“Entrepreneurs will be the first ones hiring back the millions and millions of people. Data shows that through every economic downturn, entrepreneurs are what bring us out.” – Thom Ruhe, NC IDEA Foundation chief executive officer.
RALEIGH – As the COVID-19 pandemic drags on and North Carolina’s economy begins to reopen, the Triangle’s startup economy is faring better than many would otherwise think, according to many leaders and investors in the regional entrepreneurial ecosystem.
So as the talk of a “new normal” intensifies post-pandemic, with profound changes having taken pace over the past three months, what will all the changes – from social distancing to remodeled office spaces – mean?
In a special four-part series beginning today as part of WRAL TechWire’s “Startup Monday” package, we are turning to thought leaders and entrepreneurs across the region to talk about:
- How will the Triangle rebound?
- Where are the opportunities emerging?
- Who is well-poised not just to survive, but to thrive?
- How will the labor market shift, and what are the downstream effects of this?
Their insight offers an emerging vision
“There are real people and real families being dramatically affected by the decisions we make,” said David Gardner, founder and managing partner of Cofounders Capital. “If our fledgling startups can just stay alive, they will be able to rehire and thrive again in the future.”
When they’re able to rehire, they may have access to a talent market that’s been altered by the historic unemployment numbers reported locally, in North Carolina, and across the United States, said Thom Ruhe, president and CEO of NC IDEA, in an interview with WRAL Tech Wire last week, just before the organization announced the six recipients of NC IDEA SEED grants.
“Entrepreneurs will be the first ones hiring back the millions and millions of people,” said Ruhe. “Data shows that through every economic downturn, entrepreneurs are what bring us out.”
Ruhe pointed toward recent NC IDEA SEED grant winner Unbox the Dress, who is relocating to Winston-Salem, opening a facility, and planning to hire between 20–30 skilled professionals with experience manufacturing garments and working with textiles, according to Ruhe. “Entrepreneurs and startups are so important to the economy because they create all the net new job growth in the county,” said Ruhe.
Yet despite the optimism, threats remain real, especially as the economic downturn has led to not only fewer sales but also a crunch on funding.
As WRAL TechWire reported last week, cash burn is a sigificant threat to many startups. Several have resorted to taking out federal loans through the Payecheck Protection Program. Will that lifeline be enough to keep these ventures afloat?
There is hope.
If most job losses will be recovered by the end of 2021, as a recent CBRE analysis found, according to Ruhe, Gardner, and other investors and entrepreneurs who’ve lived and worked through recessions and recoveries we interviewed for this in-depth report, people who would otherwise not have considered employment with an emerging startup or early-stage company may jump at the opportunity when jobs come available.
Jason Widen, founding partner at HQ Raleigh, told WRAL TechWire’s Chantal Allam that he remains “cautiously optimistic.”
“I’m probably meeting four companies a week. I have some companies that are doing really well; other companies that are in a wait-and-see mode,” Widen said.
Out of HQ Raleigh’s 400 member companies, he said a couple are in “dire” straits. A handful of others have asked for rent deferments. But apart from that, things look pretty good, he says.
“[I haven’t heard] of companies closing down, right and left. That hasn’t been the case. Obviously, some employees have been furloughed, and I’ve heard of people instituting cost-saving measures to be safe. Now, if you call me a month from now, that might change, maybe. But I’m cautiously optimistic.”
As in any economic setback, there are people ready to launch an adventure. Ruhe believes many entrepreneurial wannabes are considering launching their own companies for the first time, in order to address a problem they’d like to see addressed and solved.
“Entrepreneurs are going to lead the recovery, which is why we have to support them now more than ever,” said Ruhe. NC IDEA also awarded eight new NC IDEA ECOSYSTEM grants since their last “in-person” office day on March 17, said the organization in a recent newsletter.
So in the coming weeks, WRAL Tech Wire will share the trends, perspective, and stories of how the spread and presence of the novel coronavirus, COVID-19, is changing the local economy and the strong support infrastructure the Triangle is known for providing to entrepreneurs at every stage of their venture.
As the worlds of work and school have moved to “tele-everything,” that’s where opportunities may arise, says Gardner, among at least a half a dozen other Triangle leaders. As consumers and businesses learn that they can do most things remotely, and in many cases can do them more efficiently, how large of an impact will that have on the economy, both nationally and locally, and on the recovery in the Triangle?
First up: Later today we look at the impact to startup hubs in the urban centers of Raleigh and Cary, and how they’re responding to continue to support entrepreneurs and freelancers in an uncertain environment facing the potential membership and revenue losses of decreased demand for coworking communities.