​​​ ​Entrepreneurship in the Time of COVID-19

COVID-19 has had an undeniably drastic impact on our lives. Firm closures are at their highest in years and even established businesses were faced with little to no revenue during lockdown. This situation appears to be particularly threatening to start-ups, who have always been in a more vulnerable position in the first place. However, that is not to say that new opportunities are unavailable to entrepreneurs during the pandemic.

To explore these possibilities, Nanyang Business School (NBS), Nanyang Technological University, Singapore (NTU Singapore) hosted a webinar on 20 August 2020. Speakers from the Singapore start-up scene were invited to share their thoughts on surviving, striving and finding entrepreneurial opportunities in the pandemic. Moderated by Professor Foo Maw Der, Division of Strategy, International Business and Entrepreneurship, NBS, the webinar was structured around three stages of the pandemic: firefighting, pre-vaccine and the new normal.

Kicking off the webinar with a look at the firefighting stage, Professor Foo invited the panellists to share how their businesses were affected by COVID-19. Ms Kristie Lim, Founding Principal of Mind Stretcher, detailed how Mind Stretcher reconfigured their physical classes to online versions from March 2020, when many students were issued stay home notices after their return from the school holidays. While this preparation work put them in a good state when the government announced the mandatory suspension of physical classes, Ms Lim emphasised that firms "always have to anticipate and be prepared". During crisis management, "nothing is too small to be ignored as the small things can result in an overall bigger impact".

For SPH Ventures, Chief Executive Officer Mr Chua Boon Ping noted that fundraising and revenue slowed down due to COVID-19 as investors were not travelling to meet people. "Most start-ups did not have enough cash to last them beyond 12–15 months and many went into survival mode." Inevitably, cost cutting measures such as pay cuts had to be taken. Mr Chua advised that in such situations, leaders have to keep an open communication with staff, so as to prevent rumours from spreading across the firm. Start-ups should also review their products and services, Mr Chua added, and cut vanity projects that are not bringing in revenue.

Sharing a different perspective, Mr Tan Soon Liang, Founder and Managing Director of Ti Ventures Pte. Ltd., pointed out that some start-ups are not able to take pay cuts as many of the founders were drawing little to no salary even before the crisis started. Consequently, adaptive founders play an important role in the situation. Firms should learn to diversify and pivot their business towards alternative routes. Drawing on the ideas of the Stockdale Paradox, Mr Tan suggested that having a clear, long term vision is key to surviving the pandemic.

Moving on to the pre-vaccine period, Professor Foo wondered about the state of businesses as they face the scaling down of government support schemes. Mr Chua pointed out that some start-ups are in fact benefitting from the pandemic. Takeout services, for instance, have become very profitable in the last three months. "When there is a crisis, don't let the crisis go to waste. Your competitors are weak. If you are nimble enough, you can take the opportunity to gain market share", either by offering clients something at lower cost or focusing on what is unique about your value proposition. Furthermore, Mr Chua advised firms to take the opportunity to hire talents at a lower cost as people will be more flexible with their demands at this time.

In addition, Mr Tan stressed that start-ups need to see investors as more than just suppliers of capital. Before going to investors, Mr Tan suggested, start-ups should look at their own operations and consider the changes they will make to their business model. Although many are hopeful about a vaccine, Mr Tan felt that firms should plan with the assumption that COVID-19 is here to stay for another five years. To new entrepreneurs who are contemplating starting a business, Mr Tan advised them to consider the relevance of their product and services in today's world, and to contact potential stakeholders, even if they are not setting up a team immediately.

On the education front, Ms Lim is certain that online lessons and webinars will continue beyond the circuit breaker, though it is evident that the services offered will now need to be more varied in order to meet the different learning preferences. Ultimately, Ms Lim stressed that firms should take the opportunity to leverage on IT platforms and try out new things as it is always "better to have actions that are imperfect than to have perfect inaction".

Apart from the panellists' sharing, time was also set aside for Q&A. Mr Chua took a question on what and how businesses should capitalise on the opportunities that arise from the crisis. Telemedicine and remote workforce, Mr Chua noted, are two areas in which COVID-19 has forced people to overcome their resistance towards alternative ways of doing things. "Once you have the consumer's change in behaviour", said Mr Chua, "you have half the battle won. Once that is done and your services brings value to the consumer or enterprise, that is when you will see great opportunities."

In response to a question about joining the venture capital industry as a fresh NTU Masters programme graduate, Mr Tan pointed out that it is easier to get into venture capital if one has experience managing start-ups or working in existing and established companies. This is supported by Mr Chua, who stated that those who have worked in start-ups themselves would have established networks and learnt the tricks and challenges of an entrepreneur. Ultimately, it is easier to transition from an operating position to venture capital than to enter the industry as a fresh graduate. 

Participants were also interested to know what additional lenses are needed for investors when analysing start-ups in pre-vaccine time. This, according to Mr Chua, has much to do with risk. "A business can be doing very well but its core pieces may fall apart in a crisis." Therefore, investors are likely to consider how much a business hinges on a sudden shutdown of travel, for example, or if the firm has offline and online modes of doing business. Mr Tan also weighed in on the issue, stressing that entrepreneurs now need to have the endurance to look beyond the next five years and develop the ability to collaborate with large companies.

On the frequency of mergers and acquisitions in view of current uncertainties, Mr Tan pointed out that a lot of venture capital and private equity firms have been focusing on their existing portfolio companies in the past few months. Having said that, investors are also looking for distressed companies to invest in so there is a lot of opportunities for entrepreneurs to raise funds. However, most of the funds will be ready only when investors know that the company has adjusted to the new model and new way of doing business.

With regards to entering retail and F&B business, Mr Chua revealed that there are data points that indicate that these are very competitive industries. "The food industry is like the fashion industry. It comes and goes. Unless you have very strong, key differentiator, if not, you are playing in the red ocean. As investors, we look at the blue ocean. The F&B industry also has high cost structure—labour is expensive, and it is not scalable because there is a need to invest in upfront cost at every new outlet." Unless a business has a unique or different food category, Mr Chua does not advise entering the sector, especially at a time when recession is coming, and people are likely to be watching their spending. Having said that, there have been success stories in the industry too. Mr Tan shared his encounter with an F&B business that saw an increase in sales in the past six months, perhaps due to their young target customers and the fact that their business leveraged on the delivery model even before the circuit breaker. 

Finally, responding to a question about companies venturing overseas with the current travel restrictions, Ms Lim shared Mind Stretcher's experience with expanding their business in Johor Bahru (JB). Mind Stretcher started their Malaysian branch at the end of September 2019 but was unable to visit the JB centre during the circuit breaker. As a new brand in JB, Mind Stretcher decided to conduct online lessons out of goodwill to stay in contact with their customers. This turned out very well as customers perceived the business to be focused on the welfare of students. But despite the positive results, Ms Lim was clear about the challenges faced in expanding a business during the pandemic. A JB team needed to be created and trained remotely, while a virtual presence needed to be kept to reassure the Malaysian staff who are unfamiliar with the new team. Ultimately, Ms Lim stated that now is not a good time to go overseas, unless it is something you have had experience with before.

Published on 9 September 2020