COVID-19 pandemic has been devastating the economy of the world in the past months. Many aspects have been heavily affected, and startups are no exception. In a time that nothing is thought to be stable, new challenges and opportunities are awaiting ambitious entrepreneurs.
In terms of opportunities, as people are in lock-down, most of the industries that have prospered because of COVID-19 are related to online services and technologies; namely Ecommerce, Media and gaming, Video conferencing, public cloud, SaaS, Collaboration software, cyber security, health tech (data of also motivate incumbent companies not to settle down and keep innovating. Secondly, although the crisis has been disastrous for some, there are actually plenty of opportunities for innovative startups which provide solutions for the current problems or transform to be suitable for the situation. Not only do these companies promote development within theirs, but they also create values for the society at this time; for example, medical startups that are working on COVID-19 vaccines or virus tracking apps.
In terms of opportunities, as people are in lock-down, most of the industries that have prospered because of COVID-19 are related to online services and technologies; namely Ecommerce, Media and gaming, Video conferencing, public cloud, SaaS, Collaboration software, cybersecurity, health tech (data of Asheem Chandna at Greylock). People have been shopping, working, entertaining from home which create a boom in the avenue as well as the growth of these businesses. Nevertheless, the question of whether advantageous companies are able to sustain their development remains uncertain, as competition will continue to be more and more intense. To startups with innovations that could be helpful for the time being, there are also many opportunities to develop. Moreover, in a time of constant changes, new patterns of demand will be revealed. If they are identified, many businesses will prosper because of that.
Regarding challenges, there are industries that have been struggling which are listed as Live events, restaurants, on-premise enterprise IT, physical retail, real estate, IT services, travel and hospitality, legacy software, transportation (data of Asheem Chandna at Greylock). However, if they are able to keep an innovative mindset and catch up with the trends, chances for development or sustainability are plentiful. For instance, restaurants and physical retails could collaborate with delivery services and e-commerce platforms to distribute their products.
Startups have also proved their flexibility through pivoting so as to adapt to the situation.
Because of all the changes that new enterprises could bring to the economy, Dalton stressed the importance of government subsidies and policies in supporting startups during this difficult time. Unlike other sectors, startups haven’t been able to approach much funding from states, as governments tend to favor the already excelled businesses. Meanwhile, in order to generate the economic recovery, the startup ecosystem needs to be taken care of through this tough period. Moreover, not only does COVID-19 take a toll on current startups, but it also hinders the founding of new ones which leaves long-term effects on employment. The OECD data demonstrates that when the number of new companies decreases by 20%, it leads to a 0,7% decrease in the total rate of employment 3 years after the crisis, and remains at the rate of 0,5% decrease 14 years later.
In conclusion, it could be seen that there are both opportunities and challenges awaiting new enterprises. If startups can recognize and grasp at the right time, with enough strength and support, they can develop significantly. Hopefully, in the future, there will be more up-to-date measures to create incentives and overcome difficulties for startups.
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