While you might think that economic uncertainty bodes not-so-well for startups looking to raise capital, according to this TechCrunch report, that might not be the case.
As wary investors steer clear, reduced competition could actually allow a select few investors to take their time over due diligence, and swoop in where perhaps they wouldn’t get a look in before.
Of course, for the startups involved, it means they will have fewer investors to choose from, and they’re likely looking at a 20% to 30% drop in valuation. But, as long as their long-term growth prospects are strong, and they have a high chance of surviving the coronavirus-related economic downturn, they probably won’t be left high and dry.
“There are a lot of companies being built that have great growth prospects and are going to survive this global pandemic,” TechCrunch managing editor Danny Crichton writes.
“It’s the VC equivalent of buy (actually) low and sell high.”
This article is exploring the US ecosystem — one considerably more mature than ours here in Australia. Whether it’s an interesting case study to observe from afar, or something we can expect to play out similarly Down Under, remains to be seen.
As the coronavirus wreaks havoc on the airline and travel industry, Flight Centre announced on Friday it is closing up to 100 ‘underperforming’ stores across Australia.
Staff from these stores will reportedly be redeployed “to fill vacancies in other shops nearby”.
Flight Centre has also withdrawn its latest financial forecast, issued just over two weeks ago, suggesting the coronavirus outbreak is likely to reduce its profits by as much as $90 million.
“The virus’s spread and the subsequent increase in travel restrictions had made it more difficult to predict the virus’s likely full-year impact or a timeframe for recovery,” Flight Centre said in a statement.
Traditional travel businesses aren’t the only ones feeling the pinch.
Airbnb reportedly saw bookings in Beijing plummet by 96% for the week between March 1 and March 7, compared to January 5 to January 11, according to analytics firm AirDNA.
Elsewhere, Bloomberg reports that while the accommodation tech giant saw a rise in revenue in the final quarter of 2019, it also reported losses of US$276.4 million — almost double the losses in the same quarter 2018. And that was before the virus even hit.
Airbnb was rumoured to be heading for a 2020 IPO, something that’s looking less likely by the day.
It’s not doom and gloom for all startups.
Amid the apparently global run on toilet paper, sales of bidets — the fountains for cleaning your bits — are reportedly through the roof.
US startup Tushy, which sells US$79 bidets that can be attached to any toilet, has seen sales triple in the past week. Chief executive Jason Ojalvo puts this down to the shortage in TP, but also to support in the comments sections of online media.
“We’re noticing a lot of articles about the toilet paper shortage and it’s not until the comments that people say ‘get a bidet’,” Ojalvo told Crunchbase News.
The surge in toilet paper sales has proven fodder for social commentary and amusing headlines. But it has also led to calls for people to be more considerate of those who cannot feasibly join the rush to the personal hygiene aisle at opening time.
An IGA store in Altona has taken action, announcing a dedicated hour each day for holders of senior and disability cards to get their shopping done. This is set to be in place for at least the next three weeks.
This is lovely from IGA in Altona … they’ll be opening an hour early to let seniors and disability card holders buy groceries minus the stress. pic.twitter.com/BzP1f6ySzs
— Estelle Griepink (@EstelleGriepink) March 15, 2020
Woolworths has also announced the same measure, from tomorrow until at least Friday.
For both initiatives, the first hour of the day will be restricted, leading some to suggest the people in this group may have trouble getting to the stores so early in the first place.
The elderly would need to be up at 5 to organise themselves, the timing is wrong
— Maid of Cakes???? (@MaidofCakes) March 15, 2020
The government released its coronavirus stimulus package last week, to mixed reviews as to whether it goes far enough, both for small businesses and startups.
There seems to be one group of small businesses, in particular, that have fallen through the cracks.
Speaking to SmartCompany last week, Stacey Price, founder of Healthy Business Finance, said while the package is “fabulous” in theory, it doesn’t do much for sole traders — those who do not have staff, but who are still being hit by hard times.
“They’re not getting what others are,” she said.
Are you a sole trader? Let us know what you think about the stimulus, and what you’re doing to protect your business.
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