What startup funding will look like in a post-Covid-19 world

The first challenge facing startups in America, Europe and the rest of the world is to survive the pandemic. Not many have survived, and many others have hibernated while the storm has lasted. The fortitude to restart after such a huge blow can be even harder to come by than the fortitude they needed to start in the first place. 

The National Venture Capital Association hasn’t added any cause for optimism in its new report detailing how the coronavirus will impact startups in the coming quarters. The NVCA started the report with the grimmest prediction, “Fasten your seatbelts, it’s going to be a bumpy ride”. The NVCA expects VC investments to “drop significantly.”

A lot of VC’s will take this time to do more of a reappraisal of their current portfolios than taking up new deals. However, some startups are still well poised to still garner some support in the funding sphere. 

The industries that will continue to thrive

According to Oxfordbusiness, “Startups that performed well during the implementation of social distancing and lockdown measures might offer favorable opportunities to investors amid the uncertainty, while the changing investment environment is set to add impetus for greater collaboration and renewed risk evaluation”

The pandemic hit most industries, but not every industry went under. Industries like the cannabis industry saw a renaissance of sorts during the pandemic as arguments were passionately made in favor of CBD-based businesses as essential services during the pandemic by scientists and psychologists. CBD-based businesses were later declared to be essential by many states in the US and Europe. 

This good-fortune created immense innovation within the industry in such a short time with many CBD businesses implementing curbside pickups for CBD using patients and growing their Income significantly within a period when many other industries were in a downturn, signifying great optimism for creative startups in this industry. 

Food delivery and supply services also thrived significantly mid-COVID with the US Chamber of Commerce declaring it one of the most improved industries during the pandemic. The reason is simple, people now spend much more time at home than at restaurants. 

In many states, restaurants were shut down completely. The US Chamber of Commerce highlighted companies like Eat Clean Bro, a meal prep and delivery service operating in New Jersey whose orders went up over 40% and Cannizzaro Sauces, a North Carolina based canned and jarred foods business that also saw a significant upsurge in sales. 

These are just a few of the many industries that thrived in these times. However, many of these businesses have done a great job serving their customers in this period, so much so that they have caused a shift in Investors perception as well as in culture, a culture where they and businesses in their industry are likely to remain a mainstay and hence, attractive for investment.

Startups with social impact are likely to gain more support

The coronavirus coincided with a significant rise in a push for social justice after the callous killing of George Floyd by a Police officer in the U.S. No one was quite prepared for the response that the world gave to George Floyd’s killing; an international uprising that spanned countries in every continent and a loud outcry. 

The effect has been tremendous with statues of people having confederate connections coming down at an alarming rate and with institutions naming holidays and schools after causes and people sympathetic to the Black Lives Matter movement (BLM). 

This has not just brought to the fore the issues of systemic racism and social injustice that exists in America, it has also highlighted more than ever the need for clear social impact angles in businesses. 

It is becoming increasingly necessary for businesses to integrate a social impact angle, not just as an extra, but as a core part of their business strategy. This pandemic and the many companies that stood up to be counted in helping societies survive alongside the rapid reactions of companies to the BLM movement all over the world have more than ever established the necessity for social impact in the design of startups and businesses. 

This sentiment is not just held on the part of VC’s and Investors but is a mindset that is beginning to dwell in the minds of the everyday customer. The need to be socially relevant has risen beyond corporate social responsibility, this is now about a socially responsible design in business structure. 

Companies like Charitable have succeeded in building a strong socially-relevant business model, their demonstrated ability in getting renowned celebrities and influencers to endorse and promote their client businesses is based squarely on the fact that all their campaigns support a non-profit cause. 

This way, the Influencers do not promote the companies’ clients for the sake of it, but they are supporting the social impact cause against which the brand is laid.

This sentiment has become a key index in informing VC’s and Investors on what startups to fund and so Startups must incorporate clear social impact strategies into the core working of their business if they intend to attract funding much easily.  

Niche crowd-funding platforms will rise

Crowd-funding has in the last decade risen to the fore as a plausible means of raising capital and general funding for your business. However, while we have all gotten conversant with Platforms like Kickstarter who have done an immense job in helping startups across the board acquire funding, we are now forced to consider other platforms more closely in the wake of this pandemic. 

Niche-based crowdfunding platforms are already beginning to make their statements as the need for professionalism and precision in investment becomes necessary post-COVID. The idea behind their gradually rising relevance is that brands stand a greater chance of getting funded on a platform-specific to their industry because all investors that invest in that platform are in a sense looking for them. 

There are a number of lesser-known platforms who have been doing an amazing job before this pandemic and who are now poised to make an even greater impact. 

This trend is likely to grow and not let up as Investors aim to re-assess and streamline their portfolios after the heat that they have had to bear from the pandemic. 

In time, our states will fully reopen and business will resume. It may not be business as usual, but we must all find a way to move on. Just as there are many ways to catch a fish, there are many ways to keep your startup alive. Just know that your first step is to decide to strive on and not to faint.

The post What Startup Funding Will Look Like in a Post-Covid-19 World appeared first on Entrepreneur and is written by Chidike Samuelson

Original source: Entrepreneur

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