What to Do in a Down Market (Besides Complain About It)

Every founder eventually learns the same lesson: the market does not care about your milestones. It doesn’t care that your trial data is almost in, or that your deck is sharper than ever, or that you just found product-market fit after 18 months of wandering the desert. When capital tightens, it tightens for everyone. And the response from the world’s most selective investor—macroeconomic sentiment—is always the same: not now.

So what do you do?

You adapt. Quietly. Efficiently. Without the fanfare of a pivot or the false optimism of "we're oversubscribed." You make peace with the fact that fundraising is never easy, even in good times—and in a down market, it’s less a process than a marathon of controlled rejection.

But that doesn’t mean you’re powerless. You just need to change the question—from How do I raise money? to How do I keep building without running out of options?

Start with partnerships. Not the kind where two underfunded startups sign a press release and hope it impresses their board. Real ones. Where one side brings distribution, the other brings product. Where you let go of ego and ask: what can I offer that someone else genuinely needs right now? Strategic partnerships aren’t a sign of weakness. They’re a way to trade velocity for survivability. If you can’t raise alone, attach yourself to momentum.

Then consider something that, in boom times, feels taboo: mergers. Two weak companies don’t make a strong one. But two complementary ones? That might work. Especially if you’re solving adjacent problems, sharing similar back-end costs, or struggling to maintain sales traction alone. Merge not for the vanity metrics, but for shared oxygen. In biotech, this is often the smartest way to conserve pipeline and keep key teams together. In healthtech, it’s a chance to consolidate infrastructure and extend commercial reach. No one wants to say "merger of equals" anymore. But sometimes, equal desperation is enough.

You can also get creative with non-dilutive capital. Look for grants, contracts, early revenues, even service work that doesn’t kill your core mission. A founder with a bit of cash and a decent plan is still in the game. A founder who waited too long for perfect equity terms is usually on LinkedIn writing about “lessons learned.” This isn’t the time for perfection. It’s the time for runway triage.

Also: be brutally honest with your burn. You do not need to be building like it’s 2021. Reduce where it makes sense, without killing morale or momentum. There’s a difference between smart frugality and existential austerity. Founders who swing the axe too early often find themselves trying to raise money while explaining why they let go of the only person who could deliver the next milestone. Be careful. Preserve capability, not just capital.

And if you absolutely must raise? Ask for more than you think you need. Don’t be polite with your round size. In a down market, the only thing worse than not raising is raising too little—and then coming back to the same cold pool six months later. Raise to survive, not to impress. Forget oversubscription. Forget the perfect lead. Focus on the few investors who are actually deploying, and tailor your pitch to their current thesis—not your dream valuation from two years ago.

This is also the time to reassess your storytelling. Not the generic founder spiel about passion and vision. The real story: why this team, in this market, at this moment, deserves to exist. Tell it clearly. Tell it like you’re applying for oxygen, not applause.

Down markets reveal founders, not just companies. They expose vanity cap tables, hollow TAM projections, and slide decks built more for fantasy than execution. But they also reward the ones who stay focused, stay solvent, and stay realistic.

So no, it’s not fair. It never is. But if you can find the right partners, stay flexible, and survive without selling your soul—or your IP—you’ll come out stronger on the other side.

Because in a down market, the first rule of winning is simple: Don’t die. Everything else is optional.