Growing job losses caused by coronavirus will result in a booming gig economy labour force, predicts venture capital investor Ryan Floyd.

The Founding MD of Storm Ventures and host of the 'Ask a VC' YouTube channel said that although it is impossible to know where unemployment will settle after the pandemic is contained, unemployment will be at its highest in years.

“Market uncertainty probably won’t have a big impact on the gig economy - but a slow recovery and higher longer-term unemployment absolutely will drive many more people to the gig economy,” he said.

“This will drive many more to obtain whatever work that they can find. Gig businesses will benefit from this trend as there will be plentiful labour for whatever service they are providing.”

Floyd said he hoped that the increased trend for gig-economy work would prompt protections, including in healthcare in the US.

Floyd predicts that as well as boosts to businesses powered by gig-economy workers such as Uber and Deliveroo, other tech sub-sectors may also see an uptick.

next story
CORONAVIRUS LIVE BLOG

“I think other areas like security will probably continue to do well - if anything we have seen the security challenges increase with distributed teams. Anywhere there was already a shift from physical to the cloud is likely to accelerate as a result of the pandemic,” he said, pointing to portfolio companies TalkDesk, a cloud-based call centre provider and Splashtop, which provides remote login technology for servers and other devices.

“They have seen a significant increase in demand as many organisations scramble to fortify their remote work and work-from-home capabilities.”

For tech firms, particularly small enterprise tech and B2B SaaS firms which secured funding prior to coronavirus, Floyd advised they focus on playing “offense in addition to defence”.

Defence measures, in this context, referring to cash conservation, freezing hiring, and salary reductions or layoffs.

“Much has been written and discussed and many of the choices, while painful, are also obvious. But I also think companies ought to be playing offense - looking for ways to come out the other side of the pandemic stronger than before.

“Maybe the product needs to be re-thought, maybe the sales strategy needs to be re-tooled - but one thing is for sure in my opinion things will not be the same as pre-pandemic in business for some time.

“While it is true you must survive this pandemic with cash on the balance sheet, a strategy of treading water isn’t going to set anyone up for success longer term.

“It's a great time to spend the energy on thinking about how your business will need to change and adapt to the new reality.”

From the point of view of venture investors, Floyd said that he did not expect massive shifts in focus, but will consider the effect of the pandemic - and which firms to back next as a result.

“Remote work investments never looked so attractive,” he said.

“While we do not fund any life sciences, I would not be surprised to see many new companies formed to better address the future threat of a pandemic."