The New Normal: Crises don’t change the trends, they just accelerate them

This article was originally posted on VentureBurn.com (check original)

Our piece of the pie is about to get much bigger. The problem is what happens to the pie.

Let’s face it, for people freaking out the most, this Covid-19 is the first one in their adult business life. Financial Markets work in circles, and a huge correction was bound to happen anyway very soon after one of the longest bull years in history.

Cash is king now. If you have it, you can renegotiate any partnerships to your favor. If you don’t and you have to raise, get ready for your valuations to be slashed. Venture capitalists (VCs) still have investable capital they have raised last year, but they smell your blood.

Most tech startups are the lucky ones here, short term at least. Technology adoption (beyond Facebook and Whatsapp) among your total addressable market has always been the issue.

China’s post lockdown numbers have shown that many of the first-time shoppers from lower-tier cities have come back for further purchases. That is exactly what we need here in Africa too.

For software-as-a-service (Saas), B2B software startups, Covid-19 has done a better job in digitalizing your prospects that than any CTO could have ever evangelized.

The economic damage from the virus itself is getting astronomical but there were no bombs this time. Not real ones (World War II), and not hidden in a form of crooked financial instruments (2008 Global Financial Crisis).

The real damage is driven mostly by market psychology and the government’s decisions to put people in lockdowns.

History will tell us whether this approach was a genius or a stupid one. But the fact is is the governments take full responsibility for this and at least in the developed countries (from where the money comes to Africa via foreign direct investment) the economic stimulus plans will be deployed at a scale never seen before and markets will come back eventually to normal because people want it (psychology).

What is slightly annoying though is that we are already being told about “new normal” — much stricter measures in the way we are going about our lives in order to protect us from new potential diseases.

Most of recent, potentially pandemic viruses came from China, let the statistics do the rest for you. Maybe we won’t have to worry that much about how far we are standing in the queue from someone else if China simply got their shit together.

It’s unlikely however to see more “protection from” and more “scrutiny of” China’s own preventive measures their own internal way of handling the spread of viruses, that affect the rest of the World. China is too powerful to be bullied and their PR game is to turn themselves into the heroes of this pandemic, not the reason behind it.

The big problem for African economies is the oil price war between Saudi Arabia and Russia and all the escalations that can come out of it. Take that, double down with demand decrease due to economies being shut down, and you have a recession in Africa almost sure.

On the other hand, maybe this is a wake-up call for politicians to diversify their GDP inflows, pay more attention to other sectors (like IT), and let them breathe. Crises don’t change the trends, they accelerate them.

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Entrepreneur, Investor, Advisor, Speaker. Bestselling Author of “Chasing Black Unicorns”. www.marekzmyslowski.com

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Marek Zmyslowski

Marek Zmyslowski

Entrepreneur, Investor, Advisor, Speaker. Bestselling Author of “Chasing Black Unicorns”. www.marekzmyslowski.com

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