It is high time we understand global Startup statistics and the impact of COVID-19 on Startup companies globally.
The recent survey of the tech startups across the globe shows that a high percentage of the startup companies are poised to go out of business over the coming months as the capital and sales that sustain them have dry up.
41% of startups are in what we call the “red zone,” with three months or less of cash runway left. This means that four out of every 10 startups will die in the next three months if they do not raise additional capital
The situation is less dire for companies that have raised Seed, Series A, or B+ deals in the past. More than a third, or 34% of them, have less than 6 months’ worth of cash — a danger zone in the current situation where fundraising is difficult.
Morelix notes that Chinese startups saw their funding declined by more than 50% just in the first two months of the COVID-19 crisis in china.
Approximately 50% of startups were trying to raise capital or funds before the Covid-19.
Even though most of the tech startups had been pitching for Venture capital and investors, 17% had an approved Term Sheet from investors and other institutions.
For startups with term sheets, 25% have continued to have a normal fundraising process, either getting the funds or with the process going on as expected.
The remaining tech startup companies have had their fundraising derailed, with approximately 20% of those who had term sheets noting investors had canceled their rounds.
For Startups with full-time staff, 74% have had to let go, full-time staff. we have no idea about the composition of the staff.
Most of the lay off so far have been relatively small—about half of the companies reducing their workforce have laid off 20% or less of their staff.
But it is reasonable to expect more cuts in the future.
Let’s look at the top 3 continents statistic of lay off.
North America 84%
Since the beginning of the Covid-19, 74% of startups companies have seen their revenues and sales decline.
25% of startup companies observed that their revenue decline by less than 20%.
However, a sizeable share of companies was very heavily hit: 16% of startups have seen their revenue drop by more than 80%.
You should use your common senses to analysis and come to a conclusion based on these startup statistics
At the same time, a small percentage of companies are actually experiencing growth as every crisis creates opportunities for some companies.
Of course, we know the statuary of Zoom right now.
if you look at the startup statistics of tech, over 2/3 of startups companies have reduced their operations and management costs since December 2019, with 42% doing cuts of more than 20%.
Some startups have reduced costs very aggressively, with more than one out of every 10 companies reducing costs by over 60%.
According to the survey statistics, North American businesses were slightly more aggressive in terms of cost-cutting, with a higher share of them reducing costs by 60% or more.
With millions of businesses suffering global — tech startups are competing for the same general-relief; resources offered to all businesses by various agencies.
About 60% of the founders are receiving assistance or expect government policies to support their businesses directly or indirectly.
Over 90% of those startups are currently getting aid, or expecting some sort of help, from national governments.
29% of startups are also being supported by city and state governments.
You would be able to find the entire survey by visiting the Startup Genome website.
Please check “Startup Statistic 2019”