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Coronavirus: Viability of half of London’s tech startups threatened
Technology startups in London are fighting for their existence, with business plans for the next three months geared towards survival
It is inevitable that some tech startups will go under as businesses become unsustainable amid the Covid-19 pandemic, and a survey has revealed that half of London’s tech startups have business plan in place to protect their existence.
A survey of Tech London Advocates’ network of 10,000 people showed that 49% believe the coronavirus crisis is a threat to their existence, and 53% are establishing business models for the next quarter focused on survival. Some 32% expect business to stagnate in that period.
“It is a very stressful time for the entrepreneurs and the teams running these businesses,” said Tech London Advocates founder Russ Shaw
The focus for many at the moment is saving, conserving and managing cash, said Shaw. “We don’t know when we are going to get through this situation, so everything is about ensuring they can operate in the coming months so their businesses are viable when we emerge from this challenging period,” he added.
Shaw said most startups will be speaking to their investors and getting advice about what they should be doing, but many businesses want the government to help. In the survey, 40% cited deferred payments and tax relief as the best way to ease the pressure on them, with calls for the government to guarantee loans. Shaw said that if investors think particular startups will struggle to get through the crisis, they could go under.
But on a more positive note, Shaw said the tech startup industry could prove its worth during the current challenges. “There is some underlying optimism that when we come out of this, the digital and tech world, and the things it can offer, are going to become even more important and critical,” he said. “I don’t think we will go back to the way we have operated in the past.”
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- London is adding digital businesses at a faster rate than the rest of the UK and accounts for double the number of tech companies than the rest of the nation combined.
For example, platforms such as Zoom and Microsoft Teams, which businesses are using to communicate and collaborate remotely while staff are told to stay at home, will emerge from the crisis with more customers after people try the platforms out of necessity. “This will disrupt the video conference sector because people are using them now and finding out how easy they are to work with,” said Shaw.
Meanwhile, reports have revealed a huge drop in the use of cash as people try to reduce Covid-19 contamination. Shaw said this is an example of how technology – contactless payments, in this case – is enabling a reduction in the use of cash without preventing people buying basic necessities. “I don’t think cash will ever become obsolete, but when we come out of this, we will see a huge spike in digital payment platforms,” he said.
Shaw said healthtech will also attract more interest after the pandemic, with health authorities under increasing pressure amid huge rises in the number of patients requiring treatment. Three-quarters of respondents to the survey said tech companies have a central role to play in the fight against Covid-19.
For example, Spain’s health authority is using robots and artificial intelligence to test thousands more people for coronavirus.
Tech London Activities has launched a resource to help its members navigate the crisis. The TLA Covid-19 Resource Hub was launched last week to provide support including online resources, advice and blogs, as well Zoom-based networking and support.