Innovation during downturns
Investment in Innovation usually falls during downturns and it will likely do so during the covid-19 pandemic.
First-time entrepreneurs will struggle to convince investors to give them capital in the depths of the downturn.
Many large companies will shift into a defensive position.
A burst of entrepreneurial activity will likely emerge after the downturn.
In the interim there is an opportunity for existing businesses, who have sufficient capital to survive the downturn, to get a head-start.
Using government incentives such as R&D Tax Credits could ease the financial burden.
I once read about a large Investment Company who recruit talented people based on their ability to find an ‘edge’. The type who get up to play Poker at 6am to face-off against the drunk players in the USA.
In the UK, SME companies, who are usually squeezed from all directions, could currently have this edge and could be the spearheads for Innovation and Creative Destruction.
There is no doubt that the covid-19 pandemic, which has caused so much disruption and suffering, will eventually pass and give way to a wave of new opportunities and successful ventures. Who will be the ones to seize them?