COVID-19: Startup Accelerator, Not a Killer
Insight written by Trevor Goding, originally published on March 24th, 2022.
When Covid-19 hit in the beginning of 2020, there was a wave of anxiety that fell over the world. Life as we knew it completely changed over the course of a weekend and companies had to respond quickly to the shelter-in-place mandates. In a 2019 Risk Survey conducted by Ernst & Young, only 21% of the 500 board members and CEO’s surveyed responded that their company was prepared to navigate a pandemic from a “planning, communications, recovery and resilience standpoint.” A majority of companies did not have sufficient plans to deal with a remote transition, so in the first fifteen weeks of the pandemic 49 million Americans filed claims to receive unemployment benefits. Millions of Americans were suddenly jobless and in response 4.4 million new businesses were started. In 2020, there was a 24.3% increase in new businesses from the year prior, and a 51% increase from the 2010–2019 average. In a time of uncertainty, many Americans decided to start their own companies to be in control of their own income and financial security. This has been true in the past, as recessions spark entrepreneurship. Before the 2008 crisis, only 9% of small business owners claimed unemployment as their reason for starting their company, but in the years following 2008, the number jumped to 18%.
In a traditional startup, the founder would try to foster a community of employees within a brick and mortar location to inspire the team. Startups have the stereotype of creating office environments that are relaxed and ignite collaboration, such as Google’s HQ. With the world population forced to quarantine in 2020, stay-at-home founders needed to be innovative to successfully cultivate and keep the five principles of a startup culture: team creativity, culture and company identity, team spirit, formal and informal collaboration, and teamwork.
Insight has been given from founders themselves as to how they navigated the transition to remote work. EntryPoint, a nonprofit research organization, asked founders how they achieved this transition and what steps they took. Molly McFarland, founder of AdAdapted, stated how in the beginning of the pandemic every company was asking the same questions on how to face the future. McFarland’s experience of being a founder allowed her to understand what her employees needed to be successful and feel supported during the transitional period while maintaining a revenue generating company. AdAdapted was able to move their small team to online platforms to continue operations quicker than large corporations. From there, they were able to take advantage of new opportunities propagating in the market in response to Covid-19. Next, McFarland made sure to keep a continuous line of communication with her employees to ensure they were taking care of their mental health while isolating at home. AdAdapted made it obvious that the future was uncertain but not being naive inspired employees to be excited about what was to come.
Danny Ellis, founder of SkySpecs, also emphasized the importance of employee health and happiness. Employee’s mental well-being is essential to productivity, and it is challenging to keep morale up when all aspects of work life have to be changed. SkySpecs paid closer attention to culture, communication, and growth after the pandemic hit. Ellis felt it was important to emphasize these three areas as the company wanted to be a guiding hand in helping employees figure out what remote work looked like for them. This resulted in the company helping employees create home offices and adding new technology to their tech stack to keep employees connected.
The extreme loss of employment and increased time at home fostered the perfect environment for startups to begin. Twenty-first century technology allowed for people to remain connected in ways that were unprecedented. These technologies gave founders the ability to maintain the five principles of a startup, as seen with AdAdapted and SkySpecs. As the world continues to weather the effects of Covid, entrepreneurs will continue to create ideas and products that overcome new challenges.
Sources:
https://www.salesforce.com/blog/small-business-pandemic-entrepreneurs/
https://entrypointmi.com/2020/08/31/the-impact-of-covid-19-on-the-startup-community/
https://www.huffpost.com/entry/unemployment-and-entrepreneurship_n_1619621
Thank you for reading this insight written by Trevor Goding, an Associate in the Mel Rines Angel Investment Fund. To learn more about The Fund, please visit https://www.rinesfund.com/
Trevor is a sophomore from Londonderry, New Hampshire pursuing a degree in Finance and Information Systems & Business Analytics. Previously, Trevor was active in the Paul Fire Ignitor program during his first year on campus. Trevor’s passion for business has now transpired to being a part of the Fund. In the oncoming months, Trevor is eager to learn more about start-ups, the process of angel investing, and gain experience in a business professional environment alongside his peers.
