The Role of Startups in Economic Recovery
Published on: 15.06.2020
The operations of many innovative startups and SMEs worldwide have been facing the existential threat since the COVID-19 outbreak. However, it was the existence of e-commerce, video-conferencing, and digital health startups that made possible the unexpected switch from what once was the standard workplace or shopping experience to the new COVID-19 normal lifestyle. While travel, transportation, accommodation, and even 3D industrial printing startups faced difficulties because of lockdown measures, reduced financial reserves, lack of funding, diminished demand, or even logistical or bureaucratic issues.
According to a survey on the impact of the COVID-19 on global startup ecosystems, released by startupgenome.com in April, over 40 percent of startups had only three months’ worth of financial reserves.
Moreover, 74 percent of startups had to terminate full-time employees. At the same time, 74 percent saw a decline in revenues, while only 12 percent of startups saw their income increase since the beginning of the crisis.
Like all the previous crises, the coronavirus will be no exception when it comes to the opportunities that it will create for startups and small and medium-sized businesses. All will depend on the industry where they’ll operate and their ability to get acclimated with the new coronavirus reality.
With hundreds of thousands of jobs going remote, more people would consider returning to their hometown or living in less expensive areas. Freelance or full-time remote employees have already been a trend for tech startups. Now it’s becoming the new norm among tech companies. This will give people and companies the opportunity to go for a global workforce/workplace.
On one hand, startups seem to be the most adaptable businesses to the current and post-coronavirus situation. The crisis has shown a need for fast-adapting and creative businesses.
Such startups need to be ready to seize their moments as other successful enterprises have done during previous crises. The new founders can be youth, young adults, or even adults that have enough time and have found a good opportunity to grow a business. Besides, time and funding they will need a set of entrepreneurial skills such as opportunity recognition, problem-solving, creativity, dealing with uncertainty, emotional intelligence, as well as sustainability skills.
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According to the World Economic Forum, the global startup economy was valued at 2.8 billion dollars in 2019 and it has about three to four times faster than the rest of other economies. Such figures highlight the importance of startups’ role in economic recovery. Given their small size, startups, and SMEs and fast growth, startups have been driving long-lasting good jobs. Tech startup communities are known as promoters of gender equality and help to reduce the gender gap in a sector where women are not so much involved. More women in tech startups contribute to increasing access to education and digital skills among girls and women.
Innovative startups can become successful in every sector from healthcare, to agriculture and food security both in developing and rich economies.
What type of startup idea would you propose to promote economic growth and job opportunities in your area? You can join the Entrepreneurship Campus global network of innovators and create an idea of how people in your area or country are trying to innovate. If you already have an idea or project that promotes Sustainable Development Goal 8 or any of the 17 SDGs, join the Citizen Entrepreneurship Competition.