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Reading: 50% of startups have 6 months to live & other insights from our COVID-19 survey12 min
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50% of startups have 6 months to live & other insights from our COVID-19 survey

The results are in from Slush’s brand new COVID-19 startup and investor survey.


© Helmi Korhonen

Startups across the globe are facing an unprecedented situation as a result of the COVID-19 pandemic and resulting financial calamity. Young ventures leverage external funding in rapid cycles and at high risk, which makes them especially sensitive to bear markets, in particular where those come about as surprisingly as this one.

To shed light on these uncertain times, Slush distributed two surveys on how startups and investors have been affected by the pandemic. Altogether, 260 startups and 140 investors took the survey. Through the granularity of the data, Slush aims to give founders and operators some context around the hardships that they are facing. 

In general, the findings provide cause for both optimism and pessimism.

You can find the whole report from here.

Without further ado… we’ll let the data do the talking (again). 


Startups will need to raise funds at any cost

41% of startups have seen their runways decrease due to the pandemic. As a result, without new funding, one in two of all startups now has just 6 months to live. To stay afloat, nearly half of these companies are expecting to raise a smaller round in 2020 than planned. On a more positive note, only 8% of these vulnerable startups have halted fundraising altogether.

Created with Highcharts 7.1.2% of startup respondentsFundraising plans by current runwayWe were not planning to raise, but will do soWe will raise a bigger round than plannedNo changeWe were not planning to raise, and won’t do soWe will raise a slightly smaller round than plannedWe will raise a significantly smaller round than plannedWe will raise a significantly smaller round than plannedWe will not raise despite planning to do so0-3 months3-6 months6-12 months12+ monthsWe are profitable0100255075Slush COVID-19 survey

The importance of networks at a new high

First-time founders are finding it particularly hard to raise funds – hinting at an increasing importance of existing networks in an ecosystem that already revolves around whom you know.

Created with Highcharts 7.1.2% of startup respondentsEffect on 2020 fundraising by founderexperienceWe were not planning to raise, but will do soWe will raise a bigger round than plannedNo change, looking to raise as plannedWe were not planning to raise, and won’t do soWe will raise a slightly smaller round than plannedWe will raise a significantly smaller round than plannedWe will not raise despite planning to do soFirst-time founderRepeat founder0100255075Slush COVID-19 Report



To make matters worse, 46% of investors are shifting their focus towards follow-on investments.

Ekaterina Gianelli, Partner at Inventure, expresses her concern that this might amplify existing inequalities in the ecosystem: "During any crisis, there is a tendency to revert back to one’s trusted networks. Diverse founders, from the perspectives of ethnicity, gender, and age, are often outside of these networks, so they are likely to struggle to raise capital. I hope both public and private players take a stronger stance here to correct for market failures and other biases amplified by the crisis."

As a brighter finding, investors aren’t shifting their stage focus substantially, indicating that the remaining capital is still available for companies of all sizes.


Recruitment at a halt, but existing staff is largely kept on

As expected, COVID-19 has had a material effect on employees. 40% of startups have slowed down or halted recruiting efforts. On the other hand, only one in six has been forced to lay off or terminate staff.

Created with Highcharts 7.1.2Effect on recruiting and existing staff% of startup respondentsIncreased pace ofrecruitingNo changeSlower pace ofrecruiting than plannedRecruiting on halt fornowLayoffs and/orterminations affecting<25% of staffLayoffs and/orterminations affecting>25% of staff010203040Slush COVID-19 survey


Employees of mature startups have been affected more—nearly two-thirds of startups that employ over 10 people have downscaled recruiting efforts or their staff.

The effects of this are felt across the ecosystem. Otta, a UK startup hiring platform, has seen new job openings drop 43% over the past 45 days, with recruitment and HR roles disappearing entirely. At the same time, candidate numbers have doubled.

Similarly, Ninna Wicki Olsen-Stryhn, Managing Director at the Hub, a recruiting platform used by many Nordic startups, comments: "Overall we’ve seen a drop of 25% in job growth in March and April compared to earlier in the year".


Remote work is taking a toll

Working from home has put a strain on startup employees. While experiences are varied, negative effects on wellbeing and productivity were reported more widely than positive ones. The importance of experienced management is heightened, with repeat founders less likely to have seen a negative impact on their teams.

Created with Highcharts 7.1.2% startup respondentsEffects of remote work by founder experienceDecreaseImprovementNo significant changeFirst-time founder (wellbeing)Repeat founder (wellbeing)First-time founder (efficiency)Repeat founder (efficiency)020406080100Slush COVID-19 Survey



“Those of employees, who are parents of small kids, need to cover homeschooling and childcare - they need extra support now.”
- Founder


“The time spent on transportation and necessary social and human activities has decreased, which has made working days more effective, but also more tiring.”
- Founder



As sales drop, new winners are emerging

Sales have also been impacted significantly, with only 8% of startups reporting no change to the demand they face. While the overall effect has been negative, some new winners have emerged. B2C startups are doing better than those selling B2B, and pure D2C companies have actually experienced a net increase in sales.


Created with Highcharts 7.1.2% of startup respondentsEffect on sales by business modelPurely positivePurely negativeBothNo effectB2BB2C020406080100Slush COVID-19 survey


Created with Highcharts 7.1.2% startuprespondentsB2C startups;effect on sales bydistributionmodelPurely positivePurely negativeBothNo effectNot sellingD2CSellingD2C, butnotexclusivelyOnly sellingD2C050100Slush COVID-19 Survey

Plummeting sales are driven by the difficulty of attracting new customers; 63% of startups reported a decrease in acquisition. On the other hand, existing customers have largely stayed in place across the board, albeit reduced their spending. 13% of startups reported an increase in churn, while 24% mentioned that the average spending per customer had decreased.



“We mainly relied on meeting potential clients face-to-face during conferences and events such as Slush, but such gatherings have been halted in light of the pandemic. This has significantly
affected our ability to meet new people, and collaborate with them.”
- Founder



Expect optimistic pivots

As an indication of the endless optimism that young ventures are known for, startups are tackling the pandemic head-on. Across the board, companies have chosen to expand their product offering over making cuts to existing activities. Smaller companies have been particularly nimble to refocus.


Created with Highcharts 7.1.2% of investor respondentsNature of refocus by company sizeJust expansionaryJust reductionaryBothTotal pivotNo change1–4 employees5–10 employees11–20 employees20+ employees0100255075Slush COVID-19 survey


Only time will tell if this optimism carries startups through the novel situation.

We’ve already heard of some positively opportunistic stories, like Austin-based Athena Security turning their software business from firearm detection to fever detection. However, it seems that inevitability, rather than opportunism, is the overarching driving force. Industries with a significant drop in demand, like Consumer Internet, Transportation & Mobility and Education, have seen a lot of new activity.


Created with Highcharts 7.1.2%Negative demand shocks and pivots arelinked% changing focus in some way% that has experienced purely negative effect on salesMarketing and Co…Marketing and Comms techHeavy industryEducationOtherHealth, Nutrition and WellbeingElectronicsGamingMRAI , Analytics and Big DataTransportation and MobilityEnergyEnterprise SoftwareConsumer internetFinancial and Insurance050100Slush COVID-19 Report

Investors are expecting gloomy returns

The pandemic has shaken venture capital to its core. While most investors expect a negative impact on investing activities for the foreseeable future, angels are being hit the hardest.

Created with Highcharts 7.1.2COVID-19’s effect on investingactivities% of Angel investor respondents% of VC investor respondentsSomewhat positiveNeutralSomewhat negativeNegativeVery negative00. COVID-19 survey

In trying to mitigate the negative effects, many Finnish investors have been advising their portfolio companies to focus on extending runways.



Valuations and exits will come crashing down

The vast majority of investors are expecting at least a 20% decrease in valuations of early-stage startups during the remainder of 2020.


Created with Highcharts 7.1.2Effect on Valuations During 2020% of investor respondentsUnable to say<5% decrease5–10% decrease10–20% decrease20–30% decrease30–40% decrease40–50% decrease>50% decrease01020304050Slush COVID-19 Survey

This may, however, not be altogether negative. Only 32% of venture capitalists responding to the 2019 State of European Tech survey considered valuations of European early-stage companies to be at a healthy level.

Additionally, the exit market is expected to come grinding to a halt compared to last year. One-fifth of respondents expect a more than 50% decrease in venture-backed exits year-over-year.

Created with Highcharts 7.1.2Effect on VC-backed exits in 2020 vs.2019% of investor respondentsUnable to say<5% decrease5–10% decrease10–20% decrease20–30% decrease30–40% decrease40–50% decrease>50% decrease0510152025Slush COVID-19 survey

Investors are also seizing emerging opportunities

78% of respondents stated that they’ve shifted their focus towards industries benefiting from the pandemic. Health & Wellbeing, Education and E-Commerce & Online Marketplaces seem to be the top gainers.


Created with Highcharts 7.1.2%Shifting focus towards industriesbenefiting from crisis% of VC and angel investor respondentsNo shiftHealth and WellbeingEducationE-commerce and Onli…E-commerce and Online MarketplacesTransportation and M…Transportation and MobilityMobile SoftwareCommunications and …Communications and MediaMedtech and PharmaFinancial and InsuranceOther0510152025Slush COVID-19 Report

Expect to live in the new normal for a good while

If we are to believe our investor respondents, we’re in this for the long haul. 50% of investors think that deal volumes won’t normalize within the next 12 months.

Created with Highcharts 7.1.2Expected time before deal volumesnormalize% of investor respondents+24 months18-24 months12-18 months6-12 months0-6 months01020304050Slush COVID-19 survey


Timo Ahopelto, Founding Partner at Lifeline Ventures, lays out how in spite of the turbulence, founders should remain optimistic: “the role of VCs is to back founders with bold visions, building category-defining companies and taking high risks. This thesis remains largely unchanged in crisis: building a great company takes time and a crisis like this will look like a speed bump after years in any successful startup’s path. For entrepreneurs, the crisis provides new opportunities and focuses on the most essential - building great companies.”


You can find the whole report here


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