Entrepreneurship During the Pandemic: Some Suffered, Some Thrived

A segment of economy we might have expected to be especially hit by the recent pandemic is entrepreneurship. If about a year ago we were to make a prediction about how this crisis would affect entrepreneurs we’d probably be quite pessimistic.

Naturally, understanding economic and social change is difficult and takes time. But, at least according to the signals we have now, the picture is less dark than many would have thought and somewhat more nuanced.

An important source of funding for technology-intensive entrepreneurship is venture capital. So, looking at how VC performed during the pandemic might tell us something more about this picture. Initially, the expectation was that there would be a significant decrease in VC investment.

However, the picture looks rather different. First, VC investment did not really seem to slow down. Instead, it changed direction. Now it is going toward spaces that might gain from the transformation the pandemic is bringing to the world. This is consistent with the idea that a lot of the new technology is supporting the trends driving this new world.

So, the pandemic might have made life harder for many entrepreneurs. But not for all. In fact, some might have even gained from the extreme uncertainty that reigned throughout the past 18 months. In particular, those that were able to understand the transformation and pivot quickly might be thriving in this new world.

Which entrepreneurs are more likely to thrive in this crisis? What are the leadership skills that matter most during this transformation? That’s a question a lot of management research is focused on. One way to look at this is to think about what makes leaders “better” at adapting to change, something management research calls dynamic capabilities.

So, a takeaway from this difficult chapter is that one skill entrepreneurs need to cultivate during their journey is the ability to adapt to rapid and complex change. That requires some substantial flexibility in rethinking old beliefs, managing time, and allocating resources.

In fact, the research suggests that capabilities “learned” early on persist over time. So, entrepreneurs who managed to successfully go through this crisis might have gotten better at adapting to change and be more equipped to thrive in future crises.