From corona pandemic to chip shortage: How do we survive crisis after crisis as a young hardware start-up?

Lockdowns with no end date, global chip shortages, extreme inflation, and boycotts because of the war. In current events, every company sees challenges in bringing supply and demand together properly, but as a start-up, extra creativity is demanded. How do you pull through as a hardware start-up when crisis after crisis presents itself?

Running a business has not become any easier since the COVID-19 pandemic. The lockdowns were not even over when the global chip shortage threw a spanner in the works. Now, the war is presenting us with entirely new challenges. Problems in the supply chain are being felt everywhere, with the current shortage of raw materials, chips and manpower, and exponentially rising costs slowing down production and hurting margins.

Start-ups are known for their lean way of thinking and working, but currently, their flexibility is being put to the test. How do we hold our ground in a world that has never looked so uncertain?

Effects of the corona crisis on the investment climate

We are a Belgian health-tech start-up that have developed moonbird, a device for guided breathing exercises. We took our first steps on the market just before the corona pandemic. With success, because every batch of moonbirds produced sold out in no time.

"We were in an optimal climate to launch our idea just before the corona pandemic." explains Michael Broes, co-founder of moonbird. "After the initial funding from Imec.istart and a successful launch on the market, we quickly needed new capital to further expand and scale up. However, since we found ourselves in the middle of the corona crisis, there was uncertainty in the market and the financial risk increased. Raising new capital was not exactly easy, something we heard frequently in our network.”

Stefanie Broes (l) and Michael Broes, the two co-founders of moonbird.

The rise of attention for mental well-being thanks to corona

At moonbird, however, we had one big advantage: mental well-being is a growing topic of attention since the pandemic. Michael: "Since COVID-19, people experienced more fear and stress and started looking for solutions. This has ensured that, with moonbird, we have been able to spark the interest of a number of external parties, with whom we were able to successfully realise a capital round last year.

In addition, we have also received support from the Flemish government, which has enabled us to bridge this crisis period well."

Global scarcity means constant adjusting

The timing of the corona crisis thus appeared not to be entirely unfavorable for us, although the next challenge soon presented itself: global scarcity and delays in raw materials, combined with rising costs for production and transport.

"Moonbird consists of many small parts, which are carefully sourced from all over the world," Michael continues. "Due to the scarcity of raw materials, steeply rising prices, and longer delivery times, it is impossible to issue a feasible schedule to this day. For example, during one of the corona lockdowns, our packaging order was stuck in Kazakhstan for four weeks - something unthinkable before the crisis. Also, a Ukrainian factory we worked together with was destroyed in the war, which of course was sad and upsetting on its own. We quickly had to go look for a new supplier, and ‘fortunately’ had been delivered a large order from the Ukrainian factory just before this happened, which enabled us to survive the 40-week delivery period of our new partner. The playing field remains uncertain and it is constantly shifting gears."

Moonbird: the health-tech innovation that intuitively guides people through slow breathing exercises while providing biofeedback.

5 lessons from a start-up in times of crisis

Big challenges often lead to big developments. Surviving a crisis requires perseverance, flexibility, and creative solutions. What are the biggest learnings we have seen in the past two years? Michael Broes explains:

1. Think five (or more) steps ahead

"More than ever, we have experienced that everything is delayed, the planning is intense and we have to order extremely far in advance. Not weeks but months in advance, sometimes even a year. The challenges in the supply chain have also made it necessary for us to stay even more on the ball and monitor all processes in detail. Every single day."

2. Surround yourself with good partners

"The relationships with your suppliers are more important than ever, which is why we pay a lot of time and attention to them. We have made a conscious decision not to work with the largest or cheapest producers, but rather choose partners who also benefit from working with us and from maintaining a good relationship. That way, we keep the production up in the best possible way."

3. Ensure open communication

"Communication is key in these extreme times, both to partners and investors, and to our customers. Even though we are dealing with a widespread problem, open communication is necessary to ensure understanding and flexibility. Moreover, it takes some of the pressure off the shoulders of entrepreneurs, even though the challenges are not a surprise to anyone. It's still a big responsibility you have to deal with."

4. Be flexible

"The landscape is changing so rapidly at the moment that it is almost impossible to keep up. What seems a plausible solution today, is no longer relevant tomorrow. You are busy looking for alternatives every day. This is an intense process because you always run the risk of failing. Only by keeping an open mind and a flexible attitude, you manage to take a step forward every time you think you might get stuck."

5. Never give up

"This may go without saying, but staying positive is essential. No matter how big the challenge, there is always a solution to be found. We have experienced this since day one, building a tech startup is never easy. But whatever happens, we never throw in the towel."