A neon sign in the shape of a unicorn's head

Let’s encourage startups that improve a billion lives over those that want to be worth a billion dollars

The world is in dire need of innovate solutions to the challenges the coronavirus (COVID-19) will leave behind it: a health emergency, an economic shock, and the spectre of widespread unemployment to name just a few. Entrepreneurship should play a vital role in tackling this crisis – and entrepreneurs are already getting into gear.  

Unfortunately, the pre-crisis model of entrepreneurship is not best suited to tackling the current crisis: its focus is too much on creating unicorns, I.e. startups like Uber and Airbnb that achieve a private valuation of over one billion dollars. It’s a fascination that has led budding entrepreneurs to focus on driving the value of their firm over creating value for society. 

As many new ventures and established firms have focused on maximising their financial value, we ended up with a system that is not sufficiently resilient to shocks. The coronavirus pandemic exposes this failure: workers struggle due to precarious contracts, lengthy supply chains are disrupted, and healthcare systems are overwhelmed after years in which many businesses minimised their tax payments. 

But if chasing (multi)billion-dollar valuations isn’t the best way to tackle such problems, what model could offer a solution? 

Breeding social unicorns 

In these challenging times the world needs a new type of unicorn: social unicorns. These will be businesses that do not just maximise their narrow financial valuations but maximise broad societal resilience. The entrepreneurs who start them will not be celebrated for reaching a one-billion-dollar valuation but for succeeding in improving one billion lives.  

A new breed of entrepreneurs will start and – crucially – massively scale social enterprises that will compete in the market to maximise social welfare. This will involve, for example, reducing poverty, helping the unemployed, or developing health interventions. Fortunately, the social enterprise ecosystem has become more developed over the last few years and, while we are still waiting for the first social unicorn to appear, there are plenty of successful social enterprises that show a path to how that might happen. 

the pre-crisis model of entrepreneurship is not best suited to tackling the current crisis

US-based VisionSpring provides affordable eyeglasses to many in developing countries who could otherwise not afford them. With their vision improved, these individuals can earn a livelihood and gain some protection against crises. 

Another example is British-based Harry Specters, which provides employment to those with autism – a group who otherwise often struggle to get jobs – to produce its award-winning chocolates.  

Hong Kong-based Soap Cycling, meanwhile, is providing street cleaners with salvaged soap from hotels to prevent the spread of coronavirus.  

Such businesses, which maximise societal resilience, help to create the stronger communities that are vital in times of crisis.  

Squaring the circle

Social enterprises are already a growing part of the global economy, but they are still in a minority. The coronavirus pandemic shows they should become the rule, not the exception. If they manage to square the circle to achieve a billion-dollar valuation in their quest to save a billion lives, then all the better.  

Will we be able to channel the powerful spirit of enterprise and innovation to tackle this crisis? If we nurture social unicorns, we’ll certainly move the odds decidedly in our favour.  

Main image: Greens87 / iStock / Getty Images Plus via Getty Images.

Christian Hampel

About Christian Hampel

Assistant Professor of Entrepreneurship & Strategy
Dr Christian Hampel is an Assistant Professor of Entrepreneurship & Strategy at Imperial College Business School. Prior to joining Imperial, he completed his PhD in Management at the University of Cambridge’s Judge Business School and was a Research Fellow (postdoctoral researcher) at the Centre for Corporate Reputation at the University of Oxford’s Saïd Business School.

You can find the author's full profile, including publications, at their Imperial Profile