While many businesses are struggling right now, the impact of COVID-19 is not universal...
While many businesses are struggling right now, the impact of COVID-19 is not universal. Some startups are actually thriving amid the COVID-19 pandemic, highlighting that meeting the needs of the public remains one of the best ways to attract both investors and customers.
For startups worried about making it through these challenging economic times, it is important to recognize that some of the world’s most recognized companies sprung from situations like this. In fact, more than half of Fortune 500 companies launched during a recession or bear market. For instance, the Walt Disney Company was founded during the Great Depression. More recently, companies like Airbnb, Uber, and Venmo were born out of the changes fueled by the Great Recession of 2008.
Finding Startup Success in the Pandemic
Many startups that are flourishing during the COVID-19 pandemic focus on solving a problem that has been exacerbated by the crisis, such as reliable and affordable access to personal protective equipment (PPE). Companies like High5Hands (High 5) have created pathways for companies to access these products in bulk. High 5 is a Philadelphia-based company specializing in the direct sourcing and distribution of sanitization products and PPE; it supplies stadiums, malls, and other large organizations to ensure safety.
Other successful startups are meeting new consumer needs created by the pandemic and our new “safer at home” lifestyle. Home beauty, wellness and exercise products have all seen significant growth during the pandemic. According to Statista, Americans downloaded 2.6 million home fitness apps in March alone.
Gaming has also seen rapid growth during the pandemic, as we seek to safely “connect” with family and friends. Gaming platform Roblox, which is popular with children, saw a 40% increase in usage from February to March of this year. Esports startups also saw revenue boosts, as players looked to connect with peers and fill the void while professional sports were on hold.
Keys to Growth Amid COVID-19
Even in the midst of a global pandemic, there are still plenty of investors looking for promising business opportunities. In many industries, there may even be less competition for funding due to the economic impact of COVID-19.
While COVID-19 has changed a lot over the past eight months, the keys to success have largely remain unchanged. Investors are still looking for startups with a solid business plan and an experienced leadership team that can execute it.
Investors will closely examine the background, knowledge, and skills of your leadership team to determine if they have what it takes to run the company successfully. Given these challenging times, you should be prepared to show how your team’s experience can be used to manage the obstacles your new company will undoubtedly face.
Investors are also looking for companies that are bringing something new and different to the market. Therefore, you should be able to clearly demonstrate not only that your product or service is unique and innovative, but also that it capitalizes on a void or need in the particular industry.
For instance, High 5 is succeeding because it has direct access to the manufacturer of a limitless supply of products in high demand right now and can be a one-stop-shop for PPE, which has become a top priority for many businesses. Similarly, fitness company Mirror has taken off because gyms have been forced to close in many parts of the country, and, even where they have reopened, many are still leery of working out in public. Mirror’s success is due largely to its ability to bring live workouts directly to users in their homes.
Key Takeaway
While economic recessions can make or break a business, they can also present new opportunities. By focusing on what your company can do to meet a new or changing need, you can put it in a position to capitalize on them.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Ashley Brinn, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
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