Covid leads to an explosion in startups

Startups are starting up more quickly than ever, thanks to Covid. Is this good or bad?

Necessity, they say, is the mother of invention. But maybe it has another kid too: invention’s sibling, the entrepreneur.

According to professional services recruiter Robert Walters, the number of professionals who have changed their job title to Founder/Co-Founder in the past year has increased by +13 per cent. Likewise, the number of small business owners has risen by eight per cent. Those formally adopting the title of entrepreneur (four per cent) owner (one per cent)  has also increased during the pandemic.

The UK’s Office of National Statistics recently released data showing a 28 per cent increase in new business creation in Q2 2021 compared to a year ago — so the ONS and Robert Walters data do complement each other.

Lucy Bisset, Director of Robert Walters, partly puts it down to Covid and related lockdowns meaning that workers have had more time to think and plan their career path.

But other factors have been at play too. She said, “Added to the economic uncertainty; the removal of office structure and the lack of facetime with management has had a negative impact on progression rate – which in turn has sparked a culture of ‘will it be better to work for myself?”

There is one concern, and that relates to the high degree of new business failures.

A failed business can be a devastating blow for some entrepreneurs, leaving a scar on their confidence that might never heal.  According to the Robert Walters research, 20 per cent of new businesses will close their doors within just 12 months and 60 per cent will go-under within three years.”

Lucy Bisset reckons one of the problems for startups lies with hiring the wrong people. She said: “With growth comes the need for exceptional people to lead the way, and one of the biggest mistakes a high growth startup can make at this stage is to hire the wrong people.”

Of course, not everyone welcomes the rise in startups. But as a general rule, founders are passionate and more deeply committed to their business than they would be to a company for whom they are an employee.

And this part of the reason — part, not the only reason — is why the Techopian view is that this decade will see super-fast growth in productivity, keeping a lid on inflation.