“If I look very high level, I would expect there will be fewer startups being started” in 2021, states Stephan Peters. “I expect quite a few SMEs might end up closing shop.” The cash crunch will simply catch up with a lot of them, especially in sectors like hospitality and mobility.
“A more interesting story,” Peters reckons, is the type of startups that will get off the ground in 2021. Entrepreneurs “looking at the pain points we’re all experiencing now,” as people spend more time at home, will have a leg up. “If you can offer something to replace gaps in [someone’s] life, that’s a great opportunity.” That includes fields like augmented and virtual reality, digital cooking classes, virtual healthcare services and online education, to name a few. “I think mental health definitely will see more and more focus.”
That said, “investors will invest in good ideas,” says Peters. “I think there will be less startups, but startups with solid ideas, that make it work in this crisis period, there will always be funding available.” While it will “be tougher” for entrepreneurs to secure funding, “business angels and VCs will keep looking, keep investing… Maybe not the same amount of funding, and maybe [provided on] less favourable terms, but there is funding out there, for sure.”
His advice for entrepreneurs? Peters says it hasn’t changed at all: “Build products that customers are looking for and build a well-argued case why” it will make money. “At the end of the day, that’s what investors are looking for. They’re not looking for grand ideas. They’re looking for products run by a credible team that customers are willing to use and pay for.”