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Government funding for startups is available in other sectors, but there are particular and varied application rules. Additionally, revenue-generating startups may have seen a drop in income due to the slip in consumer spending.
Fremont, CA: Startups are the foundation of a thriving, entrepreneurial economy. Unfortunately, the COVID-19 pandemic is endangering the existence of thousands of startups in the UK and around the world.
Members of CIMA and the Association of International Certified Professional Accountants who work for and with startups shared their viewpoints on COVID-19 and its consequences in a recent videoconference. The following were the main themes that emerged:
Access to funding
The ability of startups to raise funds can be affected by the industry in which they function. Government funding is currently available in the UK healthcare sector for startups developing COVID-19 solutions. Government funding for startups is available in other sectors, but there are particular and varied application rules. Additionally, revenue-generating startups may have seen a drop in income due to the slip in consumer spending.
Startups that are experiencing financial difficulties may not have a clear source of funding to turn to. Funding from venture capitalists can be a time-consuming process, and many startups do not have strong enough financial results to qualify for a bank loan. There appears to be a funding gap for startup businesses in the knowledge economy at the moment. Some limited tax reforms in the United Kingdom could increase the pools of investment capital available to tech and other knowledge-based businesses.
For many startups, the pandemic has acted as a catalyst for innovation. It has urged them to reconsider their business models and cultivate closer relationships with their customers to serve them better and provide a more compelling experience.
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