41% had considered closing their businesses from January to August 2021 because of an uncertain future brought about by the pandemic, according to American Express’s second ‘Shop Small Business Recovery Research for Singapore’.
“While local businesses are more optimistic almost two years since the pandemic started, its volatility weighs heavily on business leaders’ minds, including ours. The recent spike in cases is an example of the fluidity of the situation and difficulty in planning,” said Ho Yat-Wai, the country manager for Singapore at American Express.
Business owners need help - especially now in these volatile times. These entrepreneurs will need support to survive and thrive after the pandemic. Innovation and entrepreneurship will be essential for economies to recover and build resiliency. Therefore, how these entrepreneurs and their new ventures are supported is important.
Business accelerators, a mechanism to support and grow new ventures, will need to evolve post-pandemic to support new entrepreneurs.
What are business accelerators?
Also called seed accelerators or accelerator programs, business accelerators support the growth of new ventures. Though they differ from business incubators in several ways, hybrid and evolving business acceleration models abound.
Accelerators emerged in the early 2000s with the launch of Y Combinator in the United States, considered the most successful accelerator. Accelerators are generally for-profit and often hold equity in their client’s firms. Accelerators use a time-limited, cohort-based approach to focus on accelerating the growth of selected technology-based startups from a broad range of industries.
For example, Startupbootcamp Fintech is an accelerator focused on financial innovation, providing funding, mentorship, office space and access to a global network of investors and venture capitalists, for up to 10 selected startups per year. Their 3-month program provides the selected startups with the opportunity of collaborating with over 400 mentors, partners and investors to build world-class fintech and insurtech products.
Business accelerators are becoming increasingly popular in the startup ecosystem of many countries. There are currently more than 3,000 accelerators worldwide.
"At YC, we were challenged to do things that don't scale - to start with the perfect experience for one person, then work backwards and scale it to 100 people who love us. This was the best piece of advice we've ever received." Brian Chesky, Founder, Airbnb (YC W09)
Why Accelerators must evolve
COVI-19 has resulted in reduced customer demand, lack of employee availability and disrupted supply chains, all of which threatened business survival.
Therefore starting a new venture is becoming more challenging. Turning an idea into a viable and sustainable business model is more complex. Funding might become scare and investors more risk-averse. Some industry sectors may no longer be considered attractive.
On the other hand, new opportunities emerge from COVID-19 for innovative entrepreneurs. Consider, for instance, healthcare needs, digital payments, IoT and blockchain applications, all related to the work from home trend. Accelerators can evolve their business models to support their portfolio of startups now and post-pandemic.
OECD proposed a 3-step approach applicable to accelerators.
1. Rapid response
Accelerators worldwide have to quickly undertake rapid response as a first step during the pandemic given restrictions related to social distancing and health guidelines, such as a shift to completely virtual onboarding.
2. Easily replicated model
Companies such as Entrepreneur-first and Antler have replicable global business models that offers mentorship, capital, and connections to investors and business partners. Their pre-qualification program selects startups with promising MVPs and founders, who are committed to rapidly scale growth.
3. Resilience and recovery
The pandemic has provided an opportunity to revamp the services accelerators offer. For instance, startups will need crisis and risk management training to foster resilience and techniques to identify and pursue new market opportunities. Entrepreneurial approaches like effectuation and bricolage will become more critical post-pandemic. Both emphasize flexibility and improvisation of existing resources to deal with an unpredictable future.
Challenges will continue
The pandemic created a litany of entrepreneurship challenges, and they’ll remain in place even after the crisis has passed.
More than ever, entrepreneurs and business accelerators must ensure they share the same goals and objectives when they decide to work together.
In particular, entrepreneurs should pay close attention to the selection and exit policies of accelerators, the nature and extent of services provided and what might be more or less efficient in post-pandemic world. They need to diligently assess the quality and availability of their partners.