Introduction
Crisis-born startups are companies founded in response to major crises to address significant problems emerging in the industry. These businesses capitalize on the need for solutions created by crises to address the issues. Many startups got opportunities for new business during the COVID-19 pandemic due to increased demand for hygiene products and online work solutions.
While global crises present hardships, they also create opportunities to develop new products and services. The COVID pandemic boosted the growth of telemedical platforms, digital finance solutions, and remote work services. Other industry giants like Uber were also founded during difficult times like the financial crisis while addressing the need for affordable transportation services. They capitalize on the change in economic shift and consumer behavior.
Another company founded or grew during financial or other crises is WhatsApp, founded during the 2008 recession. The logistics firm FedEx was introduced during the 1973 oil crisis, and it capitalized on the need for package delivery during fuel price fluctuations. These companies addressed urgent challenges with innovative solutions while providing opportunities to startups.
These startups are improving productivity while creating unique solutions across the industry. This article mentions the transformative role of crisis-born startups during challenging times and how they explore unique solutions while teaching lessons to entrepreneurs from this crisis.
Some of the startups born from past crises:
The 2008 financial crisis:
The global financial crisis in 2008 affected the economy leading to job losses. However, it also gave birth to many well-known companies that were able to succeed due to changing customer demand and adaptability. This financial crisis, known as the Great Recession, was caused by excessive mortgage lending to people not qualified for home loans. Here are the companies that were launched to address the challenge:
Airbnb:
Airbnb was founded during the financial crisis as a cheaper travel alternative. The company also provides rental services by connecting people looking to rent the house, creating opportunities for homeowners to rent their spaces. The firm offered solutions to reshape the hospitality industry.
The company has raised over 2.5 billion USD across three funding rounds, including $1 billion secured from Silver Lake, Sixth Street, and other investors during its series E funding round. The firm also receives investment from General Atlantics.
Uber:
Uber is a transportation company that provides a ride-hailing platform to connect people with drivers. The company was founded during the financial crisis to create flexible income opportunities. The crises led to the rise of ride-hailing services. The platform provides services including food delivery, vehicle rentals, and taxi-hailing.
The EV firm has raised around 13.2 billion USD across multiple funding rounds. This includes a $2.23 billion Post IPO round. Uber faces competition from other ride-hailing platforms like Ola and Kakao Mobility.
WhatsApp:
The private messaging platform WhatsApp was created to provide free messaging service over the Internet. During a time when SMS cost was high, WhatsApp revolutionized communication by offering free and secure real-time messaging services. The platform also has features including video calling, file sharing, and more.
The company has secured over $58.2 million from three funding rounds, including $30 million raised during its series C funding round. The startup was acquired by Facebook for 22 billion USD in 2014.
The COVID19 pandemic:
Even though global industries faced challenges like reverse migration of the workforce due to the COVID-19 pandemic in 2020 leading to a decline in the economy. It also reshaped industries globally by making people adopt digital solutions. These are some of the companies launched as a response to the pandemic:
Zoom:
Zoom is an online video conferencing platform that grew during the COVID-19 pandemic. The company received attention by helping people navigate remote work. Virtual meetings reduced travel expenses and allowed collaboration online without physical barriers. The cloud-based platform can also be integrated with Dropbox.
The company has raised around $157 million across four funding rounds since its inception, including $115 million secured during its series D funding round. The company has investors including Sequoia Capital and competes with other video conferencing platforms like Skype.
Healthtech startups:
The lockdowns and social distancing norms became a blessing and driver of growth for the healthtech sector. The rise of health tech startups such as telemedicine platforms and AI-driven diagnostic tools transformed the healthcare landscape. These startups addressed challenges like affordability, accessibility, and quality of healthcare services in rural or backward areas.
Remote work tools:
The pandemic also opened doors for companies to develop remote work solutions, leading to the launch of project management tools like Slack, Trello, and Notion. Digital tools and services gained massive adoption to overcome the communication or task management problems. At first, employees faced difficulties using online tools in their daily working routines, but remote work solutions gained attention over time to ensure productivity and work efficiency.
Industries that thrive during crisis:
The sectors that provide use essential without which we cannot live do way better during global crises and recessions. These sectors include healthcare, utilities, fintech, and more.
Health and Biotechnology: Healthcare is a sector that thrives in any condition because people can get sick at any time. This sector is not likely to have job losses at the same level as other industries. Telemedicine platforms like Practo and rapid vaccine research or developing companies like Moderna saw exponential growth during this time. Mental health apps like Headspace also saw increased demand.
Financial platforms: Financial advisors and fintech platforms play an important role in making payments and seeking stability of investments while asking for guidance to protect their assets during recessions. Fintech startups like Revolut and Paytm also grew during the COVID-19 pandemic for cashless transactions.
Digital platform and collaboration tools: In tough times like the pandemic where social distancing slowed down businesses, remote work solutions like Zoom gained public attention. These video conferencing platforms such as Google Meet and Microsoft Teams transformed the working culture. Project management platforms like Trello also became essential.
Logistics and e-commerce: Online shopping was at its peak during the pandemic and e-commerce startups like Shopify and Amazon benefited the most from it. Last-mile delivery services and innovative solutions improved urban logistics efficiency. E-commerce platforms also helped businesses to adapt to COVID-19 by enabling them to join digital platforms to increase audience reach.
Crisis creates some sense of urgency which forces companies to find unique solutions and rapidly adapt while breaking traditional barriers which promotes innovation. This encourages organizations to experiment with new things and address problems by creating a pressurized environment to push people to think out of the box and explore unique approaches. Immediate challenges often ask for immediate solutions making companies drop their priorities and find more effective solutions.
The pressure of crises can motivate companies to take risks and experiment with new things. During the crisis, governments and investors often fund innovative startups to find a solution quickly. The global crisis also changes how people interact, create, and adapt to new services, leading to new market demands. This also creates opportunities for tech-driven and other startups.
Challenges faced by Crisis-born startups:
Crisis-born startups have enough potential to transform the ecosystem across various sectors, but they also face significant challenges like funding uncertainty and scalability problems. These startups often lack the funds, as these companies are founded during the crisis when the economy goes downhill. This makes it hard for them to secure funding.
The crisis also creates rapid shifts in customer preferences, behavior, and regulations making it difficult for companies to follow trends and meet market demands. Crisis-born startups also struggle to grow and scale after the crisis subsides, due to having been made only as a solution to tackle crisis.
Lesson from successful Crisis-Driven entrepreneurs
A successful businessperson focuses on customer needs, has rapid adaptability, and can create opportunities amid challenging situations. The founder of Airbnb, Brain Chesky emphasized the customer-centric innovation and flexibility of the business as two of the key aspects of successful business. These are some of the key aspects of being a successful crisis-driven entrepreneur:
- Resilience & Adaptability: Entrepreneurs who maintain a positive and determined attitude while navigating setbacks and can adapt to market needs.
- Strategic partnership and Decision-Making: Rapid decision-making skills can determine a startup’s success. Collaborating with other organizations and businesses to combine expertise and resources during the crisis.
- Learning from failure: A successful entrepreneur always views setbacks as a staircase to growth and develops more solid plans to create its impact.
Conclusion :
The startups born in times of crisis are developing groundbreaking innovations. These startups have immense potential to revolutionize the industry. Entrepreneurs who recognize and create opportunities amid crises can build businesses by capitalizing on the solutions. The recent crisis was the COVID-19 pandemic that introduced remote work solutions, fintech, and many other sectors.
The next wave of crisis-born startups will emerge in climate tech and healthcare innovation. To succeed in the crisis-born sector you must turn obstacles into opportunities to create innovative solutions with meaningful and lasting impact.
Niraj Kumar is the Founder and CEO of Scoopearth, bringing over 13 years of experience across diverse domains, including journalism, content marketing, digital marketing, startup mentoring, and business coaching. His extensive background and leadership have made a significant impact in these areas, helping startups grow and succeed in a competitive landscape.
Reach us: niraj@
Linkedin Profile: https://www.linkedin.com/in/digitalnirajj/
Read the full article here
:max_bytes(150000):strip_icc()/GettyImages-1570624576-8ba8909c093647dcadaa465484124027.jpg "4 Ways To Use ChatGPT To Build Your Wealth")