I’ve spent a lot of time this week talking to support organizations and founders about the Covid-19 crisis – about what’s happening on the ground, how we are responding, and what should happen next.
It’s difficult to see through the fog right now, but the main message is that some companies are thriving, and there is an all-out offensive on the mentoring front despite physical distancing and self-isolation. What’s less clear is how or whether distressed companies will get funding, and what programs will be put in place to help startups through the downturn.
In the worst cases, revenues have dried up, staff can’t work together, and out-of-province sales calls have been scrapped – all in a matter of weeks. But other companies are thriving because their technology can help the current set of global problems.
“One third are in a great position but a third are not,” said Volta CEO Jesse Rodgers. “And there’s a bunch in the middle – they just don’t know what’s going to happen.”
One unique aspect of this downturn is that there has never been a recession when there has been such a strong network of support organizations for entrepreneurs, and these organizations are ramping up their support efforts. They’re helping the founders – many of whom have never been through a recession as adults – sort through online sales, organize remote staff, reduce staff if necessary, and identify opportunities once the world recovers.
“That’s one thing I love about Volta,” said SalesRight CEO Bill Wilson in a quote that could apply to several organizations. “We may not be in the same building right now but the Volta staff and resident companies are all pulling together.”
The focus is on remote mentorship and support, which means the support organizations have to get up to speed on working remotely as they ramp up their programing. Propel CEO Barry Bisson told us his organization reached out to all business accelerators and incubators in the region and offered free access for all their companies to Propel’s online curriculum for assessing product-market fit.
While the support and mentorship piece is already in place, the big issue facing the community is financing. Will government programs be sufficient to help startups and their workers? And will these companies qualify for the programs?
Government bodies are now working through these issues, but there is a need for urgent solutions.
“The startup community is already struggling, and many have already had to lay off staff,” said Venn Innovation CEO Doug Robertson. He added that it’s “hard to go after new markets . . . if you can’t afford the people you need to execute.”
Funders say that equity investments will be made in the coming months. Funding from local organizations like New Brunswick Innovation Foundation, Innovacorp and Concrete Ventures will likely be more in demand as angel investors step back from the startup market. Scaling companies will likely have to consider debt as well as equity funding.
Something that is being discussed in tech circles is the idea that the recession is an opportunity to modernize Atlantic Canadian businesses with the adoption of digital technologies. Just as Keynesian construction projects should improve infrastructure for years to come, the thinking is that emergency funding programs can help companies improve productivity and perform better in the recovery.
Cathy Simpson, the CEO of TechImpact and the Chair of NBIF said: “At a time when some businesses may have been slow to digitize and automate, this is an opportunity for us as a sector to step up and say, ‘How do we help them to get online faster? To get on the cloud, adopt data analytics or eCommerce?’”
A final consensus is that high-growth innovation companies have been a regional success story. Representatives said all parties – entrepreneurs, academia, support organizations and government – should work hard to ensure the sector emerges as unscathed as possible from the recession.
“There’s momentum there and we shouldn’t lose all that momentum,” said Rodgers. “If we can at least keep going with that then we can see some light at the end of this tunnel.”