How the coronavirus pandemic is impacting buzzy startups, from Peloton to Convene

Silicon Valley startups were already seeing investors tap the breaks after a series of black eyes for high-profile companies like WeWork and Peloton when the coronavirus hit.

Now, many of these startups, some of which raised a lot of money on the promise of rapid growth, find demand is drying up as consumer spending stalls and unemployment is set to surge. 

Business Insider has been reporting on how the coronavirus pandemic threatens these companies’ growth, the fallout so far on companies like Convene and sectors like AI, and how they’re pivoting in the face of the crisis.

Go deeper: ‘Businesses will shut down’: The coronavirus threatens to crush direct-to-consumer businesses’ wild growth

SoftBank’s vision fund, which has bet on 88 companies including WeWork, Uber, and DoorDash, reportedly anticipates that some startups in its portfolio may not have enough cash to make it through the end of the year.

Read more: SoftBank is reportedly looking to raise $10 billion to support startups reeling from the coronavirus outbreak — and some might not have enough cash to survive more than a year

Convene went from planning to add 500 people this year to laying off 150.

See more: Brookfield-backed Convene just laid off 20% of its workforce as the coronavirus upends the flex-space and events industries

Salespeople at tech startups are already running into trouble closing deals.

Read more: We talked to 7 salespeople at tech startups about how the coronavirus is already hitting them as layoffs have already begun

Even the shiny sector of artificial intelligence startups may not be immune from the effects of the pandemic.

Read the full story: The AI startup industry may be heading for consolidation and bigger problems as the economy gets tougher: ‘Get acquired or go out of business’

Digital fitness company Peloton will temporarily suspend sales of its high-end treadmill because of coronavirus containment measures.

See more: Peloton is temporarily halting sales and deliveries of its $4,295 treadmill because of the coronavirus, just as people are looking for new ways to work out at home

And: Iris Nova, the buzzy direct-to-consumer startup backed by Coca-Cola, has laid off half its staff as the coronavirus pandemic hits its retail business

Venture capitalists have warned a recession brought on by coronavirus could have a serious impact on the UK’s startup scene. 

Read further: ‘A recession is inevitable’: European investors and startups brace for cash drought and lower valuations

Startups specializing in booze and CBD-related products are seeing record sales as people work from home and distance themselves, though.

See more: Alcohol delivery and CBD-infused beverage startups are flourishing during coronavirus containment, while the broader direct-to-consumer industry struggles to keep a foothold

Investors from Greycroft, Menlo Ventures, and Mayfield warned of a potential downturn that could make it harder for startups to raise new funding. They are telling portfolio companies to cut costs, shrink plans for growth, and maintain focus to conserve capital.

Go deeper: Silicon Valley’s startups are facing the biggest crisis in a generation. Here’s what venture capital investors are telling founders they need to do to survive.

As the coronavirus devastates swaths of the economy, startups are variously slashing ad budgets, giving away products, and using content to stay connected with shoppers.

See more: Buzzy DTC startups like Hippo, Ro, and Tiny Organics are slashing ad budgets, offering free products, or ramping up content as they try and ride out the coronavirus crisis

Something is loading.

Related Items:featured

Share

Tweet

Share

Share

Email

Click to comment

Leave a Reply

Cancel reply

Your email address will not be published. Required fields are marked *

Comment *

Name *

Email *

Website

Δ

This site uses Akismet to reduce spam. Learn how your comment data is processed.