Covid-19 impact on industries: The winners and losers

Four months back, during the early day of Covid-19, many predicted that the world of entrepreneurial ventures might dry up, leading to many closures. On April 1, The New York Times announced that "the big breakdown" of the technological boom had begun.

Drastic changes have taken place in the Bay Area and other technology hubs since the mid-summer. The pandemic is having a significant effect on the life of start-ups – but not necessarily for good.

Some sectors have expanded and blossomed, while others are experiencing global losses with systemic shifts ahead. However, in general, Covid-19's potential and overall influence was to intensify the transformation of technology in all industries.

Some industries for whom the pandemic brought  success and development, are at their peak. Conversely, for those who took a hit, they have perhaps been indefinitely derailed.

In both situations, developers and corporate boards are trying to adopt the best lessons from the early months of shutdowns, so that companies emerge healthy and more resilient on the other side of the pandemic. Who flourishes and who fails – what lies next – might now be the most critical debate of venture capitalists.

One thing is obvious: we are passing through an unpredictable time, and no one is aware of how long this will continue. However, some patterns are unambiguous.

Ecommerce, media/gaming, video conferencing, digital cloud, network protection and health technologies are a few markets that prospered under Covid-19. These industries have endured in the early months of the pandemic, and then blossomed to undertake expansions.

Any of this should not be shocking at first sight. The most prominent start-ups in these sectors experienced increasing sales, sound balance sheets and satisfied consumers just before the coronavirus hit us.

If the government and society confronted the consequences of a pandemic and laid policies accordingly, the adverse effects could may have been mitigated, but it remains questionable as to what extent.

There are strong signs to speculate that there will be no deviations at all in the near term. For instance, the decision to follow and develop a public cloud, SaaS and collaboration tech engagement is a one-way door: it is impossible and unnecessary to change that direction when you've entered it. Covid-19 continues to be an efficient trigger and driver for the cloud path.

Healthcare infrastructure, be it in the fields of vaccinations, therapy or research, is vital both for existing players and for nascent creative businesses.

Meanwhile, telehealth has undergone a growth that is more commonly acknowledged as part of a modern trend. Advertising, entertainment, eCommerce and home-based protection have all been "the only game in town".

Given its dire public health implications, Covid-19 has been an enabler for all these sectors. Will these businesses retain their momentum? There is no clarity here.

Collaboration tech is on high demand and has gained fresh consumer satisfaction in a few months. But it is also a busy environment, and at some stage, users may get bored with many mundane video chat, teamwork and project management apps.

Ultimately, information workers can look for the right resources, likely requiring consolidation. There is considerable space for growth and development, but start-ups will also have to compete with Microsoft Teams' performance and scope, for example. 

In the last few months, eCommerce has been the ultimate titleholder, and there is no need for concern about Amazon's and Shopify's longevity. Niche internet stores may have to reopen physical shops and use a mix of AI (artificial intelligence and analytics) to boost their consumers' awareness and what it takes to retain them.

Live activities, hotels, IT facilities, physical shopping, real estate, transport and travel/hospitality are industries that suffered from Covid-19. There are three alternatives for start-ups in these industries: first, slash prices, boost balance sheets and hunker down; second, brace for or shut down; third, bring all money to give the company a modern secular post-Covid era look.

VC founders and venture board members who wish their businesses will succeed are still concentrating closely on the third, which is critical to their resurgence and longevity.

In IT, investment has changed from innovative programmes to performance, utilisation of remote workers and cost reductions. Badly hit regions involve IT, legacy applications and IT facilities on-site.

Internally, initiatives that may not concern consumer topline have taken a back seat. Legacy device manufacturers and on-site technology are likely to experience detrimental systemic improvements after the pandemic, with their profits from servicing still going down eventually. These organisations have small scope for combining IT and the cloud path to redesign themselves.

Suppose existing software can be re-written for the cloud, with structural, architectural improvements including APIs, containerising, orchestration and resilience, in the post-Covid environment. If there are fewer on-site and more cloud-based work, things are workflow-driven and there is probably more on-shoring, there would be a measure of feasibility in allowing this move.

Company advance in other areas are still ongoing. Ride-sharing firms like Uber invested massively in domestic transport. Their pending purchase of Postmates is not only an expansion indicator for the distribution of food from restaurants, but also indicates that ride-sharing industry development may come from on-demand food, food, retail products.

For the most part, restaurants and live performances are bound to fluctuating municipal laws. In the meantime, start-ups must reexamine how they will work in this room. Ghost kitchens, which may provide several menus and collaborate with delivery systems, seem to have a bright future. Concerts, theatre, and other live entertainments are threatened, so, start-ups can support and re-invent these industries through live streaming, increased video, and immersive experiences.

Physical shopping has also gone through many years of decline, say for Agora and a few supermarkets and grocers in large warehouses. On the other hand, sustaining companies need to accept innovative selling models, a technology that generates customised experiences, more professional knowledge and insight, and targeted product creation and distribution. This will most likely be the next shopping market for certain entrepreneurs.

The shock of a global pandemic has brought us to an inevitable decision regarding the prospects of technology start-ups: pretending the future looks like the past is not a realistic plan. Current companies must develop for a future where technical advancement and immersive interfaces can render market achievement ever more definitive.

VCs are keen to finance both current and new enterprises which are willing to take advantage of the break in the normal business cycle and lay the foundation for the post-Covid economy.

Mohammed Ishraful Alam, CEO & Co-Founder of Seventh Dice International