The Impact of COVID-19 on the Startup Industry

Exciting times lie ahead as we surf through the waves of disruption caused by COVID-19; the ultimate test for any emerging business! What's the big deal, you may ask? Well, for starters, the pandemic has sent startups on a nervous roller coaster ride, where quick decisions and bold steps are the need of the hour. So, buckle up and let's dive deep into the state of the startup world amidst the COVID-19 crisis.

The Good, the Bad, and the Ugly

It's been a while since we all got comfortable with words like 'New Normal', 'Social Distancing', and 'WFH' (Work From Home), and things have been all but normal. The pandemic has hit almost every industry like a sledgehammer, and the startup world is no different. However, there are some silver linings to hold onto amidst the gloom.

The Good

One of the few positives of the pandemic has been a sudden surge in demand for online services. With social distancing protocols in place, people are turning towards virtual solutions for almost everything - from grocery shopping to entertainment. This has created a ripe opportunity for businesses that dealt with online services, especially in the sectors of healthcare, ed-tech, and e-commerce.

Zoom, an online video conferencing service, reported a whopping 355% revenue hike in Q3 2020 compared to Q3 2019. Mindful Chef, a UK-based healthy recipe box delivery service, reportedly had a 425% rise in weekly orders since the pandemic broke out, while Carvana, an online used car dealership platform, witnessed a 100% increase in their stock price post-outbreak.

The Bad

However, the pandemic has taken an inevitable toll on most physical businesses, especially those that relied on customer footfall, such as retail, tourism, and hospitality. With lockdowns and travel restrictions, most of these businesses faced a massive financial crunch, leading to layoffs and widespread closures.

An example of such a company would be Airbnb, which saw a sharp dip in bookings since the pandemic hit. According to a report by AirDNA, holiday rental bookings on Airbnb's platform in the US were down 49% in early April 2020 vs. the same period from a year ago.

The Ugly

The pandemic has also put a strain on funding rounds for emerging businesses, with a significant decrease in investment activity worldwide. Startups looking to raise funds during the pandemic saw a sharp drop in their company valuations as investors become hesitant in the face of an unclear future.

Startups wanting to carry out initial public offers (IPO) or those planning to go for a second/further round of funding had to face severe pressure. The pandemic has caused VC investments to dip by roughly 20% in the first half of 2020, according to Inc42's Indian Tech Startup Funding Report 2020.

The New Strategies for Startups

The pandemic has forced startups to come up with innovative ways to tackle the crisis head-on. From pivoting business models to adopting new technologies and even seeking help from governments, startups worldwide have been forced to be creative in their approach.

Pivoting Business Models

One way emerging businesses have been able to survive the pandemic is through pivoting their business models. They have been attempting to adapt their businesses to fit the rapidly changing scenarios surrounding them.

Many startups that were brick and mortar-based have shifted their focus to e-commerce or other online business models. A local brewery in Nebraska, USA, designed 'Quarantine Kits' for beer lovers, which included six-packs of different beers, and also homebrewing supplies.

Adopting New Technologies

Startups have also adopted new technologies to help navigate their way through the pandemic. For instance, businesses primarily focusing on in-house data were pressured to shift to cloud services to allow for remote collaboration and better service delivery to customers.

Another example of this could be virtual reality. VR has been a godsend for a lot of businesses during the pandemic, where viewing products via glasses allows shoppers to enjoy the comfort of their own homes without the risk of exposure.

Seeking Help from Governments

Governments worldwide have introduced various policies to help keep small businesses afloat during the pandemic. For instance, various stimulus packages in the US and UK exist to provide grants or low-interest loans to startup businesses seeking immediate financial relief.


Although the pandemic has been an unusual disruptor in the lives of everyone worldwide, it's these very instances that allow businesses to prove their metal. The response from startups has been to pivot swiftly, adapt to new circumstances, and continue pushing forward. The pandemic may have left a lasting legacy on the industry, but it has also underscored how the startup community works collectively in times of crisis, channeling their resources and innovative spirit to defy the odds.

Exciting times still lie ahead, and startups will undoubtedly continue to pivot and find success through hardships, all while remaining agile and resilient in the face of disruption. And as the pandemic dissipates and return to normalcy accelerates, the impact of these innovative approaches and creative thinking will remain to shape the industry for years to come.

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