With compassion and innovation, the world will emerge stronger
As the COVID-19 pandemic continues across the world, we are trying to adjust the way lives and businesses operate against a backdrop of such unprecedented change.
This crisis, of course, is uniquely human. It affects each of us personally, and we feel only compassion for those personally affected by COVID-19 – whether they are suffering due to illness or supporting loved ones.
The economic crisis that is unfolding in parallel, however, is historic. It is the first time that we – governments, industries and global stakeholders – have actively chosen to slow the economy to save lives. This is not the bursting of a bubble – this is a triumph for empathy and compassion first, and innovation next.
We’re seeing all types of businesses pivoting to invent solutions to slow the spread of the virus, or to support a new world of widespread remote working and stay-at-home commerce. Several businesses in our portfolio are already making an impact upon this new landscape.
Without doubt, many companies, particularly those with limited access to capital, are under threat, including many tech start-ups. But those who innovate – and do it fast – will navigate this crisis better and, in some cases, even benefit from it.
Companies with resilient business models and innovation at the heart of their strategy come out stronger. Crucially, the approach of the tech sector has shifted over the past decade too. Many technology businesses, including a substantial proportion of our portfolio, now work predominantly on recurring revenue models.
Demand for their services is not going anywhere either, and as a result, they are in a strong position to weather the economic turbulence caused by the COVID-19 outbreak. Those who derive their revenue from providing critical infrastructure for financial institutions, telecoms providers, and multinationals will also do well and become integral to their partners’ long-term success.
Nonetheless, it is inevitable that business pipelines and demand will be impacted – with consumers and businesses trapped, investment and growth will be delayed.
This can be a short-term hit, and market tailwinds towards digitalization and automation will inevitably return to the gale force of recent years. With the necessary rise of mobile and remote working, pushed into practice by isolation policies, companies developing technology that drives innovation and productivity are even likely to discover vast new swathes of customers that suddenly need their product.
Smaller businesses and start-ups, driven by entrepreneurs who are capable of being more nimble and agile than corporations, can respond to these trends quicker and innovate faster, as they are not held back by legacy systems and historic processes.
Once the global economy recovers, these are the companies that will prosper and enable others to do so, too. The strength of innovators, researchers and developers in this part of the world is unmatched – and they are in a unique position to utilize the market opportunity that will now be granted to those who are able to move quickly.
Entrepreneurs, seeking to innovate at all costs, need support. Venture capital has been instrumental in the success of many growing tech start-ups, and pragmatic founders often received funds with a view to spending in the future.
Venture capitalists are unlikely to rush into deals amid the ongoing crisis, and the number of investments this year might be lower. By no means, however, will this be a complete freeze.
Those who require funding injections to drive their growth will still need it, and those who have technologies that must be adapted to the new world of work and commerce may need that capital more than ever before. This is why investors and governments should not turn their back on the world’s start-up innovators.
As this crisis has unfolded, the world has shown compassion and empathy – this can be seen in the personal sacrifices made to slow the virus, the spirit of the volunteers coming forward to support public health institutions, and the financial support for businesses suffering amid sudden shifts in consumer spending.
This global, co-ordinated approach will be the key to emerging from the other side of this crisis.
Now is the time for innovators across the globe to step up and support that new approach – and match compassion in equal strength to help drive the global recovery, saving lives and livelihoods alike.