Here I am at the frontlines of the startup world. I may not be saving lives or stacking shelves but as an entrepreneur, I am tasked with saving my business. Having lived through the natural ups and downs of being a startup founder, the ramifications of a pandemic gripping the world are something most of us never saw coming. Whilst we are daily problem solvers by profession, this was something we were not quite prepared for. Entire business models are being questioned whilst many industries are shutting down, albeit temporarily.

It ultimately boils down to the kind of business you run but all-in-all there will be unprecedented challenges and opportunities that will come about by the impacts of Covid-19. At a minimum, adjusting to a remote workforce can be trying on the operations of a business and in fostering collaboration amongst team members. The digital infrastructure we have built over the past decades is being put to its biggest test.

But there is something unique to a pandemic. When a war ends, one side wins. When economic pressures are felt, we can rebuild and come back as we saw with the 2008–09 financial crisis. A pandemic brings about changes that cause far deeper damage — most notably a major loss to human life. As we barrel towards a recession, there are those who believe the effects will be more like those felt during a depression. As most of us globally sit in lockdown with entire sectors of the economy on pause, it can feel like our startups will disappear into thin air.

When the world is battling to preserve human health, the very premise of our existence, a pandemic can shine a light on the ugly side of capitalism. Have we as a society focused exclusively on profits and growth? Are our missions aligned with strong human values? These are some of the questions that are bound to pop in our head as we work through yet another PowerPoint presentation, which is suddenly of less relevance.

And a pandemic spares nobody. Whether you are Yelp laying off 1,000 employees and furloughing another 1,100 or Airbus reducing aircraft production by approximately 33% in response to a changing marketplace, every business will be forced to adapt to this new reality.

So in the face of such grave financial damage, where do startups fall in all of this?

Is now a good time to be a startup?

Yes and no. Recessions are historically known to be the best time to launch a business. The next 12+ months will see us experience a drastic decline in economic activity. That being said, the current startup environment is ugly due to the sales and liquidity crunches but those that launch in the coming six to twelve months are timed for success.

After the 2008 financial crisis, we saw the birth of many current unicorns — Airbnb, Instagram and WhatsApp to name a few. During bull markets, companies that are founded often resort to mediocrity shielded by the hype and rigour of a booming marketplace. In downturns, businesses are forced to be resourceful and solve pressing global problems whilst keeping expenses low. This fosters their success in the long term. So whilst now may be a hard time to keep an existing startup afloat, it can be a great time to develop the foundations for a future business.

So what are the sectors of the future?

If you are an e-commerce company selling essentials or a delivery company providing groceries, it could not be a better time. According to a report by Statistica, the US digital grocery shopping share is projected to climb from 3.8% in 2017 to 10% in 2020. This was reported prior to the surge of pandemic shopping, which suggests the online grocery channel will further accelerate its share of the total grocery market. As retail is forced to innovate and adapt to online commerce more swiftly, several opportunities will present themselves in this arena. Digital experiences will become of greater importance.

Whilst the hotel and hospitality sectors have faced the biggest blows, restaurants have been forced to find ways to innovate to curbside options. Takeaway options are not always adequate — meal kits accompanied with instructions to recreate dining experiences at home are a new source of revenue for dining establishments. The future economy will have to learn to be independent of physical boundaries.

And for this reason, we will see tremendous opportunities in healthcare and education. Given that over 80% of the world cured their spells of Covid-19 at home, it emphasizes the importance of telehealth. So how then will we bring more healthcare options to our homes? Do we have intelligent cameras at home where we can consult with a doctor who can then prescribe us medication, which goes straight to our local pharmacies? If a pandemic can be treated at home, it should mean many common illnesses can. A study published in the Annals of Internal Medicine shows that healthcare administrative costs in the US are 34.2% of health spending, which can be grossly reduced by untangling the many complex layers of seeking healthcare. Digital will be the answer.

With millions of children attempting to learn their daily lessons via web conferencing platforms as schools were forced to shut their doors, digital solutions become of greater importance. Education technology companies will present dynamic new opportunities to teach students free from the constraints of a campus or school.

And so what are VCs up to?

The lifeline and liquidity for many startups is venture capital. Whilst, VCs are very much in business, their propensity to invest in new startups is slim to none. The trust that can be formed from an in-person meeting and the rapport required for a sizeable investment cannot be built virtually quite yet. Hence, VC's focus will shift from deal sourcing to exclusively managing existing portfolio companies.

CEOs of numerous startups are being told by their VC investors to list out their employees in order of priority and then draw a line halfway down the list. Anyone below that line is being laid off. Whilst this can be harsh, it’s the fastest way to conserve cash, which ultimately lengthens a startup’s runway.

The current focus for most VCs is to identify startups in their portfolios that face the most risk and salvaging those who may stand a chance. Then there are those startups that are positioned to benefit from new opportunities. As far as pitching new business — those running businesses in luxury goods or travel, for example, are highly unlikely to get noticed. Every venture will have to adapt to the reality we face and tweak how their business is aligned with the new marketplace.

Seed stage funding has taken the hardest hit. According to a report by CB insights, “seed-stage funding, which accounts for many startups’ first major foray into raising capital, is projected to decline 22% in Q1’20 compared to Q4’19.” Smaller VCs and Angel investors’ appetite for risk will also decline. As a result, existing early-stage startups will find it much harder to survive.

And what about global trade?

According to the World Trade Organization, global trade is expected to fall by between 13% and 32% in 2020. In the financial crisis of 2008–09, governments intervened through monetary and fiscal policy to buffer the economy from the downturn and provided businesses and households with income relief. Whilst similar measures are being implemented today, the restrictions on movement and enforced social distancing measures are disrupting supply chains, transportation and travel, which are unlike the impacts felt in the last recession. Services trade has been slammed the hardest with the shutdown of the travel industry bringing the movement of people to a halt.

These changes will spur about radical changes in startups who depend on foreign manufacturing. With a focus on essential manufacturing, now may be the perfect time for a pivot or to explore opportunities better suited to the current environment. With the virus wreaking havoc on global supply chains, technologies that better manage and provide visibility into company operations will be essential. In the 2008–09 crisis, there was a 9% drop in world trade (WTO), which is still lower than the most optimistic scenario present today. As countries look to become more self-reliant in the future, startups will have to rethink their expansion strategy and the way they participate in the global economy.

So then how does your startup keep up with sales?

Many startups that are still in a position to bill their customers are finding that now is the time to focus on deepening sales with existing customers as opposed to trying to sell to new customers. Since it is hard to build a rapport over a phone call, working with existing clients with whom you already have a level of trust, is the best bet to further expand on product and service offerings.

If you are a software provider, now is the time to work with your current customers to deepen the value they derive from your product. This may mean adding new features or onboarding more employees onto the platform. Another option is to offer discounts for advanced payments. This can help you generate early cash flow to tide you over. Trying to sell to new customers in the current environment will be virtually impossible.

Manage your time by focusing on business activities that make sense given the current environment. Reduce marketing spend. Freeze hiring. Closely monitor your messaging and brand. It’s down to survival mode.

So whilst, there is no single answer as to how Covid-19 will impact your startup, there are definitely changes we all have to adapt to. Some startups will survive, others will fail and a bunch will thrive. Whilst we cannot control the pandemic, we can control how we adapt to the changes brought by it. The world we return to when this is all over will not be the same. Unprecedented challenges bring about unprecedented opportunities. There are lots of problems we still need to solve. We will need more entrepreneurs. More innovators. So find ways to come out of this stronger and more resilient than ever before. Because in a decade from now, your startup might be another unicorn.

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