Building through Panic

May 9, 2025

Markets rarely behave rationally. They swing like a pendulum — from optimism to panic, from abundance to fear. And while we love to imagine startups as these self-contained, sovereign little units of innovation, the truth is they’re deeply entangled in that emotional weather.

Right now, we’re in a weird in-between: innovation is accelerating — AI breakthroughs, crypto infrastructure upgrades, deep tech investments — but the economic atmosphere is heavy. Inflation is sticky, interest rates remain high, public markets are wobbly, wars are reshaping global priorities, and elections loom everywhere. Venture fundraising has hit a six-year low. LPs are cautious and founders feel it in the air.

But we’ve been here before.

The Pattern Behind the Panic

Every cycle has its mood swings and history doesn’t repeat but it often rhymes:

  • Dot-com bust (2000–2001): Exuberance gave way to collapse. Most companies vanished, but the foundations of the modern internet were laid. Amazon survived — barely — and learned how to run lean.
  • 2008 financial crisis: The system froze. Startups like Airbnb, Uber, and WhatsApp grew out of necessity, not abundance. They solved real problems for people who were broke and anxious.
  • 2020–2021 COVID boom: Capital poured in. Valuations inflated. Overnight unicorns emerged — many of which are now quietly adjusting to a world less willing to subsidize growth at any cost.

In each case, what remained were companies with grit, adaptability, and substance. The tourists left and the builders stayed.

Volatility filters the noise

When capital is abundant, it’s easy to fake momentum. Teams over-hire, valuations balloon and everyone’s a genius when money is cheap.

But in uncertain markets, the fog clears. Vanity metrics fade and capital efficiency becomes a strength. Teams shrink, but focus sharpens. Trust becomes harder to earn — and more valuable.

Volatility doesn’t kill startups. It reveals what they’re made of.

Sentiment ≠ Fundamentals

It’s tempting to confuse today’s emotional climate with long-term reality. Sentiment is reactive and volatile but fundamentals are structural.

Despite a ~32% YoY drop in VC funding in Q1 2025, high-quality rounds are still getting done. Startups with clarity, traction, and discipline continue to raise. Down rounds aren’t a sign of death — they’re just corrections from euphoric highs.

Don’t mistake the mood for the market.

A Return to Long-Term Thinking

Boom times reward flash. Downturns reward clarity. This moment is shifting the founder mindset back to original theses and away from over-optimizing for the next round toward building something that could survive without outside funding. Long-termist builders aren’t the loudest., they’re the ones still building when no one’s watching.

Storytelling, but not for the Deck

Narrative risk is real. In noisy markets, clarity is leverage.

Great storytelling today isn’t about hype — it’s about resonance. Your mission needs to hold weight without leaning on your last raise. Ask yourself: What are we here to fix? Who are we here to serve? Why does it still matter? If your product disappears tomorrow, who notices — and why?

What Founders can do right now: this isn’t a time for panic, it’s a time to zoom out and recommit.

Audit your burn. Talk to your customers. Revisit your roadmap. Refocus your team.

Don’t overreact. Re-anchor.

Final Reflection: building in the Noise

There’s no perfect playbook for building in chaos but there is a mindset: stay lean, stay honest, stay curious. Communicate clearly. Focus harder.

Volatile times don’t just test startups — they shape them. Some will break. Others will quietly become generational companies. And those are the ones worth backing.

Stefana

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