Original published in The Business Times
A year ago, we were celebrating the global startup economy and its $3 trillion contribution in economic value. Today, with many of us in isolation and offices shuttered, Covid-19 has created a great amount of uncertainty for businesses, but these measures are especially distressing for startups.
A global study conducted by Startup Genome found 41% of startups have three months or less of cash runway left—and of the businesses that have raised Series A, B or later rounds, 34% have less than six months’ worth of cash. There are other troubling signs too: 74% of startups saw their revenues decline since the beginning of the crisis, while 38% do not expect to be helped by policy relief measures
Supporting startups in a downturn
Government support to businesses is the right first necessary step—and already the Singapore government has committed $285 million to support promising startups. But there is something to be said about the role of accelerators, incubators and innovation labs to help entrepreneurs emerge from this pandemic stronger.
In the past, startups struggled to compete in a downturn due the lack of a strong ecosystem of support, including access to expert advice and collaboration. The strong community aspect of hubs like ours means businesses can leverage mentoring and advice from other co-founders, advisers, investors and employees to their advantage. In fact, since the beginning of April, we’ve hosted more than 60 webinars, 346 virtual events globally, 38 Covid-related events and 5 mental awareness events to help our members. Given the global scale of the virus and its differing impact across countries, community sessions like these are useful to entrepreneurs seeking diverse business thinking and gives them the opportunity to compare notes with their peers.
Enabling agility
As opposed to big businesses, startups are more resourceful and agile, which means they’re better positioned to pivot business plans, accelerate speed-to-market and foster innovation. Mirxes, a member of WeWork Labs in Singapore, shifted its core offering to mass-produce locally-developed diagnostic test kits for COVID-19 to meet high demand for fast, accurate SARS-CoV-2 tests.
To supercharge this type of agility and nimbleness, we need an ecosystem that’s intuitive to the circumstances and nimble enough to evolve. This is exactly what Startups Against Corona, an initiative from 27pilots, sought to do to quickly help startups solve problems caused by the pandemic. At WeWorks, we’ve launched an 8-week program to help solve the growing challenge of accessing needed medications in Singapore during the pandemic. As part of this, selected startups will get to test their solutions with medical institutions and corporations like Venturecraft, and HiDoc.
Beyond tackling the health challenges, the pandemic has highlighted other issues like collaboration and privacy as countries shifted to work-from-home arrangements. Innovation hubs are in a unique position to propel these ideas forward. For example, our member Beowulf’s Quickcom decentralized cloud network allows customers and teammates to call each other directly by scanning a QR code using their built-in camera on their smartphone. Such QR codes can replace the regular phone number for complete privacy control and as more teams go remote, this tool allows them to join group meetings, too.
With early access to inventive entrepreneurs and organisations, as well as strong educational, mentorship and financial resources, innovation hubs will play a key role in not only identifying long-term winners, but also setting them on the path to success.
Driving continued innovation
Consumption patterns and behaviours were changing pre-pandemic, but now they’ve been thrown out of whack entirely. There is no shame in discovering that what you built wasn't exactly what your customer needed and then pivoting the business to meet a newly-found demand, service or product. During the 2003 SARS outbreak in China, Alibaba was forced to transform and launched its first consumer marketplace as people around the country self-isolated. Today, that business is worth billions of dollars.
With early access to inventive entrepreneurs and organisations, as well as strong educational, mentorship and financial resources, innovation hubs will play a key role in not only identifying long-term winners, but also setting them on the path to success. As Asia Pacific continues to deliver on opportunities and economic momentum, it will be the businesses that were flexible and innovated to the needs of the post-pandemic world that thrive.