. While funding tightens across the board, strategic AI investments continue as companies view it as existential technology, not just growth opportunity. The opportunity is just too big.
M&A activity spikes as cash-rich companies go bargain hunting. Strategic acquisitions replace growth-stage rounds.
Customer acquisition costs temporarily plummet as big spenders pull back from advertising platforms, creating opportunity for counter-cyclical marketers.
Public SaaS companies start aggressive bundling, adding more features at the same price to justify renewals and squeeze out smaller competitors.
Huge demand around building profitable companies, indiehackers, vibe coding, being Pieter Levels basically.
The losers...high-burn DTC brands caught between tariffs and shrinking consumer spending, late-stage startups that prioritized growth over unit economics, companies that raised massive rounds at 100x+ ARR multiples, startups with 6+ month sales cycles, and any business that can't reach profitability before their next planned fundraise.
The winners...profitable companies, solo founders with low burn, startups with pricing power, and AI companies solving genuine business problems.
Guest post by Greg
Author
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