It's mainly the investors that lose out from a bubble bursting--one way to look at it is that a bubble is just a good time to get a high valuation from a company's perspective. By calling it a bubble, you're saying you think there's more money out there looking for startups to invest in than startups whose prospects can support that valuation. That's a good time to get OPM (other people's money) and spend it on whatever your dream idea is, if you think you've got a shot at making it work.
There are of course counterarguments:
- Other startups are getting too much money at the same time you are, and probably spending it in irrational ways that may make it harder for you to be profitable, such as overpaying on advertising and hiring. The same argument can support the idea that the best time to start a startup is during a recession, when the big companies aren't investing enough money in growth.
- When the bubble bursts, there will be far more startups looking for money than money looking to be invested, so you're more likely to have to throw in the towel after bursting.
On the balance, I agree with the advice of most experienced entrepreneurs I've heard--err on the side of worrying more about yourself, your idea, and how you'll execute, and less about the economic environment at the time.
There are of course counterarguments: - Other startups are getting too much money at the same time you are, and probably spending it in irrational ways that may make it harder for you to be profitable, such as overpaying on advertising and hiring. The same argument can support the idea that the best time to start a startup is during a recession, when the big companies aren't investing enough money in growth. - When the bubble bursts, there will be far more startups looking for money than money looking to be invested, so you're more likely to have to throw in the towel after bursting.
On the balance, I agree with the advice of most experienced entrepreneurs I've heard--err on the side of worrying more about yourself, your idea, and how you'll execute, and less about the economic environment at the time.