Quarantined
Growth
In an effort to get a pulse of the actual impact of the COVID-19 crisis on the startup ecosystem, we sent out a survey In October and received 338 responses from founders around the globe. Based on this survey and a previous piece of Slush research from May, we put together this research report in collaboration with our partners, City of Helsinki and NGP Capital to share some insights on the past, present and future impact of this crisis through the lens of startup founders and entrepreneurs.
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Key Findings
1
The initial shock of the coronavirus crisis was apparent in Slush’s March survey. 50% of the founders surveyed reported less than 6 months of runway and 47% had either halted recruitment or were executing layoffs. At the same time, 46% investors reported an increased focus on their existing portfolio companies, exposing a lot of early stage ventures to a lack of capital to keep their operations running.
2
When asked to look back six months now, 50% of founders surveyed expected a large or moderate negative impact from the virus, and an additional 29% expected neutral impact at best. Today, 30% of founders we surveyed have seen large or moderate positive effects, while an equal 29% have seen neutral effects. Especially industries like ecommerce, fintech and education have strived in a digital-first environment.
3
Funding still seems to currently be a key problem for founders. While not a huge change to the 50% reported in March, the situation certainly hasn’t improved for the better as 55% of founders now report a current runway of less than 6 months. 35% of founders are now less optimistic about their access to capital than 6 months ago.
4
Compared to the 47% of founders who had halted recruitment or were executing layoffs in March, 20% have executed layoffs and 38% have been able to increase their headcount.
5
In times of adversity, local communities have been an asset to founders. A majority of founders have been satisfied with their local ecosystem’s efforts, especially in the Baltic-Nordic region outside Finland and in Helsinki. Support through ideas, mental support, and building connections in a time of loneliness have been especially valuable.
6
The founders in our home ecosystem of Helsinki had an especially negative view of the effects of the coronavirus crisis, as 57% were expecting a negative impact. While 49% of Helsinki-based founders feel that the actual impact has been negative, the ecosystem has shown resilience through tough times as 80% have avoided layoffs. In addition, there is hopefulness in the capital markets: 40% of Helsinki-based founders are more optimistic about the capital landscape than six months ago.
7
In a broader historical perspective, the Helsinki startup ecosystem has grown up, and it has grown with purpose. Compared to the European average, Helsinki hosts substantially more companies that have been built with a purposeful mission.
8
While the coronavirus crisis isn’t certainly over, the level of optimism is rising as a majority of founders agree: we are in a better place now than we were six months ago.
