Startup businesses are one of the essential pillars of the economy. They provide slots in the job market, competition for other businesses, an additional source of cash flow for investors, and many more. The biggest examples of startups that have grown to become corporations in their own right are Grab, Uber, and Airbnb.
Startups are not exclusively tech companies; however, the market is also saturated by startups from other fields that might not be as well-known but just as successful. The rise of the COVID-19 pandemic has badly affected the economy in various ways. One part of the economy that it has affected greatly is startup businesses.
Emerging Startup Growth in the Pandemic
Startups have been emerging and finding success even before this global crisis, but when humanity was struck with the pandemic, a lot of things shifted both for the better and for the worse.
According to the Census Bureau in the United States, there was a 24% increase in emerging startups before the pandemic. This number signifies the growth in the number of startups worldwide in general. But even though the number of startups is growing, most businesses have been struggling more during this time.
People started new businesses for two things: necessity and opportunity. Many people became unemployed when the pandemic hit because of the need for other means of income.
The Global Entrepreneurship Monitor (GEM) report found that entrepreneurs were motivated to grab an opportunity as well since there weren’t a lot of options for economic engagement.
Startups are also adjusting with consumers’ demand by going for delivery and logistics industry. An analysis conducted by the University of Kent has concluded that online trading was the reason behind the startup boom in the first 11 months last year in the UK.
Even startups in the IT industry grew by 20% in 2020 since there is a need for technologies, the telecommunications market, and anything online.
Revenue is often the most prevalent measure of a startup’s success. During the pandemic, startups from all types of fields have experienced a decrease in revenue.
According to a report by Startup Genome, the worldwide revenue decrease from December 2019 to June 2020 is as follows: 14-40% decrease on tech start-ups, 40% decrease on automotive, 60% on beauty and fashion, and 70% on travel and tourism.
What you will notice from this report is how large of a revenue decrease the Travel and Tourism industry has received. With air, land, and sea travel coming to a halt during the first wave of the pandemic, this data comes as no surprise.
The least amount of decrease that can be noticed from this report is the tech industry as its digital nature allows it to still find success more than others during this time.
Another industry to take note of is Industrial Materials and Construction. Though it is not listed in the reports, many of the ongoing and future building constructions have been affected quite drastically as it is one of the industries that exclusively must work on-site.
The people within this industry that do not have to work on-site are the architects and engineers since they can do some of their tasks like communicating with their construction equipment supplier from the comforts of their own home.
Construction workers have also been subject to drastic changes in protocols due to the pandemic. Certain measures have been implemented to ensure the safety of these workers while they work on-site.
Due to the struggles of startup businesses during the pandemic, the response has been to go digital. Many startups have adopted a digital work environment in which they communicate and do their everyday tasks with the help of online tools and applications.
Some examples of the applications that have seen a lot of utilization amidst the pandemic are Zoom for online meetings, Slack meant for online workplace messaging, Google Meet for online meetings, JIRA for online project management, Trello for online projects management, and Notion for online personal task management.
The data backs this worldwide trend of going online. With the application Zoom alone seeing growth from around 2 million daily sessions before the pandemic to a rise of 6 million daily sessions. The internet has then adjusted to the sudden rise in traffic, as it raises the global internet capacity by 35% during the previous year.
Starting and running a business during the pandemic has become one of the hardest challenges that a person has to face, but as more startup businesses emerge and impact the market, more startup founders and employees are subject to the struggle of keeping it afloat as well.