Startups are often flexible companies that easily adapt to a new reality. Agility is inherent to the entrepreneurial mindset of testing new ideas, as startups do. Therefore, it comes as no surprise that startups may be better at dealing with crises that require organizations to adapt and evolve their products, their value propositions, their operational models or any other aspect of doing business. In today’s blog I’ll review a few promising startups that demonstrate success throughout the COVID19 pandemic.
NextHink: Offering Remote Workers a Fun Digital Experience?
Founded in 2004, the Switzerland-based Nexthink offers digital employee experience (DEX) management software. The company’s mission is “to delight people at work”. As the company describes itself on its website, “Through a unique combination of real-time analytics, instant remediation, automation and employee feedback across all endpoints, Nexthink helps IT teams deliver on the promise of the modern digital workplace. Nexthink is the only solution to provide enterprises with a way to visualize, act and engage across the entire IT ecosystem to lower IT cost and improve digital employee experience.”
On February 8th 2021, the company announced that it has secured $180 million in a Series D financing round at an enterprise valuation of $1.1 billion, thereby becoming a unicorn (a unicorn is defined as a privately held startup company valued at over $1 billion). While the company has been around for quite some years already, the coronavirus pandemic has accelerated its growth, as has been acknowledged by Pedro Bados, co-founder and CEO of Nexthink: “The rise in remote working has dramatically accelerated the need for Digital Employee Experience, as a big part of all the interactions that employees have with companies are now digital”.
In other words, during the coronavirus pandemic, more and more employees worldwide have shifted to remote working, thereby raising the importance of digital employee experience. Nexthink was able to position itself well in this evolving market situation. The new round of funding demonstrates that investors believe that the company is on the right path to more substantial growth.
Instabox Redesigns Last-Mile Logistics
A second trend during the coronavirus pandemic has been the rise of eCommerce. As merchants had to close their physical shops, and as social distancing discouraged consumers from shopping outdoors unnecessarily, online shopping has become the norm. Consequently, the parcel delivery business has seen an unparalleled peak. As an example, before the Christmas season at the end of 2020, the Dutch postal service PostNL announced that they would refuse new clients (merchants) for parcel delivery, as they have reached their maximum capacity.
In the context of eCommerce, the term “Last Mile” describes the last leg of a journey comprising the movement of goods from a merchant or a transportation hub to a final destination, i.e. the consumer. The last mile is the most expensive part of the shipment. In transporting parcels from the merchants to parcel logistics hubs, the parcel company can move many parcels together from A to B, such that costs are shared across many parcels. During the last mile, however, a dedicated employee needs to bring the parcel to the house of the consumer, and repeat this personalized service for each and every parcel (not to mention that there may be complications, e.g. the client is not at home, the address is incorrect, or there are traffic jams). The last mile is therefore the bottleneck of parcel delivery.
Sweden’s tech-based logistics company Instabox transforms last-mile delivery. Instead of the costly process of bringing the package to a person’s home, Instabox promises fast delivery of the parcel from the Merchant to a Smart Locker, where the client (consumer) can pick up the package. This model shifts the last-mile to the client, thereby offering flexibility (clients can obtain products from their online merchants within a day, or even same-day delivery) and substantially reducing shipping costs. In April 2020, as COVID19 hit Europe substantially, Instabox secured €36 million in financing at a €100 million valuation. Only 10 months later, in February 2021, the company closed another $90 million Series B round. This company was well-positioned to benefit from the changes that the coronavirus pandemic has brought upon the business environment.
SkillLab Uses AI to Help People Turn Their Skills Into Careers
On a different scale of investment, Dutch social startup SkillLab raised €1.5M in its Seed round. SkillLab uses Artificial Intelligence (AI) to help people find jobs based on their skillset, rather than based on the titles of jobs that they may have fulfilled. The company aims to help those who may not have a shiny CV, or those who have lost their jobs due to increased automation; hence the social labeling of the company. Although unemployment due to automation is not specific to the coronavirus pandemic, the current crisis has also resulted in many people losing their jobs. Unemployment rates may still continue to rise, as the pandemic continues to dominate all aspects of life in 2021.
In a marketplace where more and more people seek for a job, AI at the fingertips of the unemployed can be a promising aid in matching candidates with open vacancies while avoiding bias.
Cybersecurity Rises Along with Accelerated Digital Adoption
Consulting firm McKinsey & Company reported that “digital adoption has taken a quantum leap at both the organizational and industry levels”, as a result of the COVID-19 pandemic. The overall trend across all industries is Going Digital. As more and more activities shift to the online world, the risk of data leakages and cyber attacks becomes more imminent than ever. It comes as no surprise therefore that Cybersecurity is a thriving area for investments. A few examples are:
- Cybersecurity startup CYE from Israel has raised $100 million financing early 2021. CYE helps its clients shore up their security posture. It does this in large part by conducting offensive operations against their customers — with their explicit consent — to find weaknesses in their network defenses before malicious hackers do. CYE’s CEO Reuven Aronashvili said in an interview that “CYE is now targeting revenue growth of 300% to 400% a year”, clearly showing the immense potential that this market currently has.
- Armis, another Israeli cybersecurity company, has announced the closing of a $125 million financing round at a company valuation of $2 billion. Exactly one year earlier, the company’s valuation was $1.1 billion meaning that the company’s valuation increased 81% within a year.
UiPath Named an RPA Leader
UiPath, the last company on this list, may no longer be considered a startup, as it is already a large international firm. However, bear in mind that this originally Romanian company only had 100 customers and 590 employees in 2016. What a remarkable growth it has had since then! UiPath is being recognized as a Leader in the 2020 Gartner Magic Quadrant for Robotic Process Automation (RPA).
As opposed to traditional workflow automation, where software developers produce a list of actions to automate a task and implement APIs to this end, RPA systems develop the action list by watching the user perform that task in the application’s User Interface, and then perform the automation by repeating those tasks directly. This approach reduces the barrier for workflow automation.
We have already discussed above how the coronavirus pandemic accelerated digital adoption of organizations across all sectors. And so the need for smart workflow automation grows rapidly. UiPath has been well-positioned to support companies in their adoption of technology during the crisis. As evidenced by its latest fundraising round, in a period of 7 months between July 2020 and February 2021, UiPath increased its valuation from $10.2 billion to $35 billion, i.e. an increase of 243% in the company’s valuation within 7 months!
Every crisis offers also opportunities. Some companies are better than others in identifying these opportunities and benefiting from them. Companies that are inherently agile and capable of quickly adapting themselves as the marketplace is changing are most likely to prosper at times of crisis. These capabilities however will make them stronger than their peers also when the crisis is over, because they entail a company culture that promotes innovation and entrepreneurship. Winners tend to keep winning. Therefore, these companies are likely winners not only today, but also tomorrow.
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