How covid-19 could impact startups in the future?

impact of covid-19 on startups

As you may know, I started my entrepreneurial journey in December 2019, which means I am heading to my first anniversary (yeehaa). And of course, I learned a lot during all this time, just like any other entrepreneur I guess. Although I also experienced what it was to manage a startup during a pandemic, which is not something many startups have experienced, fortunately. And some things that were normal before, are clearly no longer adapted to the current world, as I could notice. Here I am going to discuss about teleworking, and how it will impact startups.

Depending on where you are, home office was more or less favorably considered. Often, traditional or conservative companies used it moderately, if not at all, while younger companies were perfectly fine with embracing it. When the lockdown was imposed to the population by the governments, virtually all companies (those not considered essential for the basic functioning of a country, such as supermarkets, banks, or gas stations) faced the following choice: run the operations remotely, or shut down until the situation gets better. Obviously, this has led to a massive increase in unemployment, as staff members were either furloughed or just dismissed. Meanwhile, remote working tools such as Zoom, Slack or Microsoft Teams (that we are using by the way) have seen their use increase significantly.

The impact of covid-19 on startups

How were startups impacted by such event? Well, I can’t answer for all startups, of course, but I can give my opinion. In my case, we were very early in the development of our Proof of Concept when the pandemic started. Because of my personal situation (I live in Austria, but the company is in France), and the one of my team members (between France and Belgium), teleworking was a necessity for us way before the lockdown, and it is still the case. So we did not really suffer a negative impact at first sight, rather, the impact was quite positive, since it brought new opportunities to us: more time to spend on this project, more people unemployed, therefore more potential customers.

But the downside came later, and it was probably already felt by startups which were further ahead of us in their development. As more and more people are getting worried about the economic situation, and the uncertainty regarding when an effective vaccine will be available, many would consider this is not the right time to take risks. However, a startup is a risk by its very nature. Therefore, access to talent and investment is severely reduced, which hinders the growth. Additionally, the untimely opening and closing of borders between countries does everything but helping in the propagation of ideas. Because let’s face it: as good as forums and webinars are, they do not replace physical social events in which you can build your network.

Prepare for tomorrow as a startup

In my experience, many startup incubators and accelerators used to request the founders to work full time on their idea, with an access to their site whenever they want. With the current situation, they evidently had to adapt, by proposing more online modules. Y Combinator, a leading startup accelerator, even did a full program remotely. The consequence of this is that while the cost of such program was mostly justified by the rent of a desk, and the access to the facilities, it is more difficult today to see an interest in these structures. Of course, one might say that they already have the network of talents and investors, and it is still useful. But does it justify such cost alone, especially when you need to consider the cost of moving to their location, like me, in the covid-19 context? I am not so sure.

Still, the world will probably not change so much so quickly. Mostly because we hear good news regarding the research of a vaccine. However, things will certainly not be back to how they were before these events. Now, teleworking is so much more accepted than some companies even decided to keep it longer than initially planned. As for startups, it is possible that in the future we may witness the birth of more and more startups whose co-founders work remotely, sometimes even between different countries. At Jinn, we are already preparing a tool for such contingency, so I will let you know when it will be ready. Then, business laws will probably need an update too, to better consider cross-countries startups. But this is another topic…