Like many college seniors, biomedical student Abbie Kohler and engineering student Greg Fine were disheartened to have their final semester suddenly cut short and their commencement ceremony postponed for a year.
But perhaps a bigger blow to the soon-to-be Brown University graduates was the one to their Providence company, ResusciTech. Since launching the startup in fall 2018, the pair poured countless hours, brainpower and passion into developing a wearable device and phone app that uses motion sensors to monitor chest compressions during CPR.
Having fine-tuned the prototype, they were preparing for their first study for the U.S. Food and Drug Administration. Then COVID-19 hit, and the late-March trial was postponed indefinitely. The timeline they had crafted for testing, securing investment and bringing a product to market crumbled.
While businesses big and small have been hit hard by the unprecedented economic crash caused by COVID-19, startups can be particularly vulnerable due to short runways and lack of established reputations in the community. In some cases, long-envisioned target markets have vanished, and investors – often deciders of which early-stage ventures live another day – have twisted shut the spigots of deal flow.
But at the same time, the on-the-fly thinking and innovative mindset embedded in startup culture is often an asset for many local entrepreneurs.
Just as Fine and Kohler tackled the problem of how to improve CPR, they set out to overcome the obstacles the new coronavirus presented to their business plans.
Within days, they put the emergency-use app on the backburner and shifted focus to reusing the technology for virtual CPR certifications.
In some ways, Fine said, the shift was beneficial. Fewer regulations for this version of the app – it’s being used in training rather than medical emergencies – will allow them to bring something to market much faster. And with the revenue they anticipate from selling the certification device to companies and individuals, they may be less reliant on investors than if they had stuck with the original plan.
Still, the pandemic presents new challenges. Perhaps the biggest was the change to their collaboration. Rather than puzzling out problems over a shared desk and whiteboard in Brown’s Nelson Center for Entrepreneurship, they talked by web-based video from their homes in Providence and Rehoboth.
“Our best ideas have come out during snack time when we’re not working but just chatting,” Fine said of their work process before the pandemic. “That component of our workday is kind of removed.”
LET’S EXPERIMENT
Traditionally, in-person brainstorming has been integral to many startups and entrepreneurs, agreed Tuni Schartner, executive director of Venture Cafe Providence, which offers collaborative space, special events and regularly scheduled programming for businesses out of the Wexford Innovation Center, also known as Point225, in Providence.
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‘Our magic and our secret sauce are
those in-person connections,' says Tuni Schartner, Venture Cafe Providence executive director. / PBN FILE PHOTO/DAVE HANSEN[/caption]
“Our magic and our secret sauce are those in-person connections,” Schartner said. Since going entirely virtual in March, the organization has labored to mimic those in-person experiences.
Like the entrepreneurs it serves, the process has been honed through trial and error, or as Schartner put it, “Try, trash, pivot.”
Experimentation is also the watchword for Providence-based Social Enterprise Greenhouse, which shifted its training programs, networking events and resources to the virtual world. The nonprofit recently launched its first entirely virtual incubator for aspiring entrepreneurs, with about a dozen participants, and plans to debut a second incubator focused on COVID-19-related innovations in June.
“The thinking is, there may be people who have been laid off, who’ve always kind of thought about starting a business and now have the time to focus on it,” said Kelly Ramirez, SEG’s CEO. “We’ll see if that hypothesis is correct.”
Kilah Walters-Clinton said it was the perfect time for her to start her own business, even though she still works as a juvenile probation officer for the R.I. Department of Children, Youth and Families and is pursuing a doctorate in education and leadership at Johnson & Wales University.
In between virtual work and classes and supervising distance learning for her young children, Walters-Clinton has been participating in SEG’s virtual incubator. It’s helping her learn the business skills and make connections necessary to launch her business. Its focus is to offer cultural- sensitivity training for mental health providers and a directory of mental health providers with expertise in racial, ethnic and cultural experiences.
But starting a business now won’t be easy, she acknowledged. Networking opportunities she would typically use to spread the word have largely evaporated. Even more concerning was how she would secure the money for a launch.
NO LONGER ‘FROTHY’
Global venture-capital investments contracted nearly 30% during the dot-com boom and the 2008 financial crisis, according to a recent report by Startup Genome. Already, China’s startup community has seen a precipitous drop in funding that, if replicated on a global scale, would mean a $28 billion loss in startup investments in 2020, the report stated.
Particularly vulnerable are women and minority entrepreneurs, who have long faced additional barriers to funding. Melissa Withers, managing partner and co-founder of RevUp Capital in Providence, a revenue-based investment company, was not worried that funding would dry up, but rather that women and minority entrepreneurs would be further excluded.
“Those founders will be disproportionately impacted as networks become more insular, and they are the ones we should strive to protect and support,” Withers said in an email. “It’s the work of a generation, and we can’t let it be undone.”
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ON TRACK: Thorne Sparkman, managing director of Slater Technology Fund, says the seed-stage investment company is still on track to meet its anticipated 25% year-over-year investment increase despite COVID-19. / PBN FILE PHOTO/RUPERT WHITELEY[/caption]
Also at risk are those in the midst of fundraising when the pandemic hit, according to Thorne Sparkman, managing director of Providence-based Slater Technology Fund.
The seed-stage venture investment company is still on track to meet its anticipated 25% year-over-year investment increase despite COVID-19, Sparkman said. But smaller fund companies and angel investors who participated in the seed rounds Slater leads were contributing fewer dollars, as their own resources plummeted.
That’s quite a change from what Sparkman characterized as a “frothy” environment before COVID-19, in which a strong stock market made investors particularly bullish and willing to take risks.
“It wasn’t business as usual, it was business as ‘Yee-haw!’ before COVID,” he said.
Cloud Agronomics, a startup founded by Brown University students that uses aerial imaging and scalable analytics to detect crop disease and monitor soil and plant health, has seen several investors pull out during its current fundraising round, according to Jack Roswell, co-founder and chief operating officer.
It was initially crushing, Roswell said.
“As founders, we’ve poured three years into this, made so many sacrifices,” he said. “There was definitely a moment where we weren’t sure what to do.”
But Roswell and his co-founders rallied, coordinating all-hours brainstorming sessions at their offices in Providence and Boulder, Colo. That the company is small made it easier, Roswell said.
“You’re also used to working your [butt] off,” he said. “There’s no 9 to 5, there’s 8 to 10, seven days a week. I think that’s a big contributor – a lot of conversations that need to happen mean you need to work harder or sacrifice.”
The company made a series of quick decisions, extending its runway by taking across-the-board salary cuts and scaling back new research and development in favor of fine-tuning the product already on the market.
The company secured a commitment from a major investor prior to the onset of the pandemic.
“If we were just starting to fundraise now, I would be very worried about viability,” Roswell said.
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SURVIVAL MODE: Due to the COVID-19 pandemic, Abbie Kohler and Greg Fine, co-founders of ResusciTech, have had to repurpose the technology used for their wearable device and phone app that uses motion sensors to monitor chest compressions during CPR, demonstrated above. / PBN PHOTO/RUPERT WHITELEY[/caption]
CANCELED PLANS
Having closed a $485,000 financing round in 2019, money was not an immediate problem for GoPeer LLC. But figuring out how to serve higher demand for its tutoring services was, said Ethan Binder, co-founder and CEO.
With college campuses closed, the company has seen a surge of interest from college students looking to use their free time to make money by tutoring elementary and secondary school-aged children. At the same time, parents desperate for assistance meant an influx of new clients.
Demand was more than the 12-person team could handle, complicated further by scheduling problems as existing tutors abruptly canceled sessions.
Binder, a Providence native who graduated from Lafayette College in Pennsylvania last year, empathized with the college students whose academic lives were upended.
But from a business perspective, it was difficult to manage. Complaints poured in from frustrated parents whose children’s sessions had been canceled at the last minute, and the tutors were largely unresponsive as they packed up their dorm rooms and traveled home.
While the immediate crisis has subsided, GoPeer still lacks the manpower to fully accomplish the needed scale-up in curriculum writing, software engineering and marketing. Binder plans to hire seven more people – a daunting prospect to add to his brimming workload.
‘The founders and teams that stay disciplined and determined are the ones who are going to light up the stage right now.’
ETHAN BINDER, GoPeer LLC cofounder and CEO
Despite the economic uncertainty, Binder was confident in his ability to adapt.
“The founders and teams that stay disciplined and determined are the ones who are going to light up the stage right now,” he said.
LOFTY AMBITIONS
Jeannette Numbers, principal and co-founder at Loft LLC of Providence, agreed. While hardly a startup – the industrial design service company launched eight years ago – discomfort, and the innovation it inspires, is at the heart of her business strategy.
“Those sort of messy decision points where not everything is spelled out – that’s our favorite place to be,” Numbers said.
And messy decisions confronted her in droves as the pandemic hit. Loft had bought a new space on Bassett Street in Providence the year before, intending to host community events and even an incubator – all plans no longer possible under crowd limitations imposed. While immediate revenue from clients held steady, several of its larger clients contemplated holding back on new projects.
“We definitely panicked,” Numbers said of her initial reaction.
But panic gave way to inspiration as her team traded late-night texts and Slack messages, deciding to use the new space for health care needs presented by COVID-19. Specifically, Loft partnered with R.I. Commerce Corp. and R.I. National Guard to design and build trailers designed for contactless COVID-19 testing that can be hauled to communities underserved by existing test sites.
While states across the country have seen new-business filings decrease, Rhode Island fared better than most, according to a recent analysis by SmartAsset. The 480 new-business filings through mid-April was 14% less than the average number of new filings through the same period over the prior five years, compared with a 24% drop in New York.
Patrice Milos, executive director of Cherrystone Angel Group LLC in Providence and co-founder of med-tech startup Medley Genomics Inc., pointed to the state’s vast network of startup-specific programs and organizations as an asset.
The pandemic has spurred on the Providence-based New England Medical Innovation Center, which aims to grow the state’s med-tech industry through education, professional services and funding.
NEMIC co-founder Lydia Shin Schroter said COVID-19 has highlighted the importance of innovation in health care and made the group’s work more relevant. The organization recently launched a program with Commerce RI called Activate, which offers recipients thousands of dollars in professional services to fine-tune business plans and prepare for raising money. The future of that program, as well as education through Real Jobs Rhode Island, is contingent upon state funding, she noted.
Fine and Kohler, who participated in Brown’s Breakthrough Lab accelerator, hoped to continue capitalizing on the state’s robust startup programming. Having recently won the med-tech track of the 2020 Rhode Island Business Competition, the pair hoped the recognition would bring funding and mentorship.
Up first on their immediate to-do list: pitching the training app to businesses and health care institutions, virtually.
“It’s already hard to convince a stranger to buy your product,” said Fine. “To do it over Zoom … I think sales will be an interesting challenge.”
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
