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Early Stage Funding for Startups Falls by 41% globally in Q1, Risking Job Recovery.

Early-stage startups have been hit the hardest in the first quarter of 2020, with early-stage funding rounds dropping by a massive 41% globally as compared to Q1 of 2019, according to a study by HexGn, startup research and consulting firm. Echoing the sentiment, the number of deals for early-stage funding has dropped to 2000 in the last quarter, from 3600 in Q1 of 2019.

At the global level, the impact of COVID-19 will be seen from this quarter onwards. Things don’t look bright for 2020, in Q1 itself, the number of startup deals globally has fallen by over 56%, signalling a deep slide ahead. Prelim data points that the number of transactions globally in the first quarter has fallen from 6500 levels to 4100, indicating gloomy sentiment, says HexGn study. Global startup funding has dropped by 15 percent to $60 billion in the first quarter of 2020 as compared to the first quarter of last year.

2020 04 29 074133These numbers are early guidance, and there could be slight changes as more companies make announcements on funds received. We are anticipating delays in sharing of such information amid the coronavirus outbreak that has disrupted businesses worldwide.
 
At the global level, the impact of COVID-19 will be seen from this quarter onwards. Things don’t look bright for 2020, in Q1 itself, the number of startup deals globally has fallen by over 56%, signalling a deep slide ahead. Prelim data points that the number of transactions globally in the first quarter has fallen from 6500 levels to 4100, indicating gloomy sentiment, says HexGn study.

On the global front, the bad news continues to pour in for China, where funding in Q1 dropped by a massive 45 per cent from the previous year. The drop is even steeper when compared to the first quarter of 2018, dipping by 63 per cent.  Asia has seen a massive dip, from $21 billion to $14 billion, mainly due to a drop in China’s numbers. European Startup investments have dipped from $10.8 billion to $9 billion in the said quarter. Even the global powerhouse, North America, saw its tech startup funding dip by 10 per cent last quarter, from $38 billion in Q1 of 2019.
 
All is not lost, there is some good news too for early stage entrepreneurs, Oceania, South America and Africa have seen a spurt in investments in the first quarter. Though the numbers remain small; it signals that investors are looking at other geographies for value investments. Africa has moved from $102 million in 2019 to $240 million, South America from $237 million to $434 million, Oceanic from $311 million to $511 million in the first quarter of this year as compared to the first quarter of 2019. Early stage entrepreneurs from mature markets could work across these newer markets and get access to startup funding.
 
With increased layoffs and a record number of unemployed in most countries, many jobless could take recourse to entrepreneurship and aid in economic recovery; however, the lack of investor appetite for idea-stage startups will derail the process. At this stage governments, large corporates and VC funds must support by providing, access to funds, grants and online acceleration programs to increase investor readiness of these startups. Now is not the time to sit on a high pedestal and reject funding decks, its about taking everybody together to restore dignity in people’s life by restoring work.

About HexGn
 
HexGn, through its global research, industry events, and online programs, equips individuals and businesses to tap into new opportunities and future proof themselves.

www.hexgn.com