RALEIGH – Startups in the Triangle are getting hard by the pandemic, admits Cofounders capital David Gardner. But it doesn’t necessarily have to be fatal.
In fact, he says, for most of the roughly 40 B2B software companies that he invests in, this is just a holding pattern.
“If they can just right size their footprint, and wait until the pandemic is over, I think sales will go back, especially for our types of companies,” said Gardner.
“There’s this pent up demand. It hasn’t gone away. It’s just moved a few months into the future.”
Tom Snyder, executive director of RIoT, the Internet of Things users group based in Raleigh, has interface with “hundreds” of startups in the region.
A lot of people are nervous and scared, he says: “There is no question about that.”
But they are also pushing forward, making slight tweaks and building new features to capitalize on the moment and turn disruption into innovation.
“Without any question, if you look at history, the entrepreneurs that really double down in times of hardship are best positioned to capture the opportunity on the tail end of recessions,” Snyder said.
“We saw this in 2008 when there were a burst of new companies founded then that are unicorns today; you see it after 9/11 and you see it after the housing bubble — whenever there are big downturns, those are the times to invest.”
This is where the venture capital community is short sighted, he added.
“These are the best times to be making investments into new early-stage startups. We’re going to discover that we actually can do things in new ways.”
LEANING INTO DISRUPTION
Marcus Aman, founder of ShyftAuto, is one such example.
His Greenville-based company connects consumers to certified facilities for pick-up and return of vehicle service through its app.
Since the coronavirus crisis hit, Aman said he’s seen a serious uptick in business. Because it’s a “touchless” service, it’s a solution that has come in high-demand during this period of social distancing.
“Dealerships and service facilities that haven’t offered pick-up and return for service are now trying to figure out how to offer it. In the last two weeks, we’ve signed several stores that were looking a solution to get vehicles into their shops because customers aren’t driving in as usual.”
Amie Thompson, CEO of Creative Allies, a content marketing firm based out of Raleigh, is also cautiously optimistic.
While a few projects and opportunities disappeared, she believes the firm can safely ride out a period of uncertainty and even thrive after that.
“We’ve pivoted our focus a little bit and are reaching out to businesses that need help moving from brick and mortar to digital so that they can maintain their presence,” said Thompson, who, like many others, is applying for government loans for some protection.
“We are also seeing some success reaching back out to prospects that may not have said yes to us in 2019, but since they now need to maintain or improve their online brands, they are more open to working with us now.
“I know that there are businesses out there with money to spend and digital marketing is more important than ever for these businesses.”
Jason Caplain, co-founder of Bull City Venture Partners, a venture capital firm investing $250,000 to $2 million in software and internet companies, said he is also seeing a lot of ingenuity from startups.
“Some are being super opportunistic, altering their strategy to the market, finding new revenue streams,” he said in an email. “They aren’t sticking their head in the sand. Very much the opposite. I bet they come out even stronger. And over the last two decades of investing, we have never lost a company to a downturn. Fingers crossed here too.”
He also remains optimistic about the region’s prospects.
“The Raleigh-Durham market is made up of founders that are grinders. Entrepreneurs that have a chip on their shoulders. Something to prove. We didn’t see the region decimated by the last two economic downturns and we don’t expect it to here, either.”
Adam Klein, chief strategist at American Underground, which is owned by Capitol Broadcasting, the parent company of WRAL TechWire, is also focused on life post coronavirus.
He said the Durham-based startup and entrepreneurial hub has remained open and operational during this time, though a great majority of its members are working from home.
It’s estimated that 1,662 people are employed by AU companies.
While many are looking into taking emergency loans, no major rounds of layoffs have been reported, he said. Most are staying connected and in business.
“We’ve been hosting weekly Google Hangouts with our founders for discussion and knowledge sharing.”
“Right now, the focus seems to be on safety, maintaining regular operations, and leveraging new opportunities when possible. Durham and the Triangle are well positioned to snap back assuming we, as a country, succeed in dealing with coronavirus.”