Startups Stick Together in Uncertainty of Pandemic
As the economy withers during the pandemic, startups are sticking together and finding ways to support each other––virtually.
Last month, Lunar Startups announced its third cohort Cohort 3 just a week before the coronavirus outbreak was declared a pandemic. Since then, the incubator’s leaders have adapted to staying at home and building businesses and community from scratch remotely, said managing director Danielle Steer.
“Covid-19 has had a really complex effect on the startup community, on us as an organization, on founders,” she said. “We have been impressed with how the founders have responded.”
But it’s been a challenge finding a way to foster a collaborative startup community while working from home. Now, she says founders are stressed about keeping their businesses operational, along with the very real impacts of the pandemic.
“We’ve had founders with family members who have passed away or who are currently sick with Covid-19, or who have other health conditions that are not getting the treatment that they need or want,” Steer said.
Many folks are still trying to balance their business ambitions with parenting and teaching, too.
“Seeing how our founders have persevered through that mental, emotional, physical, and literal complexity has been really inspiring,” Steer added.
At the same time, the pandemic has impacted startups at Lunar in drastically different ways. Take Bim Bam Boo, for example. When the stay-at-home order went into effect, the bamboo toilet paper maker sold out of all of its product within 24 hours. The company had to work quickly to secure another shipment and navigate additional pandemic-induced logistical complications.
But more service-based organizations—primarily those whose businesses are event-centric—have seen several contracts and large chunks of revenue rapidly fall through.
“The founders had to kind of persevere and say, ‘Okay, what can we do instead? What problems can we solve for our customers instead, if we’re not going to be supporting them in their events?’” Steer said.
For many startups, community is now more important than ever.
“One of the silver linings of crisis is that it has instilled a sense of community within our founders in a way that we could not have imagined or facilitated intentionally,” Steer said. “I’ve been really impressed with how the startups have showed up for each other.”
In the switch to a virtual space, startup culture may start to become more globalized, said Ryan Broshar, founder of venture capital firm Matchstick Ventures, co-founder of BetaMN, and cofounder of Twin Cities Startup Week.
“You’re going to see more and more culture be based around distributed teams,” said Broshar, who also co-founded Twin Cities Startup Week. “It may not be as much about your local people and just your market, and it may be about who you know around the world.”
Broshar also noted that startups may feel the pinch on the funding side of things this coming year. While Matchstick Ventures will continue investing at a normal pace, Broshar sees the venture capital market as a whole slowing down, though it could potentially regain traction in 2021.
“I think there’ll be a slower pace of investment for a lot of funds, but the good companies are going to get funded and they’re going to find the capital to grow,” Broshar said. “Logistically, it’s a little bit harder to do it virtually, and people are not investing at the same pace.”
But the funds and skills are still out there, he added.
“Venture capital isn’t going anywhere. I think it’s still an essential piece of the funding for a lot of startups,” he said. “We’re really excited about the opportunities to support these founders through these hard times and keep making investments while others may be pulling back.”