When the COVID-19 pandemic hit the St. Louis area, Ken Zheng’s plans to raise money for his 1-year-old startup Takoda fell apart. Customers and investors felt the timing was too risky.
So the CEO pivoted toward telehealth — adding a video conferencing tool to his technology, which helps therapists monitor patients with substance use and psychiatric disorders.
“By the time we had finished it and brought it to market our customers actually told us, ‘It’s great that you did this, but where were you guys three months ago?’” Zheng said.
Startups are used to pivoting. But these days their turnaround time for new products and services has to be quicker than ever, plus they have to figure out how to persuade investors over Zoom to dish out funding in an uncertain economic climate.
All of these new obstacles mean more startups could face delayed launches or failure.
Jerome Katz, head professor of entrepreneurship at St. Louis University’s Chaifetz School of Business, said lots of early-stage startups are in a holding pattern.
“It’s slower and harder to raise money,” he said, pointing out a recent report from PwC and CB Insights that shows venture capital investment in the second quarter is down 18% over last year.
“Part of the investment process is trying to decide if these are people you have faith in, people you trust, people you can get along with, and Zoom is not a good replacement for face-to-face meetings for that kind of assessment,” Katz said.
On the other hand, he said there’s a lot of opportunity for online businesses, as well as services and products focused on alleviating problems exacerbated by the pandemic.
Sam Fiorello, CEO of the Cortex Innovation Community, said entrepreneurs need support now than ever. He’s making sure the district provides the right resources.
“It's Cortex’s job to facilitate those folks who are displaced, or there have been shocks to their worlds and the way they make an income, but they have a lot to offer,” Fiorello said. “At Cortex, we're constantly thinking about, how can we be of service during this time of crisis?”
Home to more than 400 companies, Cortex focuses heavily on events for entrepreneurs. With large gatherings canceled due to the pandemic, the district has taken a revenue hit, too.
But Fiorello, who took over the CEO role in February, said the district is working on virtual programs for networking, retraining and helping startups. He sees a lot of opportunities for first-time entrepreneurs.
“We see some of the folks signing up for startups that would never have done it because they didn't have this acute point where they're forced out of their job, and they're forced to rethink, ‘How do I want to make a living?’”
Building virtual connections
Earlier this year, serial entrepreneur Julian Keaton set out to build a mobile game to acclimate college students and transplants to St. Louis’ small-business scene.
The game, Dimensions, uses geolocation technology to send users on a scavenger hunt across the city. Keaton, a co-founder of the project, said the goal is to get people more involved in their community and persuade others to stay in St. Louis.
But Keaton said he had to rethink the game when the pandemic hit.
“Our game is centered around people, places and things. And if we can’t do gatherings and get people out in the community, you know, that truly impacts us,” he said.
Keaton recently participated in a new six-month startup accelerator run by St. Louis nonprofit WEPOWER, which provides funding, mentorship and co-working space for Black and Latinx entrepreneurs.
He said the program helped him figure out how to pivot toward a virtual game experience. Keaton plans to launch a beta version next month and a mobile app early next year. He also wants to find a way to use the game to help businesses struggling during the pandemic.
Entrepreneurship isn’t new to Keaton. He also owns a multimedia entertainment company, Stereo Assault, and an artist development firm for musicians, called Julian Jewels.
He said the hardest part about running early-stage businesses during a pandemic is learning how to keep morale up.
But he’s hopeful more people will take this time to reflect on what they really want to do.
“Once you find that purpose, and once you find the happiness that lives within that, then you'll be able to really see, ‘Ah, I have an idea that will make me feel that I really create impact in the world,” he said.