NEXT research shows COVID-19 impact on small U.S. businesses
Survey-based research commissioned by NEXT Insurance shows how small businesses in the United States have been impacted by the COVID-19 pandemic and how they are planning their recovery. The survey, which was highlighted as part of NEXT’s Small Business Guide: How To Thrive from Day One, was conducted by interviewing more than 500 small business owners of various ages, genders, industries, and locations.
“Small business owners have recently faced one of the most challenging times seen in decades, yet they remain resilient, nimble, and unstoppable”, said Guy Goldstein, Chief Executive Officer and Founder of NEXT.
Key findings of NEXT Insurance’s research
The COVID-19 pandemic, thanks to its impacts on economic and human health, has posed one of the biggest threats to small business owners in the United States in the past century. As regional shutdowns impacted some businesses’ ability to serve their customers for over a year, small business owners were struggling. NEXT Insurance’s “The State of Small Business Survey” aims to show how small business owners adapted to CVID-19 restrictions, while also revealing some other effects in the longer term. Below is a summary of some of the key findings.
Women were more likely to start a business in 2020 than men
- It was found that, in 2020, more women were starting businesses than men. This was often from scratch and by themselves.
- Data suggests that men are instead twice as likely (11.3% compared to 5.6% of women) to buy into an existing business or franchise and are more likely to do so with a partner rather than as an entrepreneur or alone.
Small businesses are optimistic about their recovery from COVID-19
- When asked about their own businesses, 94% said they were optimistic about their recovery.
- When asked about the economy as a whole, 84% also said they were either somewhat, very, or extremely optimistic about a recovery.
- Retail and e-commerce businesses tend to be the most exposed in terms of a lack of insurance, with 64% of those small businesses without any cover.
- Almost half (49%) of respondents said that PayPal is their most-used product or service, followed by email and LinkedIn.
- 52% cited friends, family, and colleagues as the most useful resource for business direction and advice
- 55% of small business owners expect to be working from home in the next year, and 52% of surveyees expect 50% of sales or greater to happen online by 2022.
Talking about small business ownership during COVID-19, Kelly Dramberger, Founder of Sweet Tea Catering in Houston Texas, said: "COVID-19 was tough for the small business community; however, the entrepreneurial spirit cannot be broken. I am encouraged by the optimism we are seeing amongst so many entrepreneurs, women in particular, who have taken the past year as an opportunity to chase their dreams”.
CB Insights: US Insurtechs Are Competing In A Global Market
In the first half of the year, insurtech companies around the world have raised US$7.4bn, nearly doubling their funding in Q2. According to Digital Insurance, insurtechs have raised US$4.8bn in Q2—an 89% increase in funding from Q1. But US firms are no longer the sole beneficiaries.
What Are the Stats?
Out of the 15 Q2 mega-rounds—those that top US$100mn—only eight included American firms. Pretty good, you might say. That’s over half! But US companies only made up 38% of the deals, which marks a 10% drop from Q1 and a 12% drop from 2020. Technically, therefore, US insurtechs are less influential than they’ve been in the past. But who says this is a bad development?
Despite my American citizenship, I’d argue that a more globally diverse insurance market is only for the best. Many of the world’s citizens who could most benefit from improved insurance services live outside of the States—and deserve local, tech-savvy services.
Why Does This Matter?
You’re always going to see the typical insurtech contenders from Western countries. For instance:
- German-based wefox: US$650mn Series C
- UK-based Bought By Many: US$350mn Series D
- US-based Collective Health: US$280mn Series F
But it’s critical that we address risk across the world. American insurtechs might be some of the most technologically skilled firms in the industry, but it’s not their first goal to address floods in Southeast Asia, crop destruction in China, and COVID complications in South Africa. That’s why we should celebrate that the recent Q2 round included insurtechs from 35 different countries.
According to CB Insights’ Q2 2021 Quarterly InsurTech Briefing, this was the first time that they’d observed insurtech activity in Botswana, Mali, Romania, Saudi Arabia, and Turkey. And ‘from a product, service, distribution, and underlying risk perspective, we—as a society and as an industry—are moving at an unprecedented speed’, says Dr. Andrew Johnston, Global Head of Willis Re InsurTech.
Just ask CB Insights. InsurTech value propositions have resonated with the world.