Surviving a prolonged tech winter

After a particularly long summer, this may be the first tech winter many are experiencing. How are founders and talent faring, and how can we help ourselves and one another during these trying times? ConnectOne speaks to community leaders and talent for insights.

It’s the fourth quarter of 2023, and the tech winter shows no clear signs of abating yet.

Though this industry has cycled through many upturns and downturns, what sets this winter apart is the length of the summer before the winter, said Peng T. Ong, co-founder and managing partner of venture capitalist (VC) firm Monk’s Hill Ventures.

“The summer before this winter lasted almost 15 years, so you have a whole generation of VCs, entrepreneurs and talent who have no idea what a downturn looks like. The crash is especially shocking because a lot of people have never experienced anything like that,” Peng said.

Because many VCs are a lot more hesitant to invest, founders find it harder to raise funds. Many struggle with runway, and may be forced to adapt their product and business, or make difficult decisions such as layoffs. Previously highly sought after talent who are suddenly laid off also find it more difficult to land new jobs offering comparable salaries.

Speaking to VCs, founders and talents, ConnectOne explores how this is affecting the mental health of founders and talents, and puts together their best tips to survive the winter.

“what sets this winter apart is the length of the summer before the winter”

- Peng T. Ong, co-founder and managing partner of venture capitalist (VC) firm Monk’s Hill Ventures

A First Funding Winter For Most Founders

“I do not think enough founders in Southeast Asia are open to seeking help. Startups are a confidence game, at least in the initial stages, where the founders need to be seen by their investors, employees and other stakeholders as infallible,”

- Carlson Lau, Managing Director of Northstar Group

Founding a startup has always been an incredibly stressful endeavour. In fact, 72 per cent of founders report that the entrepreneurship journey has impacted their mental health, according to Startup Snapshot’s April 2023 report.

The tech winter has intensified this stress “because a number of startups are failing fast, and the confidence of founders are affected by negative feedback,” said Carlson Lau, managing director of private equity group Northstar Group.

“Founders now have lower margin of error as the current funding raising environment means that subsequent funding rounds are not always assured unless there are clear indications of product-market fit.

“If the initial product has no product-market fit, founders will have to pivot their business model quickly or make tough decisions on headcount redundancies – something that first-time founders in particular are not used to,” he said.

Joan Low, founder of digital mental health company ThoughtFull compares this to “walking a tightrope”, where founders find themselves juggling growth, costs, and business sustainability. “Existential questions, uncertainty, and constant adapting can lead to burnout,” she said.  

Some founders like Showbhik Kalra, co-founder of Hobnob, have decided to shut down their company. Though in Showbhik’s case, he exited because he was unable to find product-market fit, not because of the tech winter. Others however, have exited because of the difficulty in raising funds.

“As a founder, making the decision to shut down the business is hard. You think about failure, your self-worth, the time you put into this, the people who worked with you, the investors, and family that have supported you along the way,” he reflected.

While many founders still seem to be holding up well, it is hard to tell when they are just putting on a brave front for their company and employees.

“I do not think enough founders in Southeast Asia are open to seeking help. Startups are a confidence game, at least in the initial stages, where the founders need to be seen by their investors, employees and other stakeholders as infallible,” explained Carlson.

More Layoffs And Uncertainty For Talent

“After asking my network for help, I started to get interviews.”

- Sufyan Sulaiman, a former account executive in tech

The talent market has also shifted drastically from the poaching wars of 2021 to massive layoffs and hiring freezes. 

Sufyan Sulaiman, a former account executive in tech was let go in mid-2023. However, he and his co-workers saw the warning signs as early as 2022 when the company started to cut marketing budget.

“For the first two months after I was let go, I sent out 200 to 250 resumes and didn’t even get a single reply – not even rejection letters,” he said, despite his considerable work experience 

Having just paid for his MBA, Sufyan felt the financial pressure. “I saw my bank account go down like sand in an hourglass,” he said. He added that he was planning to begin marriage discussions with his partner’s parents, but was forced to put it on hold as well. 

“My appetite started to go out the window and I skipped meals. I had constant anxiety and wondered how long I could last without a job. The problem was always looming at the back of my head… when I ate, slept, took a shower, talked to my friends…” he said.

He added that industry peers who escaped layoffs also took a morale hit. 

“Everyone’s in a difficult place. Many are wondering if they should double down where they are and hope that if they work hard enough, they will be retained, or if they should start looking elsewhere. I even know someone who quit without a job because she’d rather exit on her own terms than wait to be cut,” he said.

After asking his network for help, Sufyan started to get interviews. However, because many jobs offered 50 per cent of what he used to earn, he was concerned that accepting such offers might stunt his career.

Indeed, this seems to be happening across the industry. “Tech talents are facing the harsh reality that the titles and salaries they were given during the low interest rate environment, especially in the 2020 and 2021, are no longer relevant in the slower fundraising condition and new era of AI automating many functions,” noted Carlson.

Know that you are not alone and reach out for help

“ Verbalising feelings and thoughts also helps founders, investors and employee find better closure and move on”

- Showbhik Kalra, co-founder of Hobnob

Build a support network of friends, family, ex-colleagues, advisors, life coaches and therapists, said Joan. And ask for help. 

“Someone out there will extend a hand and help make an important connection for you. That was how I started to get more interviews coming in,” shared Sufyan, who managed to secure a job in four months.

“It is really difficult in our culture to ask for help. But try to get past that. You don’t have to make a public LinkedIn post if you are uncomfortable with that. Start with your immediate circle or do it in a chatgroup,” he added. 

In cases where founders are forced to shut down their startups, verbalising feelings and thoughts also helps founders, investors and employee find better closure and move on, said Showbhik. 

Invest in your physical and mental well being but know when to seek professional help

“If you notice physical symptoms such as persistent headaches, muscle tension and sleep problems, or emotional symptoms such as constant stress, overwhelming anxiety, self-doubt and negative thoughts related to work, and the loss of interest and motivation, you should consider seeking professional help.”

- Joan Low, founder of digital mental health company ThoughtFull

“Exercise serves as a pressure valve to decompress, and journaling and meditation can help with introspection,” said Joan.

However, if you notice physical symptoms such as persistent headaches, muscle tension and sleep problems, or emotional symptoms such as constant stress, overwhelming anxiety, self-doubt and negative thoughts related to work, and the loss of interest and motivation, you should consider seeking professional help, she added.

Her company’s app ThoughtFullChat offers useful mental healthcare resources, as well as a free Emotional Health Assessment that uses the Depression, Anxiety and Stress Scale to help you gauge your emotional well-being.

Crisis presents the opportunities to reflect, reset and restart

A good place to start is self-reflection. “Reflect on your current state versus what is going on in the rest of the world, how important this is versus how much of it is ego. This can help you see the bigger picture”

- Peng T. Ong, co-founder and managing partner of venture capitalist (VC) firm Monk’s Hill Ventures.

Talent and founders should use this as an opportunity to reset, and move forward with more purpose and passion, said former program management leader, Bernard Hosanna, who was also affected by recent cuts. 

A good place to start is self-reflection. “Reflect on your current state versus what is going on in the rest of the world, how important this is versus how much of it is ego. This can help you see the bigger picture,” Peng shared. If you are not sure how, a self-reflection course or coach can help.

“All the great companies started to get great during the winter – Google, Facebook, Slack... If you think about the nature of tech, it is to create a more efficient way to do things. 

“In a downturn, everyone wants more efficiency. So in theory, they should switch to good tech solutions. If this is not happening for your company, it might be good to ask yourself why,” headded. This may indeed be the breakthrough you and your company needs.