Coronavirus is forcing entrepreneurs to experiment and innovate. Having lived with the virus for longer than others, China is a useful guide for understanding how businesses are using robots for deliveries, temperature-detection technologies to identify customers who are at high risk of carrying the virus, and drones to drop parcels and to spray disinfectant.
Writing about the UK, Ed Conway has written optimistically about how new tech can help us thrive in a coronavirus world (The Times – Paywall). However, there are some blockages. Conway explains how many smart watches contain a plethysmograph – a sensor that can measure the volume of blood flowing through your veins. This technology could save lives in our battle with the virus, as measuring oxygen levels can help identify whether you have pneumonia, which is vital as Covid-19 seems to mask the symptoms.
Apple hasn’t turned on this function yet but might be able to in a software update. Conway suggests that it’s a matter of priorities – “heart disease typically kills three times more Americans than respiratory diseases, flu and pneumonia combined, so it made more sense for Apple to improve the heart readings rather than activate a potentially unreliable oximeter” – but it might also be an issue of regulation. In the US at least, FDA regulations are the blocker.
Conway paints a welcome picture of a new era of virtual globalisation, with coronavirus teaching us the value of online doctors’ appointments, edtech learning and remote meetings, which brings to mind Marc Andreessen’s recent It’s Time to Build article. The legendary entrepreneur, investor, and software engineer argues, perhaps unsurprisingly, that it’s time to build – not just coronavirus tests, ventilators, negative pressure rooms, and ICU beds, but automated factories, supersonic aircraft and gleaming skyscrapers. It’s a great polemic that stands on its own, but the inevitable question is why aren’t we already building more?
Depending on what we’re talking about there are different answers, but as the case of the FDA and Apple’s plethysmograph shows, unnecessary or unclear regulation often holds back businesses from delivering for consumers. This isn’t about laissez faire versus excessive government interventions (though it sometimes is), it’s about regulators creating the rules, certainty and space for innovators to flourish. In an excellent article, José Ricón unpacks what is needed for Andreessen’s call to arms to be made a reality. He concludes: “what urgently needs building is systems (institutions, regulations) that enable and encourage builders. The quote goes ‘Build and they will come’, but we may say ‘Regulate wisely and they will build’ as well.”
As we’ve argued from the start, we should be optimistic about the potential for innovators to beat the virus, overcome the disruptions to our way of life and in the process create new and better ways of doing things. But it’s also a time to take stock of how we can get more innovation in the future, and startups now have a rare opportunity to have an influence on regulation (just consider the Government’s sudden push to speed up e-scooter trials). I'm in regular conversations with the government's new Regulatory Horizons Council (RHC), so now is the time to let me (and them) know what you need.
Some like it hot
Conventional wisdom says that during the good times, ‘hot markets’ draw in dumb money, investor discipline falls and bad investments are made. But is this true? A study by two Harvard economists, Ramana Nanda and Mathew Rhodes-Kropf, puts it to the test by looking at whether startups funded in booms are more likely to flop.
While funding in a boom is associated with a higher failure rate, those that succeed are likely to IPO at higher values, patent more, and patent better. It seems ‘hot markets’ allow for more experimentation because they reduce the risk that a start-up won’t be able to find further funding in the future.
Just when we need more experimentation and innovation to fight the virus, we risk getting less of it. This shows the value of the already announced Future Fund and more Innovate UK grants, and why the Government should be open to other ideas to ensure investors don’t lose their risk appetite. Research Director Sam Dumitiru has written a fuller (and better) explanation of the research on our blog.
Stuck in the middle
A lot of you are keeping us updated with how government support is working on the ground. One area that still seems to be of concern is the CBILS loan scheme.
A founder recently got in touch to discuss their experience. Unlike many, they were finally approved at what they consider a fair interest rate, but their business was highly profitable before the crisis; they had strong relationships with the bank and a VC firm who helped advise on the application; they had an experienced finance team to create the complex scenario modelling required for the application and subsequent negotiations; and had enough money in the bank to deal with the time delays.
This entrepreneur is concerned many others running great businesses won’t be so lucky. As he wrote: “Given all this I can see why the scheme has struggled to lend the amounts it expected. The story seems to have fallen down the news agenda given the success of the bounce back loans. However £50k isn’t enough to help much more than micro, owner-operated businesses and I worry that many businesses a level up from that will remain in a very difficult position regarding their access to financial support.”
This gap in support is perhaps the one that should be of most concern for policymakers and one that we’ll be raising across with the Government. Let me know if you have any feedback from the coalface.
Power of the pack
Female entrepreneurs should sign up to Jess Etherington’s biweekly update. This week she is particularly keen to hear from entrepreneurs in Manchester, Birmingham, Cardiff, Edinburgh, Southampton, Leeds and Newcastle as part of our influential Female Founders Forum project that we run with Barclays. Read the latest newsletter here for more information, sign up here, and reach out to Jess with any questions about the project.
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