COVID19: Unanticipated Wins (and Struggles) for Startups
Last week we looked at the early impact of COVID-19 on the startup ecosystem. While some startups are clearly booming in this upside-down world (we’re looking at you, Zoom), the path to success in these challenging times isn’t as straightforward as one might expect. Here, we’ll explore startups that are unexpectedly struggling, unlikely front-runners, and the downside of finding success in a pandemic.
Not All Health Startups Are Thriving
It is fair to say that many health-tech startups are finding themselves in the spotlight: from increased use of tele-health, to changes in billing practices, and amplified interest in public health tracking, medical devices, and biotechnology, these innovative companies are certainly seeing increased investor attention. However, not all healthcare startups are flourishing, and those focused on patients with chronic conditions are facing mounting challenges.
With an overwhelmed health care system, many people suffering from chronic illnesses have been forced to postpone necessary care. “This country’s health care system is in for a second wave of crisis and that’s going to be what happens when people come out of this and all these urgencies, is what I’ll call them, all of a sudden become emergencies because care has been put off.”
— Sarah Hallberg, Medical Director, Virta Health
Virta Health, alongside similar startups focusing on patients with chronic illnesses, is doing what it can to help patients navigate their conditions and better manage certain aspects of their health at home, but standard self-care, like mental well-being and healthy diet, pose additional challenges in times of social and physical distancing.
And, despite the increased demand in their services, digital health companies aren’t immune to the current economic landscape, with an increasing number of them, including Virta Health, succumbing to a round of layoffs in early April.
The (un)Usual Suspects
While many U.S. businesses have been impacted, if not devastated, by COVID-19, a few have experienced surprising growth since lock down orders have been put in place.
Cleancult, a venture-backed startup that manufactures natural cleaning products in zero-waste packaging, has seen booming sales since most American’s received orders to ‘shelter in place,’ with sales on Amazon increasing 8-fold in the past several weeks and doubled on Cleancult’s website.
“People are just not finding cleaning products in stores,” said Ryan Lupberger (co-founder of Cleancult) in New York City, where half of the 15-person team is working remotely, the other half is in San Juan, Puerto Rico.
An increased attention to ‘self care’, and the closing of gyms and exercise studios, has benefited at-home fitness brands as well. Online-only services like Obé, where members can access 14 live classes a day and 4,000+ online classes, have seen sales soaring.
“We have seen a considerable increase in membership across the US in the last few weeks,” co-founder Mark Mullett told CNN Business in an email.
Shortcomings of Success
Overnight success doesn’t come without its challenges. Scough, a Brooklyn-based company that makes wrap around scarves and bandannas with attached hidden masks, sold out of their entire stock in early March. With a now-interrupted supply chain, founder Andrew Kessler is unsure when he’ll be able to resume production. And Cleancult, while sales have been through the roof, is finding they lack the funds to support production.
“We see this huge demand,” Cleancult co-founder Lupberger said, “but we don’t have the dollars to support it.”
Despite these challenges, the potential for new opportunities born out of the current climate remains strong, and we are hopeful that a variety of industries will persist. We will continue to follow related stories and share important learnings on how COVID-19 is affecting the startup environment.
