There’s no point beating about the bush. The coming months are going to be extremely tough, for the economy, for jobs and for the wealth of millions of UK households.
Many of the biggest employers in the land have already begun layoff programmes – 9000 at Rolls-Royce; 4500 at EasyJet; 12,000 at British Airways.
And that’s before the furlough scheme ends. Even companies not laying off workers have imposed pay freezes or cuts across the board. The knock-on effects on all major companies will be huge.
It’s easy to despair at it all. But there’s another way of looking at it. For some people, the impact of Covid-19 on the way we all live and work summons up one word: opportunity.
The opportunity to set up in business on their own and do things better than they’re currently done.
In many companies across the UK there will be people who’ve been laid off, or sitting around killing time on furlough who use this moment to work on new business ideas they may have been mulling over for years. Now is the time for them to develop their own ideas and put them to the test.
Some may be first timers to entrepreneurship. Others will already be working in startups which coronavirus has hit for six, meaning the riches they’d dreamed of from their shares in their exciting young business are worthless.
Whatever their circumstances, history tells us some of the fastest growing and most successful businesses are born in such trying times as these. Not only Uber and Airbnb, spawned in the global financial crisis, but Disney, created in the brain of Walt Disney as a means of cheering up America’s children in the 1929 Great Depression, or General Electric, created out of Thomas Edison’s lightbulb-tech companies in the 1889 recession.
Start-up companies have time and again proved over the generations to be quicker at spotting customers’ unserved needs and more agile in being able to service them.
Not only that, but the entrepreneurs who spot the opportunity tend to work like dogs until they’ve seen their dream become reality.
That’s why they grow faster, employ people quicker and are more productive than the big companies they often end up killing.
Right now, it’s hard for start-ups to get the funding they need. Many traditional investors have pulled back on how much money they’re prepared to risk as they’ve seen the value of their other investments plunge in the crisis.
This is, in a sense, irrational. It’s times like these, when labour, rent, energy and marketing costs are cheap that smaller firms can accelerate the fastest.
It’s also in times of hardship that entrepreneurs spot new needs in potential customers. Would Airbnb have exploded on to the scene if people hadn’t been too skint to afford hotels at the time?
The government, to do it justice, gets this. Chancellor Rishi Sunak has done more than anybody dreamed to get financial help out to small businesses. Even if the implementation has been patchy, his instincts are right that he must rescue small firms or he’ll be killing off the next generation of wealth creators and taxpayers.
Along with the Bounceback Loans scheme for small firms, he’s created the Future Fund for early stage companies. This will prove to be one of his most successful initiatives. But it is inherently risk averse. It only backs firms which have already raised at least £250,000 from private investors.
That is a massive sum for most recent start-ups. It won’t help those thousands who are nowhere near being tried and tested. The team of programmers who were just developing the software for their brilliant new financial technology app when the Covid-19 lockdown knocked 30 per cent off their investors’ share portfolio. Or the scientists trialling their prototype food technology just as the hotel and restaurants world collapsed.
For such people looking to raise funds in the first month of lockdown, the numbers of fundraising deals plunged 39 per cent on a year earlier. And, of those that did get money, only a tiny fraction were start-ups who’d never raised significant funds before.
All this is why the Evening Standard – the sister publication to The Independent – wanted to find the most promising start-ups and help get them funded. Recognising that we are journalists, not financiers, we are working with the tried and tested team at venture capital group Triple Point to find and fund the best in the UK’s capital.
They will fund the best ideas with £100,000 to £150,000 to get them started, aiming to give them a yes or no in 10 working days.
We have no idea how many start-up dreamers will apply for our Kickstart Fund, or how many of them will have sustainable ideas Triple Point deems likely to be winners.
But we’re confident there will be some that we can start on that journey to grow, thrive and become the great innovators and employers of the post-covid world.
Apply now with your brilliant tech ideas by clicking here
Jim Armitage is business editor for the Evening Standard