A woman in cosplay costumes hosts a livestream at China Joy exhibition in Shanghai, on July 31, 2020. (PHOTO / IC)
Large-scale crises such as the COVID-19 pandemic can make things complicated and terrible for startups. At the same time, however, the changes they bring almost invariably shift opportunities available to businesses, including those in their earliest stages.
In addition, recent shifts in the way people work have led many to reassess their careers, and there are signs that more and more people are taking an interest in entrepreneurship by starting their own companies. But, is now really a good time to be an entrepreneur?
A recent talk I had with entrepreneurs and venture capitalists from around the Southeast Asian business community offered some insights into the nature of entrepreneurship and how startups in the region have weathered, and even benefited, from the current turbulence.
In particular, our discussions highlighted the roles of such factors as the nature and timing of a company's offering, the ability to pivot to a new business model and the availability of funding in determining the fate of those who have taken the startup leap.
A giant global experiment
One of the sectors most impacted by COVID-19 has been the education sector, as many schools were caught off guard by the sudden shift away from in-person learning.
However, for startups such as Edukasyon.ph, a Philippines-based platform providing young adults access to online education, survival was in part a matter of being in the right place at the right time.
The potential of online education has long been recognized, but COVID-19 has greatly accelerated the adoption of digital learning, leading to what Edukasyon.ph founder and Executive Chairman Henry Motte-Munoz describes as "a giant global experiment".
One of the lessons that Motte-Munoz says he has learned from his experience is that, from an acquisition-of-skills perspective, online learning can work. From a social perspective, however, it doesn't work as well, since most parents want their children to go back to school.
Regardless, he said the pandemic has provided the push needed to make online learning mainstream, and providers such as Edukasyon.ph have been well-positioned to take advantage of the current wave.
Capitalizing on shifting trends
As COVID-19 brought wellness to the forefront and consumer habits started to change, businesses in the plant-based food space began seeing growing interest from both investors and the public.
Karana, a Singapore-based meat alternatives startup, for example, recently closed a seed funding round and was on the cusp of launching its products into restaurants and food services when the city-state went into lockdown.
As Karana co-founder and Co-CEO Blair Crichton explains, the company's initial response was to focus on "reducing cash burn, reigning in costs and battening down the hatches" while they waited to see what would play out.
At the same time, however, Crichton said the pandemic was "in some ways a blessing in disguise" as it allowed his team to reassess their plans and pivot to a different business model.
While 2020 wasn't a great time to be doing offline product launches and events, Karana was able to use the lockdown to shift their focus to developing a retail offering－something which could have been more difficult to do had they already been out in the market.
As Crichton's story suggests, periods of crisis often create conditions under which new innovations can, and must, emerge. Moreover, early-stage startups may be well-positioned to spot and react to new trends and help build a new normal.
Humanity's biggest wake-up call
For venture capital firm Gobi Partners' Founding Partner Thomas Tsao, while the volume of new investments the firm engaged in dropped during 2020, the number of follow-on investments it conducted for existing companies actually increased.
"A crisis period is really when venture capital firms earn their stripes," Tsao says of the need to offer support for startups.
Moving beyond basic survival, the pandemic has also served as what Tsao calls "humanity's biggest wake-up call". Not only has it proven how interdependent we all are, it has also accelerated a broader movement toward sustainable investing.
Moreover, Tsao added, with vaccine rollouts fueling hopes for a global economic bounce-back, environmental, social and corporate governance (ESG) is something VC firms will need to start building into everything they do.
"It is very important for VCs to take responsibility now, not only to make as much money as they can, but to make that money in a sustainable way that really has a positive impact," he said.
Despite, or perhaps because of, the turmoil caused by COVID-19, many in China in particular have been confident about expanding their businesses and trying new things.
"People are figuring out different ways of working with each other," says INCE Capital Founding Partner JP Gan.
As with any major disruption, shifts in people's lifestyles and working habits will create new opportunities and affect big changes.
"In the next few years, it will have a huge impact on business culture and business practices," Gan said.
Nevertheless, even with an available money supply and the active support of VC firms, leaping into the world of launching a self-owned business admittedly isn't for everyone.
"Being an entrepreneur is a long, lonely journey," he said.
Indeed, Gan conceded that many people working for big corporations were not ready or willing to quit their jobs to become entrepreneurs in the middle of the pandemic.
"It was not an intelligent thing to do to leave your high-paying job while working at home," he says.
Big problems, new realities
As economies rebuild and new realities become apparent, there will, of course, be both winners and losers. At the same time, as people begin future-proofing their businesses, there is an opportunity to think not only about creating economic value, but also about how to do so in a sustainable way.
Ultimately, there are big problems out there which need solving and now may be the time for entrepreneurs to step up and take advantage of this great wake-up call.
The writer is an associate dean of China Europe International Business School.
The views don't necessarily reflect those of China Daily.