Startups have emerged as key drivers of growth and stability in the post-pandemic global economy. The COVID-19 crisis allowed startups to exploit emerging trends as communities shifted to digital workspaces, education, and health services. An explosive growth in new communications technology and related innovations helped expedite this shift.
Austrian economist Joseph Schumpeter called periods of economic crises ‘creative destruction.’ New ideas and ways of doing things emerge to fill the void left by defunct institutions. The pandemic was no different: data shows 9 million jobs lost in 2020 in the US alone. In their wake emerged remote patient monitoring services, remote consultations tools, online learning and artificial intelligence solutions for researchers.
Businesses not driven out of the market by an inability to adapt exhibited a marked shift in how they operated. Some rebuilt from the ground up, adopting new technologies to provide the same services through digital applications. Staff now use remote databases and communicate with customers via social media. Offices have now become wholly virtual.
In this article, we’ll explain how startups have changed the way we work. We’ll also look at some of the innovative startups which have emerged in recent years to challenge the status quo.
How startups impact the economy
Innovative, technology-driven firms staffed by ambitious entrepreneurs have taken the reigns of the modern economy. Across all OECD countries in 2022, startups account for about 20% of employment but create almost half of new jobs.
Startups have become the new metric used by developed economies to gauge the development of their economic frontiers – the set of local companies which may or may not achieve significant economic breakthroughs. This metric is a key index for economic policymakers. Startups that break through the frontier can become an important source of growth and investment.
The economic development frontier is difficult to measure, especially in advanced economies. Traditional means of measuring innovation, such as patents and industrial output data, often do not consider new sources of potential economic growth (such as artificial intelligence) or do not coincide with how economic policymakers or business leaders think about the economy.
Startups provide a solution because they thrive on diversifying goods and services. Economists now know to not look at how efficiently an economy can deliver a narrow set of goods, but rather, how broadly new startups are approaching the economic frontier.
A wider range of services provided by startups correlates with stronger economic performance indices. Modern startups have the capacity to proactively create demand by introducing new concepts and ideas.
How startups challenge gender bias
As of 2021, women accounted for 46% of the EU workforce but secured only 3% of the total capital invested in venture-backed startups.
Gender bias starts early, and although education has begun to modernise its views, like any centralised bureaucratic system, improvements are slow. Gender roles reinforced in education persist into women’s professional careers, where they are valued according to different parameters than their male colleagues.
Despite this, research shows that when venture capitalists invest in women-owned startups, they make more money. A recent survey found that women-run businesses delivered higher revenues and generated a higher return on equity (10.1% per year versus 7.4%) than those run by their male counterparts.
While this may have snuck beneath the notice of some, more observant economic participants have taken note: The number of women-led startups funded by the European Innovation Council (EIC), for example, has grown from 8% to 29% over the past 2 years.
In addition, the European Innovation Council and SMEs Executive Agency (EISMEA) has launched the Women TechEU programme, which provides grants to female entrepreneurs and access to coaching, mentoring, and networking opportunities.
Initiatives to close the gender divide and eliminate inequality in startups look to get into full swing in the near future. The advent of the tech startup cannot be said to be solely responsible for creating said initiatives. Still, they have provided the data necessary to justify their continued funding and expansion.
How startups help emerging economies compete globally
The resources required to create a new startup are becoming more accessible as technology and living standards across developing nations improve. Entrepreneurs can learn to code with the click of a button, and cloud-based services now give access to the necessary building blocks to create viable services at a fraction of the price paid by entrepreneurs of yesteryear.
Unsurprisingly, the lack of resources and investment capital characterising emerging economies does little to deter the creation of new startups that emerged almost as a result of such scarcity. Underprivileged entrepreneurs often ask family and local communities to help fund their ventures. This is common in cultures with strong communal bonds whereby action is dictated by more than simply financial goals.
Even in developed nations, open source projects are an excellent example of communal goodwill and cooperative action taken without the expectation of remuneration. Github, for example, was developed by an open-source community not motivated by monetary incentives.
Furthermore, startups in emerging economies have seen unprecedented state support. Governments in developing economies across the world have encouraged economic growth by creating programmes and policies to incentivise the creation of local startups. Again, this is helped by the ‘lean’ nature of all startups.
All this together makes startups a great way for impoverished countries to have a chance to compete on equal footing with larger economic powers.
5 successful startups with innovative ideas
There is no shortage of new, impressive ideas in the startup space. Most startup unicorns reside in fintech and digital services, where new technologies often create new media consumption patterns to exploit. However, some of the most impactful startups have risked the process of designing, prototyping and creating physical products with more altruistic goals in mind. We’ve listed 5 of them below:
1. Upcycling – Gumdrop
Amsterdam-based startup Gumdrop Ltd. just launched their flagship GumShoe. The footwear brand does just what the name suggests. They create shoes made of used chewing gum.
Gumdrop collaborates with global manufacturers to offer innovative products from upcycled chewing gum. Gumdrop can recycle processed chewing gum for several new purposes, including boots, mobile phones, packaging and more.
Their product offers a sustainable plastic alternative for enterprises working towards achieving better ESG (Environmental, Social and Corporate Governance) goals.
2. Green energy – Alpha 311
Alpha 311 seeks to provide easy access to green energy worldwide by installing their proprietary wind turbine.
Their turbine easily fits around lamp posts. It is most efficient when placed next to a roadway where airflow from passing vehicles can generate electricity even when the wind isn’t blowing.
The Alpha 311 turbine can be manufactured at a low cost and added to most existing infrastructure. They’re currently targeting telecommunications infrastructure such as radio towers which provide the perfect platform to add their technology.
Alpha 311 offsets the carbon footprint of large cities by turning any available surface into a potential source of clean energy. It is currently working with the Greater Manchester Combined Authority (GMCA) to install 2000+ turbines across the city.
3. Marine conservation – IADYS
IADYS designs, develops and delivers robotic innovations aimed at marine conservation. Its flagship ‘Jellyfishbot’ – a small robot capable of cleaning ocean waste and oil spills – is already operated by several cities, including Cannes, Singapore, and Tokyo.
IADYS already works extensively across most municipalities in France, helping clean port areas, lakes, canals and industrial sites using a combination of robotics and artificial intelligence. Most recent developments by their R & D team allow IADYS robots to conduct automatic bathymetric surveys. Conservationists and surveys can then use this information to judge the impact of urban development on coastal regions.
IADYS has also used its platform to help educate the wider public on the dangers of ocean waste and pollution.
4. Remote medical monitoring – NuvoAir
NuvoAir uses its digital care platform to help patients monitor and manage long-term respiratory illnesses.
Their technology uses a simple handheld device alongside a digital platform which can easily interface with public and private healthcare professionals. This helps clients and their doctors make care decisions based on real-time data and insights.
NuvoAir offer services across the entire US and in some parts of the UK. Like other remote medical aids, NuvoAir also offers the promise of expanding affordable healthcare to impoverished people around the world. Patients can use the NuvoAir system without the assistance of medical professionals. This makes it accessible to areas without reliable internet connections.
5. 3D printed homes – ICON
ICON is a recent introduction to the growing industry of 3D-printed housing and construction. Using a large printing mechanism attached to a moveable gantry, their Vulcan printer can create homes and structures up to 3,000 square feet.
The Vulcan can produce resilient, single-story homes faster than conventional methods and with less waste and more design freedom. While competitors in the industry have successfully created larger spaces, ICON’s technology is particularly interesting due to its compact size.
The printer can be comfortably stored and transported in unmodified cargo containers. This makes it more likely that ICON will soon outsource this technology to impoverished nations and help alleviate homelessness.
Startup funding – Challenges and solutions
Ground-breaking products and flexible business models form the foundations of any startup. They also need funding however, to turn those ideas into reality.
Every entrepreneur’s dream is a steady flow of funds from a single, reliable source. In reality, many startups rely on multiple funding streams. Sourcing enough money to support your venture can be difficult and time-consuming, especially when patrons, clients and supporters come from different corners of the globe.
When every penny counts, startups can’t risk losing money to bureaucratic drag, inefficient online payment platforms or crippling banking fees.
CurrencyTransfer helps SMEs, entrepreneurs and corporate clients move money across borders safely, while avoiding bank fees and hidden charges. We work with a network of FCA-authorised brokers, connecting you to the best partner for your financial needs, helping you save money on every international payment you make.
Contact us to discuss the best financial strategy to support your initiatives.