Purpose over profit – The future of entrepreneurialism in the face of Covid
Today’s next generation of founders have a global mindset, care about today’s problems and often address them in their business’ end-to-end sustainability plans and throughout their operating model. The DNA make-up of next gen entrepreneur has always drawn from the strands of social responsibility so suddenly attributing this ‘trend’ to the pandemic would be unfair.
The changing attitudes of next gen entrepreneurs
Let's look at environmental impact. In France, we've seeing entrepreneurs embracing a "home-grown and traceable approach" such as organic products in cosmetics. In fashion, we're seeing businesses such as Le Slip Français focus on local production and home-grown supply chains with low carbon impact. The crisis has made founders stop and evaluate their supply chain, and some more established businesses are seeing the benefit and impact of their value proposition in a fresh light.
For example, French food waste start-up PHENIX are connecting supermarket chains with non-profits to create a circular economy, the impact of which is more tangible today than ever before. However, the Covid-19 crisis has highlighted the need to not only focus on the 'E' or environmental factors of ESG, which has long been the focal point of the acronym. It has also cast a light onto the 'S' or social aspects.
When we look at organisational infrastructure we can see that digital communication is set to change for the long-term future with employees and users, and a real focus on transparency and wellbeing. Edtech companies like Klassroom are connecting teachers and parents using apps in order to develop a sense of community whilst schools are in lockdown, simplifying the communication process in doing so.
However, the Covid-19 crisis has highlighted the need to not only focus on the 'E' or environmental factors of ESG, which has long been the focal point of the acronym. It has also cast a light onto the 'S' or social aspects.
Investors look to impact opportunities to fuel returns
It's highly likely that the pandemic will accelerate the movement towards investing in businesses focusing on impact and purpose. In greater numbers, investors are responding by making direct 'angel' investments through to taking out private equity. We are also seeing a growth in funds, with some entrepreneurs developing their own investment funds and structures, known as 'startup studios' or accelerators. Despite the huge disruption that Covid-19 has brought, as the dust slowly settles, we're seeing that good ideas are managing to raise capital, particularly in the digital, cyber-security and technology spaces.
In recent months, we've watched a Fintech established to advance touch payment systems raise EUR40 million, while EUR110 million was raised by French recycled mobile phone company BackMarket to develop a circular economy for digital devices. ALAN, a new, mature insurtech company has also recently raised EUR50 million to digitise and simplify health insurance services and the user experience for customers. As a strategic partner of entrepreneurs, we know that we have a key role to play.
For mature business ventures, with high cash reserves and a good degree of flexibility, entrepreneurs will have to react not only in terms of the ways in which they work to adapt to the coronavirus crisis, but also pivot to meet the change in consumer habits by offering products and services that meet with their higher expectations in terms of delivering impact.
The business world continues to watch as the next generation of entrepreneurs thinks at pace about integrating purpose and impact into a post Covid-19 world, using their businesses as a vehicle to deliver positive impact for their societies. Purpose should always drive a business vision especially in times of crisis. Making sure it categorically comes first is a sure indication of the benevolence and driven mindset of the entrepreneurial community.
Note: this article is a shortened version of an opinion piece entitled "How the coronavirus crisis will drive the next generation of entrepreneurs towards impact" originally published in Private Banker International.