The Impact of COVID-19 on Global Startup Ecosystems: Global Startup Survey
42 percent of startups globally are threatened in what we call “red zone”: they have 3 months or fewer of runway. This means that if their expenses and revenues remain as they are now and they do not raise additional capital, 4 out of every 10 startups will die in the next 3 months. This number is up from 31 percent in December 2019.
42 percent of startups globally are threatened in what we call “red zone” they have 3 months or fewer of runway. This means that if their expenses and revenues remain as they are now and they do not raise additional capital, 4 out of every 10 startups will die in the next 3 months. This number is up from 31 percent in December 2019.
Of startups that had a term sheet before the onset of the crisis, 20 percent have had the term sheet cancelled by the investor, and 55 percent have had the process slow down significantly. Only 25 percent have had the process continue on normally or have gotten the funds.
Talent and Jobs58 percent of startups have had to terminate full-time employees since the beginning of the crisis. When we break down that share by the top three continents for startup activity, North America is the place where most startups have had to terminate employees (70 percent), followed by Europe (55 percent) and Asia (36 percent).
71 percent of startups are operating in industries negatively affected by the crisis. 15 percent of startups are in industries unaffected so far, and 10 percent of startups are in industries experiencing growth.
43 percent of startups are not helped and do not expect to be helped by relief policy measures related to the crisis, while 19 percent are not currently helped but expect to be helped by a policy measure soon. The remaining startups are currently being helped.
94 percent of those startups being helped currently or expecting policy help soon are looking for support from national governments. 29 percent are also being supported by city and state governments.
According to founders and startup executives, the top four most helpful policy responses for their businesses would be, in order: #1 Grants to preserve company liquidity (30 percent), #2 Instruments to boost investment (19 percent), #3 Support to protect employees, like payroll supplementation grants (15 percent), and #4 Loans to preserve company liquidity (12 percent).
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