A woman uses her laptop computer to work from home.
For many people, starting a business in the midst of a global economic crisis is the last thing on their to-do list. But it may not be such a crazy idea.
According to entrepreneurs and start-up investors CNBC spoke to, this may be the best time to start thinking about starting a new home business.
The coronavirus pandemic serves in many ways as a “catalyst for creation,” Jan Hammer, partner of Index Ventures, told CNBC. He believes that history can be on the side of entrepreneurs who start their own business in times of adversity.
“If history gives us a good precedent, after the last crisis – which was the great financial crisis from 2008 to 2010 – a cohort of extremely resilient companies has emerged,” Hammer said in an interview.
He cited examples such as the food delivery company Just Eat, the payment company Adyen and the money transfer start-up TransferWise, which were all founded in 2001, 2006 and 2011 respectively.
“These are ideas that were born in, you could say, difficult times,” added Hammer. “And in a way, the trends that had spurred the growth of these companies were not linked to the macroeconomic cycle.”
Jan Hammer, partner of Index Ventures, speaks during a roundtable in London, UK, Thursday July 10, 2014.
Chris Ratcliffe | Bloomberg via Getty Images
There are many companies that were created during or during the economic crisis.
General Motors, IBM and HP are some of the biggest names born out of the recession, such as the 1907 panic and the Great Depression. Meanwhile, many tech start-ups, such as Groupon, Uber and Pinterest, were created during or shortly after the Great Recession.
Build new businesses
On Tuesday, Lara Vandenberg launched Publicist, an online marketplace for companies to find freelancers in public relations and communications. Usually based in New York, Vandenberg temporarily returned to his native Australia when the coronavirus struck the United States, but continued despite the time difference.
About 35% of the U.S. workforce – 57 million people – are self-employed, according to a report from the Upwork job site, and the pandemic has accelerated the shift to project-based work, said Vandenberg.
Publicist is about to close a funding round after starting the beta site, but does not reveal how much it has increased. He will invoice the rental companies a commission of 20% per project.
“Although we are launching a business at this very unstable stage of this macroeconomics, the future of work is an area that generates a lot of enthusiasm,” Vandenberg told CNBC. “And at the same time, it’s just an exciting problem to solve.”
For Chris Howard, co-founder of the Fuel Capital venture capital fund, this is the right time to promote a new business because advertising space is cheaper.
“You have an increase in the time users spend online,” he told CNBC. “You can better understand the cost per new customer you add … then you can start retention marketing campaigns.”
Say goodbye to ‘Bulls – T Jobs’
Matt Clifford heads Entrepreneur First, a so-called “talent investor” from London who helps founders network with one another and develop their business ideas.
“We don’t see demand reduction, which is really interesting – and I’ll be honest, I thought we would,” Clifford told CNBC. “I can totally identify with the state of mind where you say this is not the time to quit a job.”
“It is also a time when many things seem fairly trivial,” he added. “There is this whole history of” bulls – jobs “that has existed for ten years now.”
By “bulls – t jobs“Clifford is referring to roles that workers say have no significant impact on society. It is a concept that was explored in a book by American anthropologist David Graeber in 2018.
Clifford said he thinks there are now more “determined” individuals who want to “build something important” rather than “optimizing the shade of blue on this website or anything”.
Luke Lang, co-founder of the Crowdcube crowdfunding platform, agrees. He believes that the virus epidemic could pave the way for new tech companies focused on healthcare and medicine.
“People around the world are finding ideas on how to solve some of the problems and challenges we have faced in recent weeks,” he told CNBC.
“For many people, there is a lot of time to do research, there is a lot of time to think. This is the perfect time to do it.”