2020 will be remembered as the year of Coronavirus, just as 2001 was the year of the 9/11 attacks. With income and funding sources vanishing, business owners around the world are facing the real possibility of bankruptcy and massive firings. With survival as the primary need, it’s not enough to tell businesses to just keep paying their workers.
However, as a glimmer of hope in these dark times, we’re also seeing unprecedented levels of tools, funds, public policies and other resources being mobilised to support the business ecosystem. So, maybe it is not such a bad time to startup after all? Could there be a light for those entrepreneurs willing to take the risk?
Will COVID-19 alter the startup ecosystem forever?
In October 2008, Sequoia Capital, one of the world’s largest venture capital firms, had issued a missive to its portfolio companies titled R.I.P. Good Times. Warning of a financial apocalypse for technology firms in the wake of the 2008 global crisis, Sequoia advised its companies to reduce their costs and start generating profits as soon as they could. Earlier in March this year, Sequoia again published an open letter offering similar advice to its portfolio companies in response to another global crisis. Calling the Coronavirus outbreak The Black Swan of 2020, Sequoia warned to have a “prepared mindset for the scenarios that may play out” and urged the organisations in its portfolio to consider cutting jobs and spending.
Even before Sequoia’s warning, startups in Europe had already started seeing the chaos unleashed by the coronavirus, and some estimate this could be the worst crisis for startups as well as for the broader economy since 2008.
But crises don't last forever, as the Great Recession proved a few years ago. As with all crises, not only there are some businesses that stand to benefit, but also opportunities for new ideas to satisfy the ever-changing demands of people.
Sectors benefiting from the Coronavirus crisis (and potential startup ideas)
Startups in the travel and tourism industry have naturally been the worst-hit by this crisis. The so-called gig-economy firms including Uber and Airbnb are also seeing a huge drop in demand. Occupation of co-working spaces throughout Europe has plummeted, not only because of governmental measures implemented in countries such as Italy, Spain and Portugal, but also because of fears in other countries to reach their Southern Euro colleagues. And the list goes on. All these sectors will suffer more in coming weeks, with the travel sector likely to experience a sustained fall for many months to come. However, startups in other areas of business are witnessing a sharp increase in activity. Videoconferencing firms, for instance, are adding thousands of users as many companies conduct meetings and conferences online. Streaming, gaming and online education content providers are all reporting a significant increase in users and time spent on their platforms.
Demand for groceries and online retail is rising intensely as an increased amount of people stay at home during the crisis. Orders at on-demand medicine delivery startups are also increasing as customers stock up on drugs apart from hand sanitisers and masks. Despite the serious challenges these firms are facing in their supply chains due to the continuing lockdown in some countries, some individuals are already producing solutions to satisfy this increasing demand. In Spain for instance, a group of volunteers under the name Coronavirus Makers are using their 3D printers to provide life-saving equipment.
Insurance startups are experiencing an abrupt increase in demand too, and in most cases this is translating into actual business as some companies have begun offering products to cover the COVID-19 treatment cost. There is also a huge interest from organisations looking for protection against business interruption, which suggests that pandemic policies are the next big thing in commercial insurance.
Meanwhile, fintech startups have not yet seen a major disruption in their business. These firms might actually see a window of opportunity, with banks and finance apps offering new credit products and online services at customers who may be hit financially by the pandemic.
Have you already spotted what they all have in common?
Technology vs Coronavirus: how tech-based solutions can impact society
As we wait for a vaccine to be developed, many of us rely on tech-based solutions to ease our daily duties and entertain ourselves during the quarantine. After all, if there's one thing that has to be happening in a pandemic in the twenty-first century and not in the 16th, is that technology is being quite useful in helping the virus stay as contained as possible, and protecting many vulnerable people from contracting COVID-19.
Tech-based startups seem therefore to have a good chance to make a difference in this scenario. All the examples previously analysed show that we should not be afraid of starting up in times of Coronavirus, but think about how our ideas can make a positive impact on society. Technology has the potential to transform every aspect of our lives to deliver not only financial outcomes but also solve social and environmental problems. Now, more than ever, tech-for-social-good should lead the way for innovation.
As a digital product studio, we’re seeing how the amount of this kind of projects is continuously growing. Both from clients asking Acid Tango to explore how they can contribute to society with new services, and also from our own professionals, who have started shaping promising products with a real impact. Seeing these shared efforts, we can nothing but predict impactful entrepreneurship will become a trend in the next months, hopefully few years. We could say we’ll keep our fingers crossed for this, but we should keep them coding!
Pd. The Acid Tango team is committed to contributing as much as we can on tackling the impact of Coronavirus.
We’re currently offering a free week working with our technical and product team to all companies which could use our services, without obligation. You will get, completely free of charge:
- Test your product or business concept with our product design team.
- Let our experienced full-stack developers check, validate and improve your technological infrastructure.
To benefit from this, please send us an email to firstname.lastname@example.org with your contact details and technical needs, and we will schedule an online meeting as soon as possible.
Stay home, stay safe!