Hiroki Takeuchi, founder of digital payments firm GoCardless
At the start of 2020, Black Girl Ventures, a network which helps Black and brown women entrepreneurs find access to capital, was on the brink of expanding its footprint to 25 more cities in the US. But, after successfully launching two in-person capital-raising boards – called chapters – in Houston and Philadelphia, something unimaginable happened.
Black Girl Ventures was forced to pause its in-person operations and shut down all upcoming chapter launches to help stop the spread of Covid-19. It’s a story that every founder who lived through 2020 can relate to. As coronavirus raced around the world almost every business, from hairdressers and family run restaurants to large retail chains and multinational corporations, were hit hard and indiscriminately.
But the pandemic was particularly brutal for Black-owned businesses. The Stanford Institute for Economic Policy Research estimated that 40 per cent of Black-owned companies in the US had shuttered by mid-April, compared to 17 per cent of white-owned firms.
Black Girl Ventures and the female entrepreneurs it promotes were, thankfully, not casualties of the crisis. After a bumpy first quarter, the company’s founder Shelly Bell was quick to pivot. She took the community online, creating a digital incubator where entrepreneurs could connect with each other, and began to host pitching competitions virtually instead of in person. Since then, it has grown at an extraordinary rate. As of January 2021, around 130 Black and brown women entrepreneurs will have received funding as a result of the network’s six virtual pitching events.
What comes next will be determined by the lessons learned in 2020. Bell thinks that the momentum gathered by Black Lives Matter will propel Black entrepreneurs like never before. “It feels like people are thinking differently, and I don’t think it’s going to go away anytime soon. The partners that have come to us, they’re pretty serious about continuing our relationship,” says Bell. “I’m hoping that as we go through 2021, we’ll start to partner up and brainstorm.”
Black Girl Ventures isn’t the only business that has successfully adapted to the climate after the initial economic shock of the pandemic. Online direct-to-consumer businesses are blossoming as consumer fears and health regulations eat into the sales of traditional high street stores. One sector which could see massive growth through 2021 is beauty and skincare. Until now, beauty brands have relied on the support of high street retailers and huge marketing budgets to succeed, but the pandemic has tilted that rationale on its head, and set the scene for a more permanent shift in the future.
Michelle Kennedy, co-founder and CEO of Peanut
Skincare sales also boomed in 2020. Cleanser usage rose from 50 per cent in 2019 to 55 per cent in 2020, while the use of toner increased from 25 per cent to 31 per cent. Night creams, daytime moisturisers and home face masks all saw a rapid rise in sales, according to consumer research group Mintel. It’s a trend that Marcia Kilgore, founder of direct-to-consumer beauty subscription service Beauty Pie, thinks will endure as we continue to work from home.
“People are talking about the demise of lipstick in the category, but we’ve actually never seen so many sales of lipstick. People are at home. They aren’t commuting, and have a little bit more time to take care of themselves,” says Kilgore. She argues that people are using their spare time to find a skin regimen. With direct-to-consumer services such as Beauty Pie, Kilgore believes shoppers can have access to the same quality beauty products without the retailer markups and celebrity marketing.
Confidence in consumer spending could also return in 2021, after plummeting in recent times – but not necessarily on the high street. “While some of the spending will likely come back – we will go to the cinemas, we will eat out in restaurants, we will work out in gyms again – I do think that a lot of the changes in spending have been driven by an acceleration in existing trends,” says Hiroki Takeuchi, the founder of payments firm GoCardless. “Online has increased dramatically as a proportion of overall spend, and I think that will remain the case even once the impact of Covid-19 subsides.”
This spending could come in the form of subscriptions. According to research from Barclaycard Payments, which processes almost half of the UK’s credit and debit card transactions, 22 per cent of retailers developed a subscription service during lockdown, offering businesses a more reliable source of income than traditional means of spending.
Companies’ biggest investments in 2021
In 2021, businesses will embrace the hybrid workplace model, but wellness will become fundamental, says Gerard Grech, chief executive of UK tech entrepreneur network TechNation.
1. Companies will shift their resources to support employees to transition to a “new normal”, scaling up wellbeing programmes and informal mentoring to compensate for the lack of physical connection
2. Employers will focus on their workforce, and ties to physical infrastructure such as office buildings and prime locations will become weaker in 2021
3. Reimagining what working from home means for employees will be an important focus for 2021, as businesses increasingly recognise that not everybody is comfortable working in an office for the foreseeable future
4. Businesses will embrace technology and data-driven HR solutions to improve efficiency and wellbeing. Services such as those offered by wellness app People Matter, alongside logistics desk-booking systems, will become critical infrastructure within the workplace.
Zuora’s Subscription Economy Index also suggests that while S&P 500 companies saw sales contract at a rate of -10 per cent in the second quarter of 2020, subscription businesses actually expanded at a rate of 12 per cent. “It seems these business models are proving more robust than others, and I think that is again driven by the continuation of a trend towards consumers preferring to subscribe versus buy,” suggests Takeuchi, who believes subscription will become an increasing focus for both consumers and businesses.
Beyond that, investment will flood into sectors that have been untouched by the pandemic, such as social media. Michelle Kennedy, co-founder of Peanut, a social app for mums, defied the odds during lockdown, having closed a $12 million (£9.5 million) Series A round of funding for the company in May 2020.
Although we’re currently facing a bleak winter, Kennedy says that there will be great innovation ahead. “Whenever there’s a recession, people become super resourceful, and some great things come out of it,” she says. “I believe we’ll see that again.”
Alex Lee is a writer for WIRED. He tweets from @1AlexL
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