Covid-19, Vision

Startup Nation - Pandemic and entrepreneurship

  • 02 February 2021

Reading time: 9 minutes

Times are tough in 2020 but even during a global pandemic, businesses are being born and finding investors willing to back them.

I said to myself: If I don’t do it now and make the leap I’ll never know if I could have made a success of it.

Camilla Upson, Founder of Nue Hoops
Entrepreneurs are the lifeblood of any economy. So, the ease with which business-creators can get startups off the ground is a vital measure for any nation’s prospects. The disruptive effects of the last nine months on established businesses have been unprecedented in our lifetimes. Many sadly will not make it and those which survive will do so because they have undergone considerable adaptive transformation.
But what effect has Covid-19 had on startups? The disruption caused to well-established businesses is well-documented. But what effect has the virus had on entrepreneurs' appetites for trying to bring a new idea to market and how easy are they finding it to attract investment? Is it true that new openings and opportunities, gaps in markets have become newly visible? On a practical level has the lack of face-to-face meetings, conferences, trade fairs - the traditional oil in the gears of commerce - made establishing markers for good and services more onerous?  
Huge upheavals such as deep economic recessions or pandemics may or may not be true “black swan” events but there is no doubt that they change the trajectory of government policies, economies and businesses. They can alter the course of history. For example, the Black Death in the 1300s broke the long-ingrained feudal system in Europe and replaced it eventually with something that looks more like the modern employment contract.
Three centuries later, SARS, which ran from 2002-2004, catalysed the rapid rise of a then small ecommerce company called Alibaba which was the start of a journey to making it at the forefront of Asian retail. Growth was fueled by deep anxiety surrounding travel and human contact similar to what we are seeing today with Covid-19. Likewise, the financial crisis and Great Crash produced disruptive offshoots like Airbnb and Uber which had their origins in sharing assets among times of lower income and savings for many people. It may have been one of the worst times for the global economy but the years right after the financial crisis were among the best ever for startup investments.
This is part and parcel of what Schumpeter, the legendary Austrian political economist, termed “creative destruction.” 

Starts Go Up During Lockdown

We know that globally things are happening in M&A. A resurgence in activity led to the busiest summer for blockbuster deals in three decades. The combined value of $5bn-plus deals worldwide soared to $456bn in the three months to September, (Refinitiv) as executives looked for ways to reshape companies in order to cope with the fallout from the pandemic and investors look for value in a fast-changing business world.
These are the well-established mature Leviathans of the international business scene. But what is going on at gestation level and among those companies that are newly entered into the world? 
Francesca Warner is an entrepreneur, being one of two founders of Ada Ventures. And she invests in start-ups. This makes her extremely well placed to take the temperature of the market. 
London-based Ada Ventures (named after Ada Lovelace, the first computer programmer) which launched earlier this year  “on a mission to make venture capital truly accessible to the best talent in the U.K. and Europe, regardless of race, gender or background.” It controls a new $34 million (£27 million) fund, designed as a “first-cheque” seed fund. Accessibility and diversity are key themes because at present, 92 in every 100 dollars invested in Europe goes to all male teams, 83% of founders are white, 82% are university educated. In the UK, a quarter of investment committees saw no female founders in 2017 and 72% of Venture Capital funding is invested in London alone.
“Tech has been the big winner in both the public and private sphere,” says Warner.  “There is currently an enormous amount of capital finding its way into tech from every angle. You only have to look at valuations for Hut and Snowflake to see this. However, within tech - as all industries - there are winners and losers. Travel is suffering as are service-based marketplaces but there are tailwinds out there as we go from 20% of the economy being e-commerce to 35%”
Warner and Matt Penneycard, Partner at Ada, have made six investments including £2 million into a childcare website called Bubble. Bubble is a childcare and babysitting marketplace on a mission to become the destination site for flexible, accessible and trusted childcare.
Childcare, say Ada, is an underserved and overlooked market. Parents are increasingly in need of childcare. As the world becomes more globally dispersed, families are living away from their parents and friends who might previously have provided childcare. One million more mothers in the UK are now working compared to 10 years ago and the number is increasing, with 70% of mothers now working flexible hours - a number that has increased considerably due to Covid-19 - and fathers too. A nanny is unaffordable for most people and others are working freelance or shift work and therefore need flexible (rather than 9-5) childcare. Millennial parents in particular are entirely accustomed to using their mobiles to book their every-day services quickly, securely and on the go. 
Covid-19 has also, of necessity, altered the way in which investors do business with early-stage companies. As Warner says: ”We used to be very concerned about meeting as many people within the organisations we looked at. But we’ve made fully remote investments since then doing everything via Zoom. It’s possible we may not actually meet them now for years. In tech you’re very accustomed to distributed workforces, anyway.”
Warner, while aware of all the uncertainties that surround Brexit, believes that London still has a strong hand to play. “Tech is global. The UK and Europe benefit from a centrally located time zone. London still provides vital access to capital markets. The US and its election have unclear implications and China is facing a challenge with a potential trade war. Scaling can be a problem in the UK and how the country addresses the vital issue of access to international talent via Visa schemes is crucial. So, UK fundamentals are good, but we must keep going and protect them. Finally, there is also the strong sense that globally - and I mean American investors - find lower valuations in Europe. They feel they can find more for less. “

Tech has been the big winner in both the public and private sphere

Francesca Warner, Partner at Ada Ventures

A Covid-19 Startup in Rude Health

Camilla Upson’s startup is an online-only jewellery business called nuehoops.com. It designs and makes earrings combining a hoop and small additional charms. She actually took the entrepreneurial plunge during the Covid-19 lockdown, resigning from a job as a Comms and Marketing Executive in a leadership training consultancy. She had never run her own business before.
“I left the deserted streets of London to stay in the countryside with my mother in March. Things generally felt apocalyptic and with the time I had after completing my then day job I just started hustling and going for it online. To my complete surprise, it took off. I think many people have been sitting at home bored, doing business stuff and online shopping for themselves became an escape. Our products aren’t like ties, or suits, or very expensive clothing that aren’t being used so much with people not going out. In a Zoom culture women (and men) only have their head and shoulders visible and wearing something attractive makes a good talking point. We’re also a demi-luxe, guilt-free purchase. It’s not Tiffany but neither is it cheap rubbish.” 
“The ear hoops on which the charms sit start at £20 and the charms themselves are priced between £12 and £30. We were featured by two very popular social media influencers on Instagram who chanced on our things and suddenly in May we were off. Sales started climbing and climbing with my mother, sister and I packing on the kitchen table and my mother driving off to the local post office.”
“I said to myself ‘If I don’t do it now and make the leap I’ll never know if I could have made a success of it.’ I had a very honest conversation with my boss who admitted to me that he could see what I had to try and that I should never underestimate the power of momentum.” 
So, she resigned the following day. Like many new online business owners, she has learned about Shopify, the popular online store platform, the hard way. The business is growing rapidly and is well into a six-figure turnover within six months and Camilla is looking forward to the Christmas period which is traditionally the most active for the jewellery sector. “It’s scary but exciting. And working with close family members can be emotionally a bit brutal. But the time was absolutely right.”