COVID-19 is laying waste to startups around the world

By: April 22, 2020

As the COVID-19 pandemic sets fire to economies and devastates human societies across the globe, the startup ecosystem has also suffered greatly.

Startup Genome has launched the world’s first global startup survey on how the pandemic is affecting new businesses.

The key findings of this global survey are below. Also, you can download the FULL REPORT.

41% of startups globally are threatened in what is called the “red zone”: they have three months or less of cash runway left. Many young startups live with only a few months in cash. 29% were in that situation already before the crisis, but the crisis put 40% more of them in this precarious position. Focusing on startups that have raised Series A, B, or later rounds, 34% have less than six months worth of cash, a danger zone in the current situation where fundraising is difficult.

Talent and jobs
Since the beginning of the crisis, 74% of startups have had to terminate full-time employees. 39% of all startups had to lay off 20% or more of their staff, and 26% had to let go 60% of employees or more. If we break down the share of startups that had to terminate full-time employees by the top three continents for startup activity, North America is the place with the biggest share of companies reducing headcount (84%), followed by Europe (67%) and Asia (59%).

74% of startups saw their revenues decline since the beginning of the crisis. The most common type of change in revenue is a relatively modest decline. However, a large share of companies was very heavily hit. 16% of startups saw their revenue drop by more than 80%. A major reason for the drops in revenue comes from the effect of the crisis on industries those startups serve. Three out of every four startups work in industries severely affected by the COVID-19 crisis.

Download the FULL REPORT.

Pictured above is Arnobio Morelix, chief innovation officer at Startup Genome, and co-author of the report.

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