Covid-19: How It Affects and Reshapes the Startup Environment 

Covid-19: How It Affects and Reshapes the Startup Environment 

In order to survive, some have to strive

As the Covid-19 outbreak raises concerns globally, small- and medium-sized businesses like startups need to rethink their strategy. The executive director of the Ryerson DMZ startup incubator, Abdullah Snobar told Financial Post that the fallout from the Covid-19 pandemic is already here – and some startups will come out of this while some others will not. 

Venture capital firm Sequoia also reported that its business has experienced the downturn of the pandemic as Sequoia tries to rethink its strategy without risking its people and society. In their note, Sequoia stated that businesses are spending less, consumers even less, while startups have seen their topline drop anywhere between 5 percent and 50 percent in less than a week. It advised companies to consider cutting workforce and marketing budgets. Even more, businesses might be necessary to get by without further capital investment. 

Covid-19 is changing more than the economy as it changes the way the world works. In order to flat the curve and lessen the virus spreading, governments are taking strict steps to urge businesses to allow their people to work remotely, even for those who have no plan to do so. Face-to-face meetings are now conducted through Skype, Meet, and Zoom calls, and if the job can be done at home, companies are advising employees to go ahead and do just that. 

See also: The Pros and Cons of Taking Startup Remote Jobs

Innovation would help

Just like what happened during the SARS crisis, Covid-19 would also bring value to some businesses. During the 2008 financial crisis, startups like Airbnb and Uber shot up in popularity across the west as the subprime crisis meant lower savings and income for masses, forcing people to share assets in the form of spare rooms and car rides. 

Meanwhile, in today’s situation, there are signs of a shift in how consumers and businesses behave, such as remote working that is now encouraged by tech and non-tech companies alike. Longer-term innovation and changes in trends will come about as consumers and businesses try earnestly to normalise the impact of this pandemic. 

Co-founder of, Hamza Mudassir found that a recession usually brings about an acceleration in business model change, while driving down costs to serve and prices. In this case, Corona pandemic would help accelerate innovation where startups and business ideas would gain popularity at a faster rate. As an example, supply chains will merge into resilient ecosystems, or mental health support that soon will be provided digitally. 

What startups should do: experts advise 

The changing of ideas in this crisis would be helpful. Brainstorming, which would be intended for a different purpose entirely, could help in the current crisis, Israel21c reported. As per March 18, there are 427 corona cases in Israel with 416 active cases. While the cases rate is not booming like in Italy and Iran, startups in the country are changing their ideas which are completely different from their initial plans to help address corona issues. Soapy, CoughSync, Antimicrobial fabrics are among products Israel’s startup creates to help fight coronavirus. 

Venture capital experts advised founders to raise money more than they anticipated during a crisis. Some investors will be more skittish about plowing millions of dollars into companies for the time being. However, think about the situation where no decent investor will punish you for incurring costs from doing the right thing. There is a systematic empathy built into the ecosystem now, because of this covid crisis. The decision is to make and do the right thing, said Karan Mehandru, VC at Trinity Ventures.

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