Startup fundamentals still prevail in a changed world

A FOUNDER has a problem they are passionate about; the resilience to endure the highs and lows of entrepreneurship; and a propensity to meet people and attract talent to their companies. These are 3 foundations that have underpinned and moulded successful entrepreneurs - and they continue to hold true in the face of Covid-19, and likely future events that may similarly present unprecedented challenges to businesses.

The reason is simple: the fundamentals of starting up are ingrained, and will prevail regardless of time, place or macroeconomic trends. Take the first fundamental: a problem the founder or founding team is obsessed with solving. This forms the basis of every good company. If the problem statement is rightly identified and understood, building the right solution will often lead to a good business.

Airbnb, for instance, was born out of insufficient accommodation in cities and homeowners wanting to rent out spare rooms for cash. The outcome? A marketplace that rectifies these issues, and is now available in more than 200 countries and 81,000 cities. When the coronavirus hit, Airbnb responded by offering longer-term stays (not just short-term rentals) to cater to the emerging trend of people looking to move from crowded metropolises to remote locations, and even offering virtual experiences.

Clearly, curiosity and enthusiasm for solving a problem is essential in starting up. But what is equally critical in a founding team is flexibility. It is difficult to predict if the problem identified is well grounded, or if the solution would be perennially effective. Founders should therefore not be too emotionally attached to their first idea, and instead be versatile and open to making adjustments or even abandoning their original master plan when required.

The second fundamental is resilience, an attribute that serves all human beings well but is particularly crucial for founders. Entrepreneurship is a long game of ups and downs, where quick-changing market conditions, running out of capital, or losing valued customers and colleagues are commonplace - and can be daunting and demoralising. Entrepreneurship is also a lonely journey that can demand long hours away from loved ones. To boot, founders are responsible not only for their own well-being and professional development, but that of their team as well. Add Covid-19 to the mix, and founders today have an even greater load to shoulder.

This immense amount of responsibility and dedication aside, building a business also comes with freedom, exhilaration, creativity, and a sense of fulfilment, collectively creating extreme highs and lows in the entrepreneurial journey. To navigate the latter, resilience is key to ensuring founders can pivot and adapt in times of change and challenge, bounce back when the going gets tough, all while taking care of their health and well-being.

Thirdly, the ability to surround themselves with people is fundamental to successful founders. No matter the startup's offering - a product or service - the founder's role is often frontline. It requires them to actively network and make acquaintances, promote their brand to clients or customers, and influence investors to back their ventures. Only by meeting new people can founders uncover the best talent, partners and backers to bring to and grow their companies.

In a time of pandemic, while these fundamentals remain unequivocally tenable, founders must also acknowledge and acclimatise to a changed world. For instance, they should tap opportunities in e-commerce, fintech or digital marketing, which are among the many sectors the pandemic has catalysed and made pertinent to doing business. Moreover, aspiring entrepreneurs with deep expertise could explore innovations in energy or clean tech, which have been freshly identified as growth areas in countries such as Singapore.

GO BEYOND PUBLICISING SUCCESSES

Liquidity in the market is another macroeconomic factor that entrepreneurs ought to pay attention to. Amid the pandemic, the availability of "dry powder" in the market has grown. Many investors are fervently seeking promising ventures to champion, with a keener eye on discipline and prudence. This means that for startups which are raising funds, they must be laser-focused on internal metrics like unit economics, customer reviews and growth - as opposed to valuation, which is an external validation they usually cannot control.

What could be incredibly helpful for these startups - especially the early-stage ones - is setting up an advisory board composed of seasoned business leaders, who do not necessarily have to have the business know-how, but are proficient in their own ways, like in finance, sustainability or mental health. Their experience and exterior viewpoints will serve as a handy check and balance that can help guide the startup in being efficient and financially sustainable.

An additional thing founders today can leverage is the growing recognition of the importance of mental well-being, which has become even more paramount during the pandemic. Compared to a decade ago, mental health is now being talked about more in the startup ecosystem. Venture capitalists - many of whom did not use to prioritise their founders' mental health and might have even perceived mental illness as a sign of weakness - are increasingly reaching out to their portfolio of startups to discuss wellness. More founders, too, are implementing mental health initiatives within their companies, which range from mandatory focus hours to complimentary counselling.

Notably, mental wellness is a pursuit that will require cooperation from the larger ecosystem. Startup communities, for example, can do their part by organising private platforms to allow people to open up about matters close to their hearts, air their concerns, or just rant, in a safe environment. Beyond publicising their own achievements and celebrating the successes of others, individuals in the ecosystem should also not be afraid of coming out and declaring that they are not okay. For one thing, a well-known entrepreneur publishing a LinkedIn post about his struggles and taking a break from work to undergo therapy can go a long way in giving courage to peers and encouraging them to step up and look after their mental health too.

The pandemic may have impacted businesses, but it has not dampened the spirit of risk-taking and being enterprising. Even as founders and entrepreneurs adjust to a changed world, the fundamentals of starting up will still prevail. And as startups continue to present great hope for our future - driving positive change and disruption - everyone in the ecosystem must lean in to ensure that these companies are equipped with everything they need to move forward.

• The writer, an angel investor, is a board member of TiE Singapore and entrepreneur-in-residence at Insead.