Faculty & Research
Faculty & Research
Is now a good time to be an entrepreneur?
By Shameen Prashantham
Large-scale crises such as the COVID-19 pandemic can make things both complicated and terrible for start-ups. At the same time, however, the changes they bring almost invariably alter the opportunities that are available to businesses, including those in their earliest stages.
Added to this, recent shifts in the way people work have led many to reassess what they’re doing, and there are signs that more and more people are taking an interest in entrepreneurship and starting their own companies. But, is now really a good time to be an entrepreneur?
A recent talk I had with entrepreneurs and venture capitalists from around the South East Asian business community has offered some insight into the nature of entrepreneurship and how start-ups in the region have weathered (and even benefitted from) the current storm.
In particular, our discussion has highlighted the role of factors such as the nature and timing of a company’s offering, the ability to pivot to a new business model, and the availability of funding in determining the fate of those who have taken the start-up leap.
A giant global experiment
One of the sectors most impacted by COVID-19 was the education sector, as many schools were caught off guard by the sudden shift away from in-person learning.
For start-ups such as Edukasyon.ph, a Philippines-based platform providing young adults access to online education, however, survival was in part a matter of being in the right place at the right time.
The potential of online education has long been recognised, but COVID-19 has greatly accelerated the adoption of digital learning, leading to what Edukasyon.ph Founder and Executive Chairman Henry Motte-Muñoz describes as “a giant global experiment.”
One of the lessons that Motte-Muñoz says he has learned from his experience is that, from an acquisition-of-skills perspective, online learning can work; from a social perspective, however, it doesn’t work as well, since most parents want their children to go back to school.
Regardless, he notes the pandemic has offered the push needed to break online learning in, and providers such as Edukasyon.ph have been well-positioned to take advantage of the current wave.
Capitalising on shifting trends
As COVID-19 brought wellness to the forefront and consumer habits started to change, businesses in the plant-based food space began seeing growing interest from both investors and the public.
Karana, a Singapore-based meat alternatives start-up, for example, had recently closed their seed funding round and was on the cusp of launching their products into restaurants and food services when the city-state went into lockdown.
As Karana Co-Founder and Co-CEO Blair Crichton explains, the company’s initial response was to focus on “reducing cash burn, reigning in costs and battening down the hatches” while they waited to see what would play out.
At the same time, however, he says the pandemic was “in some ways a blessing in disguise,” as it allowed his team to reassess their plans and pivot to a different business model.
While 2020 wasn’t a great time to be doing offline product launches and events, Karana was able to use the lockdown to shift their focus to developing their retail offering (something which could have been more difficult to do had they already been out in the market).
As Crichton’s story suggests, periods of crisis often create conditions under which new innovations can (and must) emerge. Moreover, early-stage start-ups may be well-positioned to spot and react to new trends and help build the new normal.
Humanity’s biggest wake-up call
For Gobi Partners venture capital Founding Partner Thomas Tsao, while the volume of new investments his firm engaged in dropped during 2020, the number of follow-on investments it conducted for existing companies actually increased.
“A crisis period is really where venture capital firms earn their stripes,” Tsao says of the need to offer support for start-ups during periods of crisis.
Moving beyond basic survival, the pandemic has also served as what Tsao calls “humanity’s biggest wake-up call.” Not only has it proven how interdependent we all are, it has also accelerated a broader movement towards sustainable investing.
Moreover, as Tsao explains, with vaccine roll-outs fuelling hope for global economic bounce-back, environmental, social and corporate governance (ESG) is something VC firms will need to start building into everything they do.
“It is very important VCs take responsibility now not only to make as much money as you can, but to make that money in a sustainable way that really has a positive impact,” he adds.
A long, lonely journey
Despite (or perhaps because of) the turmoil caused by COVID-19, many in China in particular have been confident about expanding their businesses and trying new things.
“People are figuring out a different way of working with each other,” says INCE Capital Founding Partner JP Gan.
As with any major disruption, the shift in people’s lifestyles and working habits will create new opportunities and affect big changes.
“In the next few years, it will have a huge impact on business culture and business practices,” Gan says.
Nevertheless, even with an available money supply and the active support of VC firms, leaping into the world of launching a self-owned business admittedly hasn’t been for everyone.
“Being an entrepreneur is a long, lonely journey,” he says.
Indeed, Gan concedes that many people working for big corporations were not ready or willing to quit their jobs to become entrepreneurs in the middle of the pandemic.
“It was not an intelligent thing to do to leave your high paying job while working at home,” he says.
Big problems, new realities
As economies rebuild and new realities become apparent, there will, of course, be both winners and losers. At the same time, as people in the region begin future-proofing their businesses, there is an opportunity to think not only about creating economic value, but also about how to do so in a sustainable way.
Ultimately, there are big problems out there which need solving and now may be the time for entrepreneurs to step up and take advantage of this great wake-up call.
This article references a panel discussion from the 2021 China Conference: Southeast Asia. Watch it here.
Shameen Prashantham is Associate Dean, MBA Programme Director and a Professor of International Business and Strategy at CEIBS. For more on his teaching and research interests, please visit his faculty profile here.