Startup markets: insights & analysis of the COVID-19 impact

In these hectic times, investors recommend startups to be cautious in resource allocation. We are aware that COVID-19 will impact early-stage investment, but we cannot know for how long its impact will last. Taken into consideration these unknowns, startups should contemplate cutting down cash burn and increasing runway fast. Most likely, startups might have already made 2020 plans, but it is time to reexamine operations to lower costs. Additionally, companies should keep the focus on customer retention. One survey results imply that such KPIs as retention is likely to stay a prime focus for investors:

1. 83,5% of those questioned said that the pandemic had an impact on their investment plans.
2. More than half of surveyed will fund the same stages as planned before COVID-19. The lockdown affected industries, such as healthcare, remote work solutions, productivity software, and logistics, to see investor growing interest.
3. Most respondents advised startups to lower costs and concentrate on consumers.

Desperate times call for desperate measures, so the agile companies are accelerating and pushing things forward. Besides, there are already several accelerators that focus on startups that help address the coronavirus pandemic. There are even special funds that finance similar businesses. Black&Veath invests from $250 thousand in teams that have passed the accelerator and help them with their resources, while the Bill and Melinda Gates Foundation (together with Wellcome and Mastercard) allocated $125 million for research.

What should be done?

Now is the time to keep the accentuate the consumer, customer needs, and demands. Products should whirl around them, so beware of making any changes or pivots, which can negatively impact the user experience. Startups should meet consumer needs and gaps in the market, so stay on that track and measure KPIs, which present consumer satisfaction in the product or service. In any economic recession, non-essential goods or services are often the first to be dismissed by consumers. Now it is more critical than ever for venture-funded startups to become a substantial business and build on revenue. Gartner predicts global IT spending to decline by 8% in 2020 due to the impact of COVID-19. As the virus mercilessly spreads across Europe, investors hurried to close deals that were already at an advanced stage.  Some M&A advisers have announced that up to 90.0% of their mandates have been paused. Deals in early stages will probably be put on hold or wholly canceled as investors due to force majeure events. While deals will still happen out of the need for those who move into the distraught territory, a new normal is believed to be formed, with investors’ assumptions and ambitions being substantially contrasting.

Where are we heading?

Our research shows that top COVID-19 startup investment directions are in:

• Finance services (fintech). Six startups raised more than $5,5 million in sum, e.g., Primer – is a MI company that uses machine learning and natural language processing to automate the analysis of massive datasets.
• Biotechnology Startups (MOMA Therapeutics, ROME Therapeutics, Pulmobiotics, Genespire) raised more than $155,5 million. It is quite surprising considering that it takes a few years of intensive cash-burning before a biotech company’s first product reaches the market.
• Gaming startups (Rally Cry, Pragma, Skibre, NAG Studios) raised $5,5 million.
• Video Streaming startups raised $22 million (the best one is BancroftX Media)

Most of the new startups came from the USA (14), 8 of which from San Francisco. As a runner up, the European Union with Germany and Sweden. Some of the most exciting startups and initiatives we have mentioned here. The next big thing after the pandemic will be the speed and efficiency of vertical jobs marketplaces. Verticalized labor marketplaces are job boards specifically designed for the only thing:

• jobs in one industry (such as telecommunications or healthcare)
• one job type (data analyst or web designer)
• one candidate type (white-collar workers, remote engineers)
• one demographic (military veterans or stay-at-home moms).

When focused on one thing only, these platforms can create a custom-made and smooth experience that connects the appropriate people to the right jobs with the pace, scale, and effectiveness needed. We are on the verge of a rare moment in which the most effective job marketplaces will benefit, not the deepest. Sluggish networks will become agile ones. Job boards will be overwhelmed with great candidates and listings. Moreover, the job market will be one of the essential things anyone is working on. Now a lot is happening around creating captivating consumer-y experiences in the ventures; that’s very interesting. Getting a job at one of the big tech companies is now way more compelling than before. Just recall how competitive the corporate packages are and how many of these companies are working on cool things. As for the startups, it is the first time in history when you can quickly get your first million in funding. It is an ecosystem, and if you have a legit idea, there is a community willing to take a bet. It is inspiring to imagine all the tools that we are going to have for working from home or entertaining ourselves or feeling that social connection, even if we are not in person. We believe in the next two years; we will have the whole generation of entrepreneurs tackling those needs. Author Bio –

Daria Marchan, Content Marketing Specialist at LAB325 . LAB325 – full cycle Product Engineering Agency, we’ll bring your ideal product to life, achieve future growth, and keep up relevance in your market. We love Products, and we are pleased to assist them through their business lifecycle. Our Product Lab uses a full cycle approach: from exploration and hypothesizing to design, from the development to testing and implementation. LAB325 develops innovative technologies for customers worldwide.