There’s no good way to estimate how many startups won’t survive coronavirus, because nobody knows how long the crisis will last. Some companies have been fortunate enough to be in industries that are flourishing during the lockdown, like food delivery, remote work, or telehealth. For the rest, their fate may rest on a factor outside their control: timing.
Ordinarily, startups aim to raise enough capital to last them for one to two years of operation. But with the global economy in the tank, access to new venture capital has been largely cut off. According to Pitchbook analyst Alexander Davis, 7,200 of the U.S. startups in his firm’s database were likely running out of cash by mid-March. Most of those identified probably raised capital between 12 and 18 months ago. Meanwhile, the bills kept coming. For most companies, salaries are their biggest expense, and layoffs have become commonplace across the startup landscape.
Over the past several weeks, I’ve spoken to a number of…
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Source : fastcompany.com
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