How the Pandemic has changed Entrepreneurship and Start-ups
The pandemic disrupted the working world as we knew it. It completely reshaped people’s idea of what ‘work’ meant to them; how important it was, what they found interesting, where they wanted to do it, even questioning entire careers. It completely reshaped people’s priorities, and the rise of entrepreneurs and start-ups began.
In the UK, 835,494 new businesses were registered in 2020. That’s a 41% increase from 2019 and 96% increase from 2018. In the first half of 2021 alone, another study concluded that 340,500 businesses were registered, which is a 34% increase from the year before. These huge numbers signal that the pandemic massively drove entrepreneurial spirit, and start-ups will play a big role for the economic recovery post-Covid.
The entrepreneurial & start-ups landscape younger & increasingly female
What do entrepreneurs look like right now? The landscape, generally, has begun to catch up and modernise to reflect the working world. More women and more young people have started their own businesses, a hugely positive outcome. In the period of July 2020 – 2021, women made up 34% of start-up business owners. This is a huge increase from four years prior, when just 17% of founders were women. Generally, start-ups are more likely to be founded by men than women, so this shift indicates that the gender gap in the British business world is slowly but surely closing.
Entrepreneurs, in general, are also getting younger – most notably among women founders. Women entrepreneurs aged 25 – 29 in 2020 – 2021 made up 18% of all women founders that year. Plus, women aged between 30 – 34 that founded start-ups in that year made up nearly a quarter of all female entrepreneurs at 23%! In support of this new wave of younger entrepreneurs, the percentage of start-ups founded by a man aged 20 – 24 rose to 10%. Overall, the median age for a start-up business owner is 35, a decrease from the previous year.
What is causing this increase in new entrepreneurs & start-ups?
Many workers sought out a way of life improvement through entrepreneurship, which was one of the biggest drivers of the Great Resignation last year. While for some, the pandemic presented opportunities in the way of realising passions, having more time to focus on a business, and even saving money to start it up, it wasn’t the case for everyone as young people and women were disproportionally affected by job loss.
Lots of young people were working in shops, restaurants, pubs, cinemas, and theatres. Many were unable to fully open, if they did at all. In May 2021, it was reported that over the past year the number of under-25s on company payrolls fell by 289,000. While at the time, the UK employment rate was 4.8%, the unemployment rate for 16–24-year-olds was over triple that at 13.3%.
In 2020 alone, women globally lost more than 64 million jobs. That’s $800 billion lost in income due to the pandemic. While the rise of entrepreneurship has romantic notions of independence, the link between those more at risk of unemployment and those founding start-ups could be out of necessity breeding innovation.
What industries are growing?
Unsurprisingly, the reliance on technology like never before has contributed to the rise in industries such as fintech. From crypto, to neobanks, to the rise of ‘buy now, pay later’ platforms, fintech has dominated the start-up world over the past few years. Last year, investors worldwide poured $131 billion of funding into it – there’s a lot of confidence that VC backed fintech companies will play a vital role in driving economic recovery.
However, it certainly isn’t the only industry to be thriving. While many business owners experienced large reductions in income, other technology start-ups were beginning to boom. Consumer habits evolve, and savvy founders saw a gap where traditional offline businesses could become an opportunity.
- Food services delivery services led the way in new business applications in 2020 and saw a huge 75% increase from 2019.
- Online education grew by a whopping 179% in 2020 – 2021 from the year before and continues to experience a surge in investment globally as VC interest remains strong.
- Online retail saw rapid growth, as the high street plummeted, with new businesses making up nearly 40,000 of start-ups founded in 2020.
- Medical technology platforms have taken centre stage, linking patients with therapists; a growing opportunity as the world faces a shortage of mental health professionals.
Aside from tech start-ups, transportation and warehouse services are on the up. Supply chain challenges and the constant need for more drivers, as well as space to store online goods, have contributed towards a 74% rise in transportation and warehouse services. Businesses with products manufactured domestically have a huge advantage against those suffering from supply chain problems.
What can we expect from the entrepreneurial and start up landscape in 2022?
In terms of industry, domestic manufacturing is one of the biggest predictions for the year ahead. Establishing a manufacturing base domestically is a huge help for reducing the impact that the pandemic and the new regulations around Brexit have brought about. Fintech will continue to be a huge player in start-ups, too. With the huge investment that fintech got last year, and the continued need for technology solutions to modern problems, it doesn’t look like fintech start-ups are going anywhere anytime soon.
2022 has come with some renewed uncertainty, but it has the potential to continue the UK’s economic recovery. We can expect to see more entrepreneurs making holistic changes as to how they work as they continue to see entrepreneurship as a way of life improvement. When it comes to financing, fear will always hinder the process to an extent. This is where venture capitalists continue to play a big role in start-ups. Fast, transformational growth and stability are what start up founders need to ensure the pace of innovation doesn’t fall short.