Deeptech/Data/Analysis/ In data: The impact of Covid-19 on Europe’s startups European startups have turned to government-backed loans and freezing hiring to combat the effects of the coronavirus crisis, but it's not all bad news. By Kit Gillet in Bucharest 8 July 2020 \Deeptech Think GDPR is a big-company problem? Think again. Here's what startups need to know By Sylvain Kalache 20 April 2022 Deeptech/Data/Analysis/ In data: The impact of Covid-19 on Europe’s startups European startups have turned to government-backed loans and freezing hiring to combat the effects of the coronavirus crisis, but it's not all bad news. By Kit Gillet in Bucharest 8 July 2020 Almost half (49%) of European startups have turned to banks for government-backed loans in recent months, while 43% have frozen hiring, according to a recent survey carried out by LocalGlobe and Dealroom. The survey also found that 40% of European companies expect to see revenues down at least 25% in 2020, compared to previous targets. However, it’s not all bad news. While a third of surveyed companies plan to make some permanent layoffs, only 17% envision laying off more than 10% of staff. At the same time, 66% of companies have more than a year’s cash runway to tide them over. The survey was published as part of the European Startups project, a two-year initiative by Dealroom and Sifted, supported by the European Commission and European Parliament, which aims to supply real-time insights into the health of startups across the European Union. It also coincides with the launch of the European Startups Dashboard, which will provide macro insights and information on investor activity, funding rounds and exits. Conducted in June, the survey focused on measures early-stage tech companies have taken to try to mitigate the economic impacts of Covid-19. Around 140 startups responded, the majority from Europe, with over half founded in the last five years. “The sentiment in European tech is rapidly changing,” Yoram Wijngaarde, founder and chief executive of Dealroom, tells Sifted. “We went from near panic, to the idea that tech seems impervious, and even accelerating. But the ripple effects are still unknown. Therefore it is important to take a snapshot of the market now.” Here are 10 key data takeaways While 48% of French companies surveyed have applied for R&D grants, designed to help early-stage tech companies through the crisis, just 17% of their German counterparts and 13% of UK startups, have followed suit. Part of this appears to be down to accessibility, with just 7% of French startups believing they were ineligible or applying was too cumbersome, compared with 21% of UK startups and 48% of Germany companies. At the same time, 29% of UK startups surveyed have considered venture debt, compared to 16% in both France and Germany. Seed-stage companies across Europe are more likely to apply for state aid, with 64% of seed-stage companies having already applied for, or considering applying for, government R&D grants for the next 12 months. % of companies applying for, or considering applying for, government R&D grants in the next 12 months At the same time, later-stage tech companies are more likely to have seen their revenues drop, with 60% of Series C+ companies seeing revenues fall by at least 10% in March/April, along with 51% of Series B companies and 52% of Series A. Overall, 35% of companies surveyed saw their revenues decline by over 25% during the first two months of the pandemic. 35% of companies surveyed saw revenues decline by over 25% in March/April Fundraising has also been affected. The survey also found that just over 40% of imminent fundraises have been delayed, which could have strong ramifications down the line. Fundraising targets have been affected by the coronavirus That being said, only a third of respondents said they had less than a year of cash runway, with the majority having over a year’s worth of money in the bank. Money in the bank, in months Staff furloughing has taken place across the continent. A third of German startups surveyed had furloughed, or reduced to short hours, between 10–50% of their staff. More than half of French startups have also temporarily suspended or furloughed up to half of their employees. Overall, 30% of companies surveyed had committed to furloughing at least 10% of their staff. An earlier survey, conducted between April 6–17, found that 26% of UK tech companies had also committed to furloughing at least 10% of their workforce. The survey found that among the companies, just 17% had committed to laying off at least 10% of their staff, with sales and marketing positions most impacted, and customer service teams among the least. The fact that so few companies are planning to make permanent cuts is a positive sign for the European tech ecosystem, even with the likely slowdown in hiring, with 43% of surveyed companies having introduced hiring freezes. Workforce growth is being impacted by the current pandemic Nearly half of French (46%) and German (47%) startups have not tried to renegotiate their office contracts, compared with just 15% of UK startups. This could reflect greater long-term confidence by the European companies. Overall, 45% of companies surveyed had successfully renegotiated their workspace rent, or were in the process of doing so, while 10% had tried and failed. Many companies have tried to renegotiate their existing office contracts, with varying success Not unexpectedly, Covid-19 is leading companies to reassess their work set-up. Many of those surveyed plan to increase the percentage of their teams working remotely, as well as reduce office space and company travel. 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