COVID-19 definitely had and still has an impact on the startup ecosystem worldwide. Some innovative businesses face the challenge of survival, it became more difficult to attract investments and make sales. However, others have successfully implemented their ideas in response to current market needs. How to survive the pandemics and even use it as an advantage? Tal Catran, Israeli Startups & Accelerators Guru, who has established and managed 14 accelerators, conducted 60 acceleration cohorts, agreed to share some tips and insights on the topic. His experience spreads over near 30 countries worldwide, including Lithuania, where he has been a keynote speaker in several major conferences. Tal is also a startup mentor, angel investor, as well as lecturer, and speaker in the “TechHub“ pre-acceleration program launched by the Agency for Science, Innovation, and Technology (MITA).

Tal, could you tell us how COVID-19 crisis has changed the startup ecosystem so far?

Someone could say: how is it that they launch “TechHub” pre-acceleration program for startups in the middle of Corona? Well, I believe every crisis presents also an opportunity. Startups are facing unclarity, uncertainty, difficulties and challenges on a daily basis, so nothing really changed for them because of Corona. Yes, sales are more difficult to do now because customers are trying to cut down expenses. Smart investors know that “shopping” during a crisis can present good deals because “sellers” tend to be more flexible. Anyway, if you are a good startup, have a good team and technology, you are focused on what you do and have the capabilities to deliver on your promise, you will prevail, you will succeed. Startups always need to keep on moving forward, maybe a little bit slower now, but keep on moving, do not stop! If you and your startup survive a major crisis, investors will appreciate it, and customers will flock to you.

And how is Israel adapting to the situation?

People think that everything shines in Israel. And yes, we are the Startups Nation, but we have it difficult like everyone else. To start, Israel is a tough country to live in and no less expensive and don’t forget constant security tension. What is different is that entrepreneurs in Israel take it all the way, they don’t stop, they work very hard on the technology, they deploy quite quickly to the market and put themselves out there, making sure that their technology is needed. It is a bit easier for startups to raise funds having a mature ecosystem, very supportive towards early-stage startups. During September, Israeli startups raised over a Billion Dollars. According to OECD, Israel is ranked in the first 10 most educated countries in the world. Interesting fact to share with the readers was published last week by Mastercard Index of Women Entrepreneurs 2020, nominating Israel as number 1 in the world for supporting women entrepreneurs. So yes, we have the technological capabilities, we support our businesses, but we also take risks, we are not afraid to fail, because we gain more experience. Investors appreciate it when we rise up and try a different way.  

You have a slogan, which is “Don’t hesitate, accelerate!”. Do you think that a time like this is also a time to accelerate? Or maybe it is better to wait until the situation is more stable?

I think it is always time to accelerate. As I said, startups never stop developing, pivoting, adjusting, learning the market, reaching out to customers, partners and investors. If you stop you will most probably not move again. So yes, do accelerate, and especially during a crisis. When the attention is somewhere else, it gives you time to pivot and adjust yourself and your startup. You need to work hard. Just think, every second you are not pushing your limits, someone else does! Keep vigilant, updated and sharp.

Could you give our listeners several practical tools to help them stay in business or even succeed in this time?

Stay optimistic but realistic, keep your eyes open and make sure your team is doing the same. Validate your need and quickly develop the solution. As an early stage startup, you don’t have the privilege of launching when your solution is 100 %, realize 60 % and it is good enough to engage. Reach out to first adopters, launch your technology, learn from mistakes, and adjust. Be attentive to your customer’s needs as well as feedbacks. If a customer tells you “I have a similar solution and it works quite well for me”, don’t argue to prove yours is better, instead search for a different way in. Secondly, because your resources are even lower during COVID, cut your expenses. I know it’s tough, especially when you need to let go of someone in your team. Speak to them, don’t send them a message saying “bye-bye”. Take responsibility and remain empathic. Finally, keep a constant touch with your customers and investors. If you can’t deliver on time, let them know, don’t ignore them. To recap, remain optimistic and realize you need to be agile and adaptive to the New Normal and hopefully get some luck on your side.

How to convince investors to invest during the crisis?  

You better reach out to investors only after validating your idea, meaning you have an MVP (Minimal Viable Product) and first adaptors. The more ahead you get with your product and sales, before reaching investors, the higher are your chances to get a decent valuation and raise significant funds. Know your market means not just who are your customers, but also how to reach them and make the sale, preferably B2B. Its clear that making it during COVID is more difficult, but it’s not an excuse to mention to investors, their answer will be “come back once you do better, its too early for me”. Remember to learn about the investor you’re about to meet, better meet him after someone knowing you both introduced you to the investor. Practice, practice, practice, you don’t just “show up” for a meeting with investors, for that matter also with your customers, you must come prepared, sharp and professional.

What would be your advice to the policymakers during this time, what kind of interventions should be made to speed startup recovery?

Government has a huge impact on accelerating the startup ecosystem but needs to act like any investor, meaning ensuring an ROI as well as commitment from the side of the startups. That said, funding is not enough, and the investment should be also in way of training and skills development. That is usually a responsibility the accelerators and incubators take, regardless if they operate under a government agency, such as TechHub, or business sector. Startup’s life span is relatively short, startuppers need to deal with many challenges, have little resources, which is why they are in constant need of assistance, that must be offered quickly and effectively. They can’t bare bureaucracy. I can see that the Lithuanian government is making efforts to support startups, in way of funding and consulting and I’m sure results will soon follow.

Gintas Kimtys, director of MITA, says “TechHub” pre-acceleration program is just what startups need during this time: “The biggest advantage of our pre-acceleration program – personal mentors, free consultations with local and international lectors. It is hard to operate on your own. Mentors can help you shift towards the right direction, share necessary tools to survive and support you.” The registration to the second cycle of the pre-acceleration program will start on January 2021.

TechHub is a project implemented by the Agency for Science, Innovation and Technology (MITA) to help develop early-stage innovative business ideas, encourage intensive start-up growth and sustainable development of the entrepreneurial ecosystem. The aim of the project is to encourage researchers, scientists, students and businesses to develop innovative ideas, provide their teams with support and opportunities for intensive growth. We invite you to follow all project related news on Facebook and LinkedIn as well as https://mita.lrv.lt/lt/veiklos-sritys/mita-vykdomi-projektai/techhub.