Tuesday, August 16, 2022

How the pandemic changed the Startup playing field

The pandemic has left its mark on businesses far and wide, however when it comes to the startup industry – things do not go as expected.

With COVID-19 bringing with it several structural transformations that lie ahead for businesses, certain trends become more evident and examinable.

We can see a filtration effect taking place in the startup industry as companies are separated into a category of businesses that have enjoyed expansion and growth during the pandemic.

And another category of companies that are the disrupted and potentially derailed businesses.

Overall, we witnessed the pandemic effect whereby it catalyzes and accelerates the disruptive role of technology across several industries. As this was noted by how fast we saw new ideas come to life.

The following table better illustrates the industries that managed to do well during the pandemic with those that are struggling. Data aggregated from Forbes.

Businesses doing well during pandemic  Businesses struggling during pandemic  
E-commerceLive Events
Media and GamingRestaurants
Video ConferencingOn-premise enterprise IT
Public CloudPhysical Retail
CybersecurityIT Services
Health TechTravel and Hospitality

And, according to SP Global, the five industries least impacted by COVID-19 are:

IndustryMedian PD as of March 1, 2020Median PD as of March 31, 2020
Property, Casualty Insurance0.59%1.06%
Health Care REITs0.55%0.52%
Multi-line Insurance0.59%0.92%
Life & Health Insurance0.62%1.00%
Industrial REITs0.08%0.55%

With all this in mind, we examine two prominent and long term marks the pandemic will be leaving on the startup ecosystem.

Wider Talent Pool

As COVID-19 claimed the lives of thousands of people around the world every day and as many traditional businesses felt the heat of the new reality, many SMEs and large corporations shifted to digital mode.

This opens up so many avenues for HR when it comes to hiring, and talent acquisition.

No longer constraint by location, proximity, nationality, or even time – HR managers literally have the world to choose from when it comes to their next hire, allowing for a stronger and more diversified team

Increased Non-Local Investors

The world is now closer to the tips of our fingers.

This new undeniable fact made it much easier to make solid decisions based on the outputs of our screen.

Furthermore, the increased usage of video conferencing for startup pitches that has paved the way for virtual meetings in 2020, allowing venture capitalists to become more comfortable in making and managing remote investments.

The pandemic brought forward a surge of investments for big tech as Q3 of 2020 went down to be the second consecutive record quarter for big tech investments, according to CB Insights.

What does this mean?

The money is still there, the pace is getting even faster and more people are out to get it.