For months in the United States, the coronavirus has been all that most of us thought about or talked about. It shut down our lives, our businesses, and the economy in many major ways.
Even things we consider essential, like court cases and medical procedures were put on hold. For example, the American College of Surgeons recommended all surgeries be avoided in hospitals with full ICUs and ventilator shortages.
Startups, the tech sector, and innovation of course been impacted by the coronavirus as well.
In some ways there have been positive effects, and in other ways, the effects have been detrimental.
While we can’t in reality, talk about a post-coronavirus world because it could become a seasonal illness, we can talk about startups and innovation throughout the lockdowns and the post-lockdown world.
Some Startups Are Struggling
Startups are inherently at-risk of bankruptcy. That level of financial risk is inevitable for a new company, and for some, coronavirus and the economic repercussions have made this risk more real or sudden.
Startups didn’t have the resources at the beginning of this situation to weather the storm like larger companies. For example, a big company tends to have cash on hand and lines of credit.
What many startups started doing when they realised the effects of the coronavirus on the economy and world was slowing things down as a way of coping. That could help with cash flow management, and it may be something that needs to continue for the time being.
Researchers found that around two-thirds of tech startups don’t have the capital to make it past September. Thirty-one percent said they couldn’t survive as is past June.
The Tech Industry
The tech industry has seen a lot of up and down throughout the pandemic and the shutdowns. One day you’ll hear the tech sector is outperforming others, and the next, you’ll hear that they aren’t weathering the storm as well as they hoped to be.
Initially, tech startups and the tech industry didn’t see as many effects as other industries because these companies are inherently designed to allow employees to work remotely.
The shift and eventual mandate that employees work from home weren’t tough on their day-to-day operations. For example, the Startup Genome looked specifically at tech startups and found 66% said their company could work from home with little to no disruption.
However, the rosy picture didn’t remain for some of these companies.
One reason was that investors were pulling back on funding and canceling funding commitments.
According to a report from Computer World, enterprise-oriented startups have seen the biggest negative effects.
Enterprise startups are related to retail, food processors, commercial real estate, medical providers, and manufacturers, for example.
On the other hand, consumer-oriented tech firms often saw their revenues go up since the start of the pandemic.
A possible explanation for this could be the fact that large enterprises were faster to cut expenses.
Consumers were simultaneously moving from consumption patterns to spending on digitally-based products and services.
To save money, tech startups began with lay-offs.
Could the Pandemic Fuel Innovation?
While there are a lot of areas of bad news among the pandemic for startups, there are opportunities as well.
For example, the SARS pandemic which went on from 2002 to 2004 led to the growth of Ali Baba, which was at the time a small eCommerce company.
The reason?
People felt anxious about travel and interacting with other people, which are familiar themes right now around the world.
After the Great Recession in 2008, the growth of companies like Airbnb and Uber occurred because people didn’t have as much income, nor did they have as much savings set aside, therefore sharing resources became a viable option.
For innovation to come out of the pandemic, there has to be an understanding of the psychological effects as much as the economic elements.
For example, one trend we’re already seeing emerging in a major way is the delivery of telemedicine.
Telemedicine isn’t new, but the pandemic has made it the preferred way for a lot of people to receive health care and mental health care.
Mental health startups like Braive have been working on ways to not only provide mental health services to a population that’s afraid to leave home or perhaps not even allowed to leave home but to simultaneously deal with the issues that creates such as social isolation.
There could also be new innovations aimed at making it easier to facilitate remote work.
In March, as we were just gaining an understanding of the potential effects of the coronavirus in the U.S., one of the first decisions a lot of local governments made was to require people who could work from home to do so.
That was before there were larger-scale lockdowns in many places, but a lot of businesses were caught off guard with no real plan to implement remote work.
Now, there is an opportunity there because as people have increasingly worked from home for the past few months, they’ve found they like it, and it’s been advantageous for a lot of employers.
Other Areas of Innovation
While there are broad, general opportunities, some companies are specifically focusing on projects geared toward what the world needs right now.
For example, Scylla is an AI company, and they specialize in image recognition systems. Now, they’re using thermal imaging algorithms to quickly determine which people in large groups might have a fever. This is technology that may be used at airports as well as theme parks and other public areas.
Harvard and Stanford have also teamed up to create a Covid-19 symptom tracker app.
The app can allow medical professionals and public health officials to monitor disease hotspots as a way to allocate resources and plan quarantines appropriately.
There have been discouraging stories as far as startups and small businesses throughout the pandemic and its ripple effects, but also promising things coming out as well. It could be a unique opportunity for innovators.
