In the midst of every crisis lies opportunity.
Silicon Valley entrepreneurs are creating startups or pivoting existing ones to fight Covid-19. Some companies have raised funding with the help of Y Combinator, or were formed after discussions in the Covid Accelerator, a community that helps startups develop and raise funding.
“The current situation is creating an unprecedented change to consumer behavior,” Jared Friedman, a partner at Y Combinator, told CNN Business. “There are huge opportunities for new products to help people with our new daily reality.”
This isn’t the first time that a downturn has led to game-changing innovations. Two of Y-Combinator’s most successful companies, online payment platform Stripe and Airbnb, were created in the midst of the 2008 financial crisis. As people a decade ago sought ways to make money in the depths of a recession, they listed parts of their home out on Airbnb. Uber, founded in 2009, also emerged out of the crisis, offering gig workers a flexible way to earn money and set their own hours, while recovering from layoffs or working through a career change.
Silicon Valley is eager to invest in the future winners of the current crisis. In March, 12 investment firms pledged to invest more than $30 million in companies with Covid-19 programs, and Y-Combinator has connected many of those founders to investors. Friedman said it’s not yet clear how much money has been raised or invested.
“In a crisis like this, the bigger risk is not funding potential solutions versus funding things that don’t work,” said Seth Bannon, the founding partner at Fifty Years, an early stage venture capital firm that is among that dozen. His firm asked its startups what they are working on right now that might help fight Covid-19, offering up to $25,000 that would convert into equity.
Bannon said that Fifty Years has invested more than $13.5 million so far in projects that range from Covid-19 vaccines to automated testing using robots.
Getting smart people together
Eri Gentry and Tito Jankowski started Covid Accelerator on March 12 to unite people of various backgrounds, from computer science to marketing, who want to fight Covid-19 together. Together they discuss ideas over daily Zoom coffee dates and connect startups to funding grants.
“In the future, we won’t have to hack together a set of tools to get things done,” said Gentry. She envisions that networks like the accelerator will exist post-Covid to help startups.
One of Covid Accelerator’s successes is MyCovidMD, founded by Dr. Nana Afoh-Manin, 42, an emergency medicine doctor in Los Angeles who told CNN Business that she founded her startup to help fill in the blanks where the healthcare system falls short.
MyCovidMD offers people a way get people to coronavirus testing sites by creating community events, complete with spoken-word artists and hot chocolate. The tests are provided to people in their cars, maintaining social distancing rules, irregardless of whether they have health insurance. MyCovidMD says it has performed more than 1,000 tests and anticipates reaching 4,000 by the end of May.
“There’s been many times where you struggle with the system,” said Afoh-Manin. “There’s absolutely no reason why we can’t take care of our own.”
Afoh-Manin estimates her nonprofit has received about $80,000 in funding, from herself and her co-founders and various donors including real estate company Hackman Capital and Fraser Communications, a Los Angeles communications company.
Unpredictable time table
It’s too early to tell which of these emerging startups may emerge as the market winners. And biotech companies attempting to fight the pandemic also must abide by government time tables.
Companies developing Covid-19 treatments run the risk of acting too quickly, said Anat Admati, professor of finance and economics at the Stanford Graduate School of Business.
“One has to remember that Silicon Valley, even biotech, they are very impatient. But we saw with Theranos that [public health] is a little more complicated,” said Admati, referring to the now-defunct blood-testing startup, a one-time darling of Silicon Valley.
Ritu Lal, 51, CEO and co-founder of GEN1E Lifesciences in Palo Alto, California, estimates her company has received $3 million in total funding since its launch last May. GEN1E, a Y Combinator-backed company, is seeking FDA approval on a sped-up timeline to produce a drug that treats acute respiratory distress syndrome, which is found in some severe coronavirus cases.
“We have to do it in a safe way so that people don’t get hurt,” she said. “So sometimes you have to be patient.”
The head of health care software startup Clara Health agrees.
“There’s the [saying] ‘Move fast and break things.’ You cannot do that in health care. You can move with a sense of urgency but you cannot break things,” said Evan Ehrenberg, its co-founder and CEO.
Clara Health aims to match people with clinical trials as easy as “grabbing [an] Uber or booking Airbnb,” said Evan Ehrenberg, its co-founder and CEO. The company has raised $11 million in total funding, all of it pre-pandemic. Ehrenberg estimates Clara Health has matched more than 10,000 patients to clinical trials and will continue to grow that “at a sustainable pace.”
As Silicon Valley continues to back its adaptive startups, eventually winners may shake out from the ongoing pandemic. Each startup hopes it will be them, but it’s too early to tell.
