Opportunity in a Time of Crisis
This is a topic that has been on my mind since the beginning of the Covid-19 crisis. In the first week or so, everyone moves into crisis-control in order to handle the immediate issues — which is a normal response. But I just can’t help wondering what new opportunities and business ideas this crisis will generate once things start to settle.
A problem or an opportunity?
One of the things I have always loved about the startup ecosystem and culture, is that there is this insane optimism — sometimes to the point of insanity. Entrepreneurs always manage to transform problems into opportunities. There are so many great examples of startups that have come about and taken off during crises. Perhaps the best and most relevant example to what we are currently experiencing is Alibaba, which gained traction during the SARS outbreak in 2002–2003. In France, some of the best known startups have also shown growth during crises. My personal favorite is the story of Blablacar, which took off when an Icelandic volcano paralyzed European the transportation networks in 2010. But there have also been examples of other French startups doing well during the economic downturn of 2008.
As we work with such a high volume of companies from various sectors at Station F, one question we get asked a lot is about the trends we see. Naturally, we’ve seen companies that have been positively and negatively by the situation — and companies that have quickly managed to launch new features, services, and transition to an online format. Companies that have been hit hard often have some offline business component that is difficult to replicate online (for example, events, travel, etc.), or require international shipment or assembly that has been impacted by confinement and transport. Yet, companies that have seen more of a positive impact include all tools for remote working, online entertainment (or anything that enhances online experiences), medical equipment or tools, and local delivery-related startups. I mentioned 2 Station F delivery-related startups, Phacil (medicine delivery) and FamilEat (delivery of family-portion meals), that had seen growth in an interview I did with BFM Business — but there have been many others as well.
Tech with a cause.
With the Covid-19 crisis, one of the immediate reactions from the local startup ecosystem has been: how can I help? We’ve seen many startups offering free services and in some cases launching new services in order to help others. In fact, prior to announcing confinement measures, the French government had actively approached the startup community asking for startups to come forward with solutions that would help during the crisis. In the medical space, we’ve seen examples like French-unicorn Doctolib offer free medical consultations online via their platform, insurtech company Alan launch a special Covid-19 offer during confinement and many, many more (impossible to list them all). But many smaller companies are stepping up as well. At Station F, a large number of our companies immediately began offering their tools and services to support each other — B2B and B2C alike.
Another response that has been incredible to see is the development of #ProtegeTonSoignant, an initiative to help medical professionals get the materials they need. A number of entrepreneurs and investors from the ecosystem have come together — including the cofounders of companies like PeopleDoc, Leetchi, Zenly, Deezer and more — and have already raised over €1M of their €2M objective to deliver medical equipment to hospitals in France. (PS: Please donate here.)
Still funding? Still hiring?
While we’ve seen the odd startup announce funding (or better yet — this one or this one! though not French), likely these rounds were closed earlier in the year. Many VCs have turned their attention to their portfolio companies. They continue to say they are “open for business” but have specified that this isn’t necessarily business as usual (examples here and here). That said, I’m hearing more and more VCs talk about their interest in recession-proof businesses or highly “sticky” or agile businesses. Fortunately, I’ve personally heard less about local VCs behaving badly and have been pleased that many VCs in our community have reached out to offer guidance to our companies and more. To top it all off, the French government has announced a €4 billion plan in startup financial support during this time.
With regards to hiring, a lot of French startups have opted to furlough rather than lay-off staff (thanks to generous French government grants that help cover salaries during this time). We even see startups that are still hiring — these companies are very much in line with the same sectors and products that are positively impacted by the situation. And for companies that are letting people go, we’ve seen lots of great initiatives to connect laid-off talent with new roles at leading companies.
Life after confinement.
It’s still perhaps early for us to have a grasp of what life will look like after confinement and the lasting changes. That said, we have a pretty good idea of which confinement behaviors will stick (probably a majority of them). Ecommerce/online marketplaces, logistics/delivery, pharmaceuticals, online-health platforms, video conferencing and remote working solutions, and online entertainment will probably all continue to see post-crisis growth. Travel, physical retail, and events-related businesses will probably take more time to recover. there is any new service or experience to develop online, now is the perfect opportunity. Where many digital services may have previously been met with resistance, the crisis has literally catalyzed adoption overnight — which is not an opportunity that should be overlooked.
The other long term effect that I am expecting to see is perhaps more related to ecosystem behavior. As with all crises, there is perhaps a reality and a consciousness that sets in. Entrepreneurs and investors will hopefully turn their attention to more responsible and impact-driven innovation. We’ve already seen a lot of positive behaviors, let’s hope it keeps up.