The global startup economy generates roughly $3 trillion in value. However, the ongoing pandemic has disturbed its growth significantly. In fact, the Global Startup Ecosystem Report from Startup Genome states that the COVID-19 can become a ‘mass extinction event’ for startups.
Despite its growth, the startup industry was facing a series of challenges before the pandemic struck. This includes the concentrated value in multiple cities, a lack of inclusion, and leading companies like WeWork and Softbank seeing a major downfall.
The coronavirus added to its upheavals with the majority of startups seeing very low consumer demand and venture capital. Ultimately, the lack of profits has led to a huge number of layoffs as well.
VC funding reduced by 20% worldwide in the first quarter of 2020, whereas it lowered 50% in China – as the number of coronavirus diagnosis increases in the country. The report also shows that 72% of the world’s startup saw their revenue fall since the start of the crisis and the declined averaged 32%. In addition, 40% of all startups experienced a 40% fall in revenue or more while only 12% reported growth.
The chart below highlights the startup niche most affected the COVID-19. As anticipated, the Travel & Tourism industry is suffering the most – with a 70% fall in revenue. It is followed by the automotive sector that reports a 43% decline in consumer demand.
The tech industry has also seen a noticeable financial impact. However, with the majority of the global population turning towards technology gadgets for their communication and entertainment during the ‘lockdown’ phases, the tech sector has indeed managed to weather the storm better than most.
Blockchain/Crypto (-14 percent) and Cybersecurity (-17 percent) were the least affected sector, along with Gaming (-19 percent) and Social media (-22 percent) industry.
Read next: Report Reveals Due To Pandemic, Global Apps Earned Over $50 Billion In The First 6 Months Of 2020
Despite its growth, the startup industry was facing a series of challenges before the pandemic struck. This includes the concentrated value in multiple cities, a lack of inclusion, and leading companies like WeWork and Softbank seeing a major downfall.
The coronavirus added to its upheavals with the majority of startups seeing very low consumer demand and venture capital. Ultimately, the lack of profits has led to a huge number of layoffs as well.
VC funding reduced by 20% worldwide in the first quarter of 2020, whereas it lowered 50% in China – as the number of coronavirus diagnosis increases in the country. The report also shows that 72% of the world’s startup saw their revenue fall since the start of the crisis and the declined averaged 32%. In addition, 40% of all startups experienced a 40% fall in revenue or more while only 12% reported growth.
The chart below highlights the startup niche most affected the COVID-19. As anticipated, the Travel & Tourism industry is suffering the most – with a 70% fall in revenue. It is followed by the automotive sector that reports a 43% decline in consumer demand.
The tech industry has also seen a noticeable financial impact. However, with the majority of the global population turning towards technology gadgets for their communication and entertainment during the ‘lockdown’ phases, the tech sector has indeed managed to weather the storm better than most.
Blockchain/Crypto (-14 percent) and Cybersecurity (-17 percent) were the least affected sector, along with Gaming (-19 percent) and Social media (-22 percent) industry.
Read next: Report Reveals Due To Pandemic, Global Apps Earned Over $50 Billion In The First 6 Months Of 2020
