The recent startup boom – is it a fad or a long-term transformation of the way we do business?

Despite battling a deadly pandemic and a recession, there is a boom in the new startup listings. Post-November 2020, there is a rise in the positive business sentiment and confidence levels across the domains. 

Recent studies by eminent researchers suggest that the rise continues, and the signs seen in November last year weren’t just a blip. The numbers of new business applications have been rising consistently on the back of strong startup culture.

What does it mean for the economy? Can these businesses bring on sustainable growth that we can endure for a longer duration? Technology is a vital driver and at the core of such startups. 

The situation

The first half of the year 2020 saw the pullback of the applications for new businesses in the US. But like a slingshot, it sprung forward in the succeeding months. It led to 2020 becoming a new record holder for the highest business creation from the time the census began in 2004. 

May 2021 became the second-highest month on record. It saw around half a million applications for new businesses. If you consider the total number of applications for new businesses in the post-pandemic scenario, the tally stands at six million. An important aspect to note is that this number includes both sole proprietorship and larger companies. 

Most of the time spent during the last year and a half has been on reshuffling our work and livelihood. The shift in this regimen has led to the creation of new opportunities for entrepreneurs.

The abrupt plug and play from a brick-and-mortar setup to a completely virtual medium of business has led to the transformation. All the business interactions are on the digital screens. 

E-retailers account for about thirty percent of all the new startups. Services like warehousing, trucking, and delivery are getting higher traction too. It is in line with the current buyer behavior of buying tangible goods online rather than a physical store.

A general reshuffling of the populations from towns to suburbs and remote working is also on the rise. It also supports the reasons for the growth of the food tech platforms and accommodation sector. The remote service providers enjoyed an edge over all the businesses due to this shift.

The fate

Creating an entity from scratch is a difficult job. It entails a lot of hard work by individuals from various domains and cultures. The rise and availability of tech platforms and solutions have led to ease of consumer usage and convenience. It has also opened a lot of options for new startups to get a share of the pie.

Keeping the core team intact and people pursuing the same dream with coherent thought often become tough. The reasons can either be the loss of the initial gusto, with which the project started or differing ambitions among the founding members. Whatever the reason may be, such a situation may warrant you to sell your business. 

The need for an experienced intermediary is crucial for the completion of such a step. Shortlisting a company that can accommodate businesses of varying sizes and types, operating across geographies is vital for a successful deal.

Intermediaries who operate across countries like the US, UK, China, or Australia have greater exposure. Another aspect that you can check is the domain expertise of the intermediary and their current portfolio worth. An intermediary with a higher proven record for handling such cases can drive value for the seller and the buyer.

The theories

The rise in the number of cases and worsening pandemic situations are fueling the boom. It has led to a change in consumer behavior. The pandemic shoved two restructurings into the economy. 

The wrecking of the face-to-face economy and creating the ‘socially distant’ business transactions is the first. It had two types of effect – one, of course, the brick-and-mortar stores taking a heavy hit, and the second is a rise in the online retailer’s sales. However, such short-term opportunities may die out once the situation improves.

Since the vaccination drives are in full force, the pent-up demand is rapidly growing. It is giving shape to the second restructuring – the older businesses rising from their dismal state.

We may be heading back to normalcy again. The rise of the pandemic led businesses and startup boom are yet to taste rough waters. These startups are anchored to a grim situation and rising on the back of a demand triggered by a pandemic – can they last long? The answer lies in the days ahead.