What would an economic recession mean for Atlanta tech entrepreneurs? – WABE

As the Federal Reserve raises interest rates in an attempt to curb inflation and world events remain chaotic, many forecasters are predicting that the US could be headed for an economic recession next year.

How might the downturn affect Atlanta’s ecosystem of tech startups and entrepreneurs?

Dan Drechsel, general partner at Atlanta venture capital firm Panoramic Ventures, looks to the past economic downturns of 1991, 2001 and 2008 as a guide.

“Atlanta is actually a robust innovation community around them,” he said. “Sure, we go down a little bit, but we usually bounce back pretty quickly.”

Why? He says many tech companies and startups in Atlanta are focused on business-to-business sales, which tend to be more sustainable. He also says the large number of tech entrepreneurs spawned by public universities also helps.

Drechsel says that while there have been tens of thousands of tech layoffs in recent months, most have been in California and New York.

He says he doesn’t expect a potential recession to have much of an impact on available capital in Atlanta.

“Most investors, once the prices settle in from what the valuations are for tech companies, are actually good at investing during downturns,” Drechsel said.

But not only venture capitalists can be sources of funding. He says big companies — dozens of which call metro Atlanta home — can also support an ecosystem of innovators.

“The status of our Fortune 1000 companies is a big source because they can be buyers of products and offerings,” Drechsel said.

Then there are government stimulus programs that help provide funding when the economy turns sour.

“They can help complement what’s going on in the market and help smooth out the downturn in demand that an innovation company might face,” he said.

Regardless of how the economy is doing or how much capital is available, Drechsel says a good idea will always tend to rise to the top.

“The persistence of an important innovation that people want and that solves a real problem is ultimately the source of coping in a difficult time,” he said.