How is the Dutch startup ecosystem doing during COVID-19? Techleap.nl made a survey to 400 startups and scale-ups about their challenges and concerns regarding the effects of corona in their business. As a result, they found corona crisis is already causing a direct delay in funding for about a third of businesses since 50% of the startups have lost significant revenue. In addition, 66% of the consulted entrepreneurs said they urgently need money to bridge the next three months.
What actions have this startups and scale-ups taken to cut part of the costs? 85% said they reduced the operational costs, followed by postponing payments/investments/marketing. They strongly believe these two actions will help them get through the following months. And when they were asked abour what need they had, 67% of the startups and scale-ups indicated they need to get funded, a short term capital to survive this corona times, until things go back to normal.
Another study about the Impact of the Corona Crisis on startups & tech from dealroom.co affirms travel, advertising, retail and mobility have been hitted hard. See the following chart:
Mobility
According to Dealroom.co, mobility is most affected. Nonetheless it seems that, for some startups of the industry, this may be an opportunity. We got to talk to Squad Mobility from The Netherlands, who develops new urban mobility concepts; Solar powered personal or utility mobility solutions that are both emission free as well as a solution to the urban congestion problem. Robert Hoevers, Squad Mobility founder and CEO, affirmed they have always worked from home and their presence online has always been there. They participated in the Dutch Mobility Awards, getting a cash award for reaching the finals, they also had the support from an angel investor and a subsidy. All of this helped them to keep up with the development phase, which has not stopped during corona. Robert said:
“People nowadays like personal transport even more than before, thinking about the social distance. Also, they do not want to stop to fill the tank, so our mobility concept based on solar power is very much what the clients look for. And another target are females, who rather have comfort and avoid harassment in public transport. Besides that, the affordable prices make our solution more interesting”
Travel
Travel is one of the most affected industries by the corona crisis. Le Grand Voyages, winner of Present Your Startup Caribbean 2019, creates travel experiences that highlight and share the exclusivity of their region's multicultural, multi-destinations, with their Dutch, French and British influences accented with Caribbean flair.
Cristal Le Grand, CEO and founder of Le Grand Vogayes, said during this pandemic it is difficult as the tourism had already taken a hit from the hurricanes of 2017:
“Even now, though digitalization is crucial to maintaining relationships and communications, the focus of leisure travel is obviously not anyone's primary focus. Now, it is not business as usual, but it is not worst, just different. And I believe that is key right now: being able to adapt and change as things progress”
Therefore, Cristal shared some decisions she has made for the business with us:
“Looking for area that we can provide our services to other industries. For example, we handle logistics, now we are applying those principles to the health sector in coordinating their events. And preparing for the future, we are looking at wellness tourism (as most reports indicate people well seek renewal after this and the family reunion sector (as reports also show these will be some of the first travelers after this pandemic)”.
Products
Tropical Nature from Bonaire: Sustainable company that provides hand-made, vegan, care products such as sunscreen, shampoo and lip balm to save the coral reefs and most importantly, protect the skin. Dorian Crespo, CEO and founder of Tropical Nature affirmed their main source of income were sales at cruise ships at the market of Bonaire, due to the crisis, cruises are not going anymore, there are no markets and therefore no sales. Another sources of income they had were sales in supermarkets and dive shops, with no tourists, these shops remain closed:
“Product turnover in supermarkets has been reduced to a minimum. In Bonaire there are around 20,000 residents on the island. We also have online sales in the USA, but when countries closed their borders, cargo shipments to the whole world were suspended, with the exception of Curacao and the Netherlands”
Tropical Nature needs to adapt and therefore, Dorian has stablished three strategies:
“We’ll continue promoting our products to our clients. Also stimulate online sales through social media, focusing on markets where we can reach, such as the Netherlands and Curacao. And now is time for R&D. We are researching and developing new products and improving existing ones, focused on our goal, which is to take care of human health and the environment and at the same time, have respect for animals”.
Borrow a Brand from The Netherlands: Making rental the norm within the fashion industry by making beautiful, quality clothing affordable and available to everyone. Megaidi Pinas, CEO and founder of this startup said:
“I’m in the middle of a pivot at the moment. So this Corona-thing gives me the opportunity to really think my strategy through before launching the new service. It’s not better or worse because there is no service yet. I had some appointments with brands in April. Brands that where interested in collaborating in the new fashion Rental service that I’m creating. These appointments are cancelled. So that’s unfortunate, but when the appointments are re-scheduled I will be more ready for it. And because of Corona I had the time to apply for a subsidy and think about my finance strategy. So I think it’s for the better. But not in terms of revenue because the service is not launched yet”.
So what are the challenges in these times? Startups and scales-ups need to prepare for further lockdowns, since a vaccine could take up to 18 months and anybody can be sure there will not be an outbreak. Therefore, preserving cash for this period is crucial.
Another challenge is changing valuations since the expectations must be realistic. It will not be so easy to ask to be funded in these times. Consequently, it may be worth waiting before raising money again since the pandemic is not over yet and the market could be unstable.
Remember good leadership is necessary always, but even more during corona. Showing empathy to the team, making people feel connected, having an open communication is as important as staying true to values and vision. Transparency and honesty about this situation is key to build trust.
Finally, pivoting the business model is something to consider now. Several businesses are changing the way they offer value to different customer groups during this crisis. Thinking about a lock down and what could you offer to your target, as offering value to new customers with possibly different characteristics is the key to success nowadays.
Are you a startup and you would like to share your experience? Do you need help to grow?
Written by Claudia Flores Jiménez
Comments, questions, suggestions to: claudia@innovate.today
