SMEs have been hit hard by Corona. What solutions have they come up with, to minimize setbacks? How are EU startups dealing with COVID-19?
It has now been half a year since the COVID-19 epidemic started. Several countries are experiencing recessions, and businesses are closing doors. Amongst the latter, startups are being particularly impacted. Below, we’ll analyze how the actors are dealing with the setback.
The question of how SME’s are facing challenges is puzzling entrepreneurs. To shed light on the issue, LocalGlobe and Dealroom have published a survey. The document was published in June, and focused on early-stage tech enterprises. Respondents are fairly “recent”: the majority has been created in the last five years.
What do the main findings say? The outlook, of course isn’t brilliant. Yet, it’s also not a complete catastrophe. This can be seen by discussing several results. The first regards the use of corona-focused R&D grants. Rates of application are varying across the EU. For example, 48% of French companies have applied for such tools. Yet, only 17% of German ones have done so. This might be explained by accessibility: 48% of German respondents see the process as tiresome. For France, the figure is only 7%.
Second, not many startups have considered venture debt. Only 16% of enterprises have done so, in Germany. The French numbers are similar. This might be interpreted as worrisome. Case studies of incubators show that VC-funded SMEs are likely to survive the epidemic.
Third, startup fundraising has been strongly impacted. For example, 40% of fundraises that were imminent were postponed. Of all startups, only 17% will be fundraising as originally planned.
Third, enterprises are reaching out for state aid. About 64% of seed-stage startups have applied/ are planning to apply for state funds. This makes sense, since such funds a re crucial for EU startups dealing with COVID-19.