Entrepreneurs search for innovations that are marketable and can be scaled-up. A tech start-up is a company, typically set up by entrepreneurs, to research, develop, and bring a product or service to the market place. The product is usually based on a new technology or takes an existing idea and creates a new delivery mechanism.
Trying Times to Start-Up
Start-ups depend on skilled staff and capital to make their ideas come to fruition. Although some start-ups have thrived recently, globally, the impact of the COVID-19 pandemic has been difficult on the majority, with 74 percent seeing a decline in revenues. Typically, they need at least three months of funds, and 41 percent are now within the red zone for their cash flow needs. The knock-on effect is that 74 percent of start-ups have cut full-time staff, with 26 percent of companies laying off 60 percent or more. One brighter result is that 96 percent of tech start-ups continued working during the COVID-19 crisis.
By the nature of start-ups, some will overcome the constraints of the COVID-19 pandemic and prosper. Procedures to manage living with the virus and medical advances to overcome the virus will enable a new normal that will see people returning to work and resuming leisure activities. The new normal will also highlight an ongoing issue with technology advances: the future of work.
The Future of Work
Although automation in manufacturing has improved standards and replaced workers for decades, the continuing advances in robotics and the development of artificial intelligence (AI) has automated more complex tasks. These jobs are not only in manufacturing, such as car production but also in other industries such as transportation and logistics, customer service, agriculture, healthcare, and finance.
With start-ups leading the way, the work environment and job market are changing. Venture capitalists invest in tech start-ups to find ways to reduce employment costs, reduce the impact of human error, fatigue, and sickness, and increase efficiency. Innovation also brings new jobs, with today’s students preparing to work with technology that hasn’t yet been invented. Reducing employer salaries through technology allows companies to lower their costs to the consumer and enables them to expand. Technology also takes away repetitive tasks and improves worker safety. Technological advancement in communications means that people are better connected so that they do not have to be in a particular location to work.
Innovate to Generate
Innovative technology is not a zero-sum phenomenon. Smart products, AI, and automation will improve our lifestyle and will make some jobs in many sectors obsolete, but it will also generate new work. In 2018, the World Economic Forum’s report on the Future of Jobs said that although new machines and algorithms were projected to replace 75 million jobs, they were also predicted to stimulate 133 million new roles.
Tech start-ups aim to address an unmet need or demand; if successful, they create jobs and inject money into the economy. Periods of rapid innovation typically occur with periods of strong economic growth, creating a virtuous circle of prosperity. The motivation for successful start-ups is not limited to the bottom line. The innovative ideas help address big problems, such as climate change and socio-economic difficulties, to pull people out of poverty.
By addressing these problems, tech start-ups play a fundamental role in raising living standards and preserving the environment for everyone.