Covid’s Entrepreneur Explosion
High unemployment, the magnifying power of the web and fresh fintech financing are fueling an eruption of startups not seen in decades. And America will never go back to business as usual.
Massive unemployment, the magnifying power of the web and fresh fintech financing are fueling an eruption of startups not seen in decades. And America will never go back to business as usual. Plus: 1,000 business owners creating their personal American Dream.
In the gritty, gray concrete lobby of Firebrand Collective—a women’s coworking space in Kansas City’s industrial West Bottoms district—Jackie Nguyen makes lattes laced with cardamom and lychee from her colorful mobile coffee shop. A colossal dragon head covers the shop, Cafe Cà Phê, painted the bold yellow and red of the South Vietnamese flag, with dashes of bright blue in a nod to the French influence on the country’s food. “And of course, this is Kansas City,” says Nguyen, 32. “They’re the colors of the Chiefs and Royals, too.”
Cafe Cà Phê serves “Hella Good Lattes” and “Saigon” iced coffee to some 200 customers a day. Monthly revenue is roughly $30,000. “It’s been a crazy, amazing ride,” says Nguyen, a first-time entrepreneur. “The only business I knew before this was show business.”
A little over a year ago, Nguyen was an actress who had spent nearly two decades in musical theater. Before the pandemic, she made $90,000 a year on the touring production of Miss Saigon. On March 15, 2020, she performed in Fort Myers, Florida. The next day, the lights went out on Broadway. “I didn’t have a house, car or any significant savings,” Nguyen says. She moved to Kansas City from Long Island City, Queens, investing $10,000 from her scant savings and an additional $13,000 from Kickstarter (it helps to have 4,000 Instagram followers). She’s never going back to the Great White Way. “As an actress, my career was always at the mercy of someone else,” she says. “Now I get to make all my choices and get to be very intentional behind what I choose.”
Nguyen is one of the 4 million–plus people fueling America’s unprecedented entrepreneurial explosion. Sparked by pandemic unemployment not seen since the depths of the Great Depression, a permanent shift in where we live and work, access to fresh sources of capital through fintech, ubiquitous cheap technology and dogged determination, Americans are betting on themselves and launching companies at a historic rate.
Every recession seeds a bumper crop of startups. As the maxim goes, necessity is the mother of invention. But this time it’s different. Just as the Covid recession, in its breadth, size and speed, was astounding, so will be its impact on America’s small-business landscape.
In 2020, more than 4.3 million people registered for new business applications, according to the U.S. Census Bureau. That’s nearly 840,000 more than 2019—a 25% jump. It’s a stark difference compared to the 2008 credit crisis, which saw an 8% drop in new applications.
“This makes you sit up and pay attention,” says John Lettieri, cofounder and CEO of the Economic Innovation Group, a bipartisan think tank. “It’s not what many of us would have expected on the front end of this crisis.”
Up also are the number of new startups likely to hire employees. Labeled “high-propensity” businesses by the IRS, these potential job creators jumped 15% in 2020. “During 2008’s Great Recession, the new-employer businesses fell by nearly 230,000 from their previous year’s level,” Lettieri says. “During the Covid crisis, they