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Major challenges for Startups during the Covid-19 pandemic.

A new year but nothing new here...

The Covid-19 epidemic is continuing and for many, especially for us in the UK, we are hitting the worst of it right now.... well hopefully it doesn't get any worse!

Photo by CDC from Pexels
Photo by CDC from Pexels

It has been just over a year now since the virus appeared, and during this time business's have had to adapt to survive.
For those in the Travel, Tourism, Hospitality, Cinema, & Outdoor Event industry the challenge to survive has been the greatest and they have taken the most severe of hits. Even for those not in these industries, the battle to survive has been all too real.

Startups are more vulnerable to the problems the Covid-19 pandemic is creating compared to established companies. One of the major challenges facing them at the moment is the ability to raise capital, both financial and human.
The lack of access to financial capital has not been helping Startups get through these difficult times. 
According to a report created by Startup Genome, 41% of young startups have less than 3 months of cash left. 29% of startups were in this situation before the lockdowns and following the crisis, a further 40% entered this position.

Even where funding had been secured before the crisis, 20% of the startups have seen their promised investment pulled and 53% have encountered issues maintaining a dialogue with promised investors, thus slowing down the whole process.

Along with the financial problems created, this epidemic is also making it hard to obtain and retain human capital. During the past year finding and maintaining employees has been a challenge for startups for two reasons.

  1. Potential new talent is more attracted to the job security and opportunity larger established firms can offer compared to the far riskier job security presented by newly formed startups.
  2. Startups are failing and can no longer afford the staff. According to the Startup Genome report: "Since the beginning of the crisis, 74% of startups have had to terminate full-time employees. 39% of all startups had to lay off 20% or more of their staff, and 26% had to let go 60% of employees or more."


During an economic downturn, it is especially the higher-quality talent that moves to established firms.
Startups only expand and innovate following the ability to attract high-quality personnel. So even if Startups have managed to survive the economic downturn of the past year, this shortage of high-quality talented staff is hampering their growth. 
Ref:  Harvard Business School research


Not the most uplifting of reading so far I'll admit however, there are rays of sunshine burning through the misty doom and gloom. There are startups out there that have been making the most of the downturn and have found opportunities of growth within the new economic environment the Covid-19 pandemic has created.


Sock Fancy, based in Atlanta, specialised in supplying socks but when the Covid-19 crisis hit they started to offer masks, some which matched their socks!
They had been established for more than 7 years but a few months into the covid-19 epidemic they started to sell masks and by the end of spring 2020 they had sold 80,000 and donated an equal amount to essential workers. 

CovCare was founded in 2020 when the covid-19 crisis caused a dramatic reduction of trade for two companies.
Wooter Apparel and Game Breaker pivoted their business model to respond to the demand for facemasks.
They now produce affordable facemasks at below-market prices (they donate 1 mask for every 10 sold to a hospital in need), and premium-quality respirators. CovCare’s face masks are now used in hospitals and medical facilities around the globe!

Other startups have flourished simply because their product fits well with the climate. A great example is the imposed lockdowns creating an increased demand for online meeting apps such as Zoom. Their share price doubled shortly after the first lockdown started and between then and October 2020 it increased by 750%!

Another example of a startup to bloom in the new economic environment, see:


Photo courtesy of Calm

Calm, a meditation app startup based in SanFrancisco, Califonia. It is now the leading mental wellness brand with the #1 app for sleep, meditation and relaxation, designed to help you manage stress, sleep better and live a happier, healthier life. Now with users in more than 190 countries.

So far, the company has raised $115 million in funding, and with the ongoing covid-19 pandemic increasing everyone's anxiety it will surely continue to be there for those of us that need a calming influence. 

Excuse me, I shall now visit the app store...