8 Ideas On How To Run A Startup Amid Coronavirus Outbreak
Coronavirus surge caught world community by surprise, leading to significant changes in such fundamental spheres as healthcare, transportation, commodity turnover, etc. These disruptions provoked crisis in economy putting founders round the globe in unfavorable conditions.
Pandemic status of COVID-19, strict quarantine measures, economic decay predetermined hardships on fundraising market, thus SMEs must do their best to increase own survival chances and overcome this storm.
In this post, OpenGeeksLab offers an overview of global private market investment, discusses possible damage in different niches, and gives advice on how to run a startup during coronavirus pandemic.
Global Market State
Coronavirus outbreak swept the world creating mess in fundraising and investment niche. According to statistic research, private market financing in Q1’2019 amounted $87 billion and reached $92 billion till end of the year. However, these numbers are forecasted to decay in Q1’2020 and total projected sum constitutes only $77 billion that is l6% decline. Experts claim it could become second abrupt quarterly drop-off in the past decade after 36% decline in Q3’2012. However, Asia-based segment is supposed to be influenced even more. Analytical research shows that funding in Q1’2020 will reach $20 billion, i.e. collapse for 36% comparing to previous quarter.
Deal volume also experience pandemic impact in Q1’2020. In comparison with Q4’2019 deal volume will presumably decline about 20% globally, and twice more, about 40 %, in Asian region.
What Does Coronavirus Pandemic Mean for Startups?
Naturally, economic downshift means hard times for startup projects in the first instance, because many of them depend on investment rounds, loans, or equity turnover. However, overall critical situation can be viewed not only as collapse but also as a turning point. Economy collapses of 2001 and 2008–2009 years have given rise to over large-scale 50 tech initiatives only, let alone less ambitious ones. Still, present-day circumstances imply gradual reduction of unicorn ventures with expanding opportunities for small business startup ideas.
Ventures in fields like on-demand delivery, biotech, medical care, remote communication, etc. will definitely take off due to favorable development conditions, though it does not mean a dead end for others. Projects experiencing temporary hardships also have enough chances to come out stronger. Wise leads bet on reducing startup costs and switching employees to remote work mode.
Experts advise delay hiring new employees as well, because there would be no significant demand increase in your product in the nearest future. Besides, there exists a set of smaller measures to be applied during coronavirus pandemic, like ensuring proper work-from-home conditions, taking care of data safety and cybersecurity, providing employees with correspondent salaries, etc. Taking a loan can also become a way-out if venture operation is temporarily suspended.
Implementing restricting measures definitely does not mean that venture capitalists will stop funding for uncertain period. In present conditions investors will become more selective redirecting investments into most prospective ventures, thus entrepreneurs must pay more attention to quality of their services or goods showing promising results.
Which Spheres Are Endangered?
Coronavirus surge produced indelible impact onto all niches without any exceptions, though it does not mean complete crash of startup business in its conceptual sense. Majority of new startup companies undergo probation period that will define their future perspectives.
According to expert forecasts, agencies that have already acquired more or less firm position on market will get over economic downshift low loss. Enterprises being above six months on runway also do not experience maximum shock wave power, as they have already gained minimal safety bag. The most endangered group includes pre-seed and seed-stage projects — they must do their best to stand this challenge and preserve investment, otherwise, they would have no chances. However, small business startup ideas being at the very beginning of their life cycle may also survive due to possible delay (up to three months) of product launch.
COVID-19 accelerating crisis influences market niches differently dividing them into fundraising winners and losers.
Naturally, in times of pandemic medical and healthcare services reach top of popularity. On-demand apps allowing consulting doctors online become equivalent to face-to-face appointments. However, unexpected activity surge made enterprise owners try their best in hiring qualified employees to cover the growing demand.
Biotech initiatives do not stand apart as well. Old and new startup companies scramble to fight coronavirus in any way. Scientists and developers work shoulder to shoulder on creating vaccine or other medical supplies necessary while overcoming pandemic. Thus, year 2020 may become a promising beginning for enterprises in pharma or pharma-tech industry.
As majority of offices take up work-from-home mode, remote communication software gains popularity. Launching own platform ensuring any kind of distance interaction (from e-learning to web-conferencing) can become a win-win option today. Besides, strict quarantine gives new breath to forgotten services that now attract customers offering free trials or discounts.
Due to self-isolation measures applied in majority of countries and movement restrictions, tourism and traveling stand among most affected spheres. Travel agencies suffer their worst times, as bookings reduce with rise of virus chaos. Major tourist attractions across Europe are closed for indefinite term, so people cannot be sure about having regular vacation this season and do not pre-order tours.
Overall uncertainty provokes decay not only in traveling niche but affects transport services as well. Many transport booking agencies stand idle as customers avoid not only long journeys abroad or around the country but also eliminate short-distance moves. Carsharing like BlaBlaCar suffers bad times as well because clients keep social distance to protect themselves.
Another sector suffering significant loss is home rental niche. Coronavirus spread made tenants isolated within their homes reducing moving possibilities, so rental business runners adopt redirecting attention to guaranteeing tenants safe and comfortable quarantine period at home.
Investment Alternatives
In terms of financial downshift, entrepreneurs must find alternative investment sources to keep the lights on. Public investment organizations offer multiple variants on how to come over temporary loss. Many investors adopt convertible notes to support initiatives running out of startup costs. Convertible notes are a type of short-period loan that turns into equity during next funding round. Other organizations provide loans for marketing and advertising, as many startup projects cannot afford it now remaining unnoticed.
Revenue — based financing represents another beneficial option, as financing costs directly depend on revenue organization has got. If it flourishes, funding also rises creating a safety bag; still, if revenue reduces, investors can spare costs and redirect them at more promising venture.
Government structures also do not stand apart offering various loan options of financial support. Many public bodies undertake measures directed at innovation financing, especially in spheres contributing in COVID-19 overcoming, e.g. pharmacy, biotech, medical care, etc. Besides, governments provide research tax credits in advance to ventures having record of accomplishment.
8 Ideas on How to Give Back
1. Make Some Services Free
COVID-19 took global community by surprise, so people were stricken by health and economic issues at one. Offering free services/products or providing substantial discounts may save the day. Like other spheres, startup projects adjust supplying in-demand goods ranging from volunteer medical equipment to free online courses or distance communication platforms. Organizations trading free products or services in need may not only soften coronavirus effects but attract future customers as well.
2. Take on Relevant Idea
Crisis usually greatly changes people’s attitudes towards in-demand goods and services, thus starting trading “nice-to-have” stuff is not the best option of handling situation. Customers rearrange priorities giving preferences to healthcare, safety and wellness products, becoming of vital importance in times of coronavirus pandemic. Thus, developing products directed at eliminating coronavirus itself or related problems will hit the big time. If you have an idea of rolling out health-tech project directed at fighting COVID-19, do not waste time — begin as soon as possible and catch your lucky ticket.
3. Cooperate With Other Startups in Your Area
Establishing productive connections and creating supportive community stand among key issues old and new startup companies must ensure in terms of economic collapse. Uniting together they increase survival chances taking up crisis management and implementing necessary measures collectively. Becoming involved and engaging other e-commerce employees in your area contributes to creating a stronghold for SMEs in a whole country as well.
4. Do Not Forget About Hackathons
Organizing hackathons is another productive way of getting through hardships. Such events are directed at entrepreneurs and developers unite to solve emergency issues taking necessary measures and driving innovative tech startup ideas. Hackathons gave rise to a wide range of exceptional products that have burst into market. In modern conditions events of the kind (conducted remotely of course) may serve as platforms for implementing small business startup ideas soothing pandemic influence onto world society.
5. Offer Webinars, Q&A Sessions, Podcasts
COVID-19 made half of the world stay at home and work remotely, giving rise to distance communication technologies. Conducting online events like webinars, O&A sessions, podcasts, etc. helps staying tuned during quarantine. Besides, via online services employers may organize web-conferences or communicate about work issues motivate their employees continue being as productive as they were at office.
6. Help Earlier Stage Entrepreneurs Boost Progress
Mentoring programs for new startup companies gain popularity in modern circumstances. As a rule, these programs are offered by more developed and stable agencies to their younger companions in field. These initiatives are directed at finding possible way-outs for ventures got into economic troubles because of world pandemic situation. All you need is to find suitable mentorship program on Internet and get certified help from field specialist on how to eliminate negative impact and overcome temporary hardships.
7. Share Experiences of Remote Working
No one knows how to work from home with maximum profit better than startup project members. However, in terms of quarantine, vast majority of employees get through their first experiences in working at home without any preparation or after short briefing. Sharing your ‘remote work’ experiences and providing simple advice represents another activity to give back during coronavirus period. Pieces of advice may be simply posted on organization’s blog or you can elaborate holistic webinars presenting work adaptation techniques and efficient task optimization principles.
8. Support SMEs in Digitalization & Automation Issues
As many employees were not ready to switch to distance work, substantial part of SMEs turned unprepared to provide distance services that would guarantee seamless performance and comfortable operation modes. It opens another direction for successful startup companies not to lose acquired positions. Pressed by surrounding, SMEs require qualified help that tech entrepreneurs can provide. Diverse solutions and business models can be applied to ensure high-level digitalization or automation: from powering online shop to AI implementation. Besides, software development agencies can give consultations on how to use certain services, help with data management or even advice on running digital marketing campaigns.
No Time for Despair!
Coronavirus pandemic will definitely strike startup niche, though it is not the time to panic — right approach helps not only survive economic hardships but become stronger.
Our team, in turn, will provide you with exceptional digital solution making best out of your initial concept. Do not be afraid of contacting us to come through difficulties together and create the product that will take off.
