Innovation & Funding in Times of Crisis...•Innovation in emerging sectors is thriving and...
Transcript of Innovation & Funding in Times of Crisis...•Innovation in emerging sectors is thriving and...
INNOVATION & FUNDING IN TIMES OF CRISIS
WHY THE BEST TIME TO GROW IS NOW
Insight from Andrew Hughes, Entrepreneur & Investor
POSITIVITY Let’s start with that mindset
INNOVATION: IMPACT FOR SOCIAL GOOD
The pandemic is sending shock waves
throughout the business world
But there are a seismic shifts for the
better of our communities, an approach
that must continue
Significant increase in Social Impact
outlook and taking Responsibility
SOCIAL IMPACT &
RESPONSIBILITY
• Prioritizing doing good over profit
• Captains of industry leveraging their
strengths to aid the current situation
• Companies pivoting all over the world to
help others
• Employers are looking after their employees
whether they are working or not
• This is the societal innovation long overdue
INNOVATION Opportunity is coming
IF NECESSITY IS THE MOTHER OF ALL INVENTION
Here’s a thought…
Is this the moment in history
we witness
the end of cash?
Innovation arises from defining moments
SO WHAT IS GOING
ON?
• Innovation is born of necessity
• Technology doesn’t stop evolving in a
crisis - in fact it accelerates
• As economies get upended, certain
markets open up and grow
• Blockchain, IOT, AI and Data
Research, Robotics and other
technologies are critical solutions now
SO WHAT IS GOING
ON?
• Beyond the immediate crisis, it is possible to
see a continuation of the conditions that
have served the start-up world so well
• Monetary authorities will keep capital
cheap and plentiful
• In a world desperate for growth, investors
will be dependent on finding the next
promising start-up unicorn
SO WHAT’S GOING ON
IN SPAIN?
• Over 1.000 Spanish start-ups have joined
the #STOPCORONA movement to use
technology and data to fight COVID-19
• #VENCEALVIRUS #THECUBE Madrid with
hackathon 6000 people to help society
during and post crisis
• GBO member spearheading crowd funding
for ventilators Spain with 80+ delivered
WHAT’S NOT
GOING ON!
INNOVATE NOW
WHY ENTREPRENEURS
MATTER
Start-ups are the #1 Engine
for job creation in modern economies
ENTREPRENEURSFOCUS
• This is an unprecedented time, and all are being
impacted, some more severely than others
• As a business owner, your customers and their trust
are paramount
• You need to be willing to sacrifice short term profit
gains to protect your customer
• Protect your employees
• The founders of some of today's largest companies
did exactly this in the last financial crisis
LET’S THRIVE
• Innovation in emerging sectors is thriving and
providing opportunity in this crisis
• Entrepreneurs thrive and drive recovery in
every crisis:1890’s,1930’s, 1970’s Oil,
1990’s, Dot.com, 2008 and now
• New and young firms are the main net job
creators in the economy, and this is especially
true during recessions - older firms are net
job destroyers
• Countless investments are still being made
• On 3rd April Insight Partners announced a
massive $9.5 billion growth equity fund
COMPANIES STARTED IN THE LAST CRISIS
• Airbnb 2008, $31B
• WhatsApp2009, Bought by FB$19B
• Instagram 2010, Bought by FB $1B
• Uber 2009, $47B
• Pinterest 2010, $8.6 B
• Slack 2009, $15.9 B
• Square 2009, $23 B
• Stripe 2010, $50 B
• Groupon 2008, - $1B
• Abzorba Games, 2011, acquired 2015!
ADVANTAGES TO START-UPS
NOW VS 2008?
• Abundance of cheap government money
• VC money still available for proven tech
• Tech is still a massively attractive investment
• Success have proven the tech value over time
• Tech barriers-to-entry are lower and cheaper
• Cloud vs server infrastructure
• Diverse seam of skilled and remote talent pool
• Multiple distribution channel options
• New models such as SaaS, subscriptions
• Crowd-funding options
2 APRIL 2020
“During and post crisis Tech
companies that sell to
businesses should be able to
count on more dependable
revenues, particularly given a
shift from transactional sales
to subscriptions with the rise
of cloud computing”
INNOVATION, INVESTMENT & GROWTH NOW
Healthcare eLearning Social ImpactChildren’s Content
Remote
Pharmaceuticals Bio Technology Food Delivery eSports Gaming
Blockchain Electric VehiclesInsight & Research
AI & Deep Tech Cyber Security
VC INVESTMENTLET’S THRIVE
INSIGHT
Northzone EU, Hoxton Ventures London, HV Holtzbrinck Ventures Berlin, Kibo Ventures Madrid, Mundi Ventures Madrid
• Investors are still investing but expect them to take longer than usual and probably lower valuations
• Companies with enough runway have an incredible opportunity to emerge stronger
• Seek capital efficient companies
• Many companies will be able to become EBITDA positive, providing revenues are not extremely exposed
• M&A continues and will continue, albeit with impact on valuation
• Keep developing, keep lean and smart pivots now could impress investors later
Source: 2020 Start-up Genome LLC. |
NOT ALL GOOD NEWS!
• Chinese VC deals have contracted c55% in first two months
• If that happens globally c$28 billion in start-up investment will go missing in 2020
• Last recession total drop in VC investments was 29% over 12 months – equivalent to
$86.4 billion in 2020
• It took global VC investments 3 years to recover
• US Tech IPOs dropped by 90% following last recession, and has not recovered to
pre-Recession levels, with the number of IPOs in 2019 (34) being 55.3 percent lower
than in 2007 (76)
• Some VCs using the pandemic to rip up term sheets, force extreme rewrites or
slash valuations - post signature
Source: 2020 Start-up Genome LLC. |
DO IT NOW!
• Need for net new jobs means the economy needs start-ups now
• During past 2 recessions, fewer dollars invested but more companies funded
• Over half the Fortune 500 companies created during recession or bear market
• Over 50 tech unicorns valued at $145.2 billion founded during last recession
• Governments helping founders
• Denmark covering 75% of salaries for companies that do not cut staff,
Germany is offering to cover 60% of the new salaries for employees reduced
from full to part-time, UK to follow with ‘Runway Fund’
SUMMARY• It’s dire, we all can see that
• The world is turning to help each other like no
other time in history
• It’s going to get worse before it gets better
• But growth is all around us
• New opportunities are abundant
• Success comes from within
• We are in for the long haul - together
“Success is a little like wrestling a
gorilla.
You don’t quit when you’re tiered, you
quit when the gorilla is”.
- Robert Strauss