Startups Decimated by Coronavirus
Most stories about the effects of Coronavirus shutdowns on business tend to focus on either very large companies, or public-forward companies such as restaurants and bars. But what about the tens of thousands of startups and early stage companies around the world who, by definition, are still in their seed stage, with all of the vulnerability that implies?
This article describes the results of survey of over 1000 of these firms. Just as one might have expected, they are running on fumes. But here is the deal; many of these enterprises, and their Founders, are used to running on fumes. One could half-jokingly say, “They eat fumes for lunch!”
Or at least the ones who have a better chance of surviving do. I have noticed two types of Founders and their startups over the past few, heady, years of early stage investing: Those who jack up their valuations, are in constant capital raise mode, and believe their own hype more than they understand their business … and those who hunker down, bootstrap up, and know exactly what it is they have to sell.You could probably recognize the two types as well. The first tend to have fancier offices, revel in their own, frequent press, and are always travelling to some far off place for another pitch competition. The second type may be working out of their spare bedroom, eating lots of Ramen noodles, and rarely travel anywhere, preferring to communicate with their real customers by Zoom whenever they can.
Which of these do YOU think will make it through the pandemic downturn? It’s a funny thing — that six months of capital you told the survey you had left before you go broke, can last years, if you need for it to — as long as you really like Ramen noodles, and never developed a taste for steak during the go-go years.
Read more at Innovation Origins.