COVID-19's Impact on Startup Investment

As Camoin 310 responds to COVID-19 by supporting the small business and entrepreneurship community, we are working with a number of data partners to stay on top of the latest market and economic trends that are developing as a result of this crisis.

PitchBook’s analyst team has produced research examining COVID-19’s impact on startup companies and the venture capital (VC) market. Understanding the findings of this research is critical for economic developers as we move forward with implementing strategies to support small businesses and entrepreneurs.

PitchBook’s Q1 2020 Analyst Note, The Ripple Effects of COVID-19 on Emerging Technologies provides a comprehensive overview of the effect of COVID-19 on startup companies. While all businesses are feeling the impact of the current pandemic, startups are particularly vulnerable to economic downtowns as they are often still working towards profitability. VC investment is a tool that helps bridge this gap, however investors tend to be more conservative during periods of economic contraction. The global uncertainty created by COVID-19 will have consequences for VC investment across industries.

The following table outlines PitchBook’s projections for the level of impact of COVID-19 on VC deal count and deal activity in key emerging industries:

Key global industry-specific findings are summarized below:

  • Healthtech: Increased government investment is expected as public health becomes a priority. This could include investment in centralized disease tracking, telemedicine, and health records. The industry will receive a COVID-19 boost as a result of higher demand for telemedicine, mental wellness applications, and at-home fitness applications and devices.
  • Foodtech: There will be a near term spike in demand for grocery and delivery services, ghost kitchen restaurant models, online grocery, and meal kits. Consumers may become accustomed to things like grocery delivery services, expanding the market beyond the crisis.
  • Internet of Things (IoT): Fewer long-term investments in IoT are expected, but increases in demand for remote patient monitoring devices use shows promise.
  • Mobility Tech: Ridesharing, micromobility (e-bike and e-scooter), autonomous vehicles, and electric vehicles will see a short-term pullback in investment as demand declines.
  • Insurtech: An increase in insurance claims due to the COVID-19 pandemic will help to drive adoption of claims automation and fraud management technology.
  • Fintech: Digital and mobile payments will get a boost from social distancing. Money transfer services, robo-advisors, digital brokerages, neobanks, and fintech lenders will face a more challenging environment. Fintech companies focused on small businesses and consumer lending will experience losses.
  • Artificial Intelligence & Machine Learning (AI & ML): Automation be accelerated as an enterprise cost-cutting measure across industries. There is a demonstrated need for improved AI in healthcare for the detection, diagnosis and treatment of infectious outbreaks.
  • Supply Chain Tech: Investment in supply chain tech could experience long-term gains. Startups that could see long term benefits from the current crisis include risk management, freight tech, warehousing, industrial automation, and last-mile delivery.
  • Cloudtech & DevOps: Software development initiatives remain mission critical, and the need for remote work solutions could further benefit this industry.
  • Information Security (Infosec): Overall, cost cutting and low growth in IT spending are projected to negatively impact this industry. In the short term, there will be increased demand for anti-phishing and other tools to support the remote workforce.

Businesses and economic developers can use this type of data and findings to:

  • Develop and/or revise their targeted industry strategies including determining which industries in their region will likely need support and which ones will be poised for growth.
  • Assess workforce skills and talent in terms of occupations impacted and future industry needs related to emerging technologies.
  • Partnership development with entrepreneur networks and existing companies and institutions.

Camoin 310 is here for you. We understand that your needs are changing daily and can work with you to develop a custom approach for your business or community. For more information contact Jim Damicis at 207-831-1061 or jim@camoinassociates.com.

Contact Information

120 West Avenue
Saratoga Springs, NY 12866
518.899.2608
info@camoinassociates.com

Contact Us