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20% of startups with “temporarily suspended activity” due to pandemic

by ace
20% of startups with "temporarily suspended activity" due to pandemic

“We don’t want to be just the country of the Web Summit.” The words are from the Secretary of State for Digital Transition, André de Aragão Azevedo, who on Tuesday said that Portugal’s goal for the presidency of the Council of the European Union in 2021 will go through “giving the deserved prominence to the ecosystem of startups (Portuguese)”.

The statements were made during the presentation of the Study Startup Portugal, EY and SAP on the Portuguese entrepreneurship ecosystem, which shows a “moderate optimism” of startups in relation to the future, said the politician. In addition, the study concludes that 3.8% of startups had to shut down, 4.6% are “about to suspend activity temporarily” and 19.8% have “temporarily suspended activity” due to the Covid-19 pandemic.

Most startups claim to be “working normally”

As part of the presidency of the Council of the Union, Aragão Azevedo also said that he wants to “bring to Portugal one of the most relevant events in this area. We don’t want to be just the country of the Web Summit. Throughout the year, we want to score with other types of events that bring focus and visibility to what has been good in the entrepreneurship ecosystem.”

According to the Secretary of State, the study shows the importance of the entrepreneurial ecosystem Portuguese for the economy.

“We have an ecosystem of about 2500 (startups) and we aim to double this number,” he said of a sector that leaves Portugal “well in the picture.” However, despite the more optimistic results revealed in this study, the Secretary of State assumed that it is necessary to improve access to information for all actors in the ecosystem, whether entrepreneurs or investors.

On this point, Aragão Azevedo reiterated a desire already revealed by Startup Portugal: to create an online platform where it is easier to “improve the information capacity” for startups. Moreover, the government official did not fail to mention that “the vitality of this sector needs the ability to capture the international (investment) ecosystem”.

Apps to track contacts? “We are very early and we will have news very soon,” says Secretary of State

This promise of the politician arises due to the study of Startup Portugal, which reveals that data such as “the most useful support measures at the moment” would be tax incentives and exemptions, with 47.7% choosing this need, followed by the offer of new financial support (28.9%). In addition, participants did not fail to mention that it would be important to have “more information on key public support” (24.5% of respondents) and information on investor prospects (20.4%).

20% of startups with "temporarily suspended activity" due to pandemic

The most useful support for businesses at this time, according to the study

Most companies surveyed (86.9%) said that he was aware of state support. Nevertheless, only 33.1% said they had resorted to at least one of these support measures, as Aragão de Azevedo highlighted it as positive.

Startup Portugal revealed in mid-May that it was preparing a study on the impact of the pandemic on startups. This government arm of startup incentive joined EY and SAP and, after inquiring “more than 200 startup founders and executive presidents, having received responses from 14 districts in Portugal and the 2 autonomous regions”, there are results. The conclusions are several, but there are two that stand out: “71.8% continue to work normally and for 42.3% the present situation has generated new business opportunities”.

Redundancies, cuts and criticism of government support. An x-ray of the impact of the pandemic on Portuguese startups

Although virtually all startups claim they have been impacted by the pandemic, somehow these conclusions lead the secretary of state to speak of a “moderate optimism” in the ecosystem. According to the study, there are sectors that have been heavily affected, such as “tourism or health”. However, since most companies in this business software sector, the work was not negatively affected.

20% of startups with "temporarily suspended activity" due to pandemic

Startups’ feeling about the future

As for the future, the expectation of entrepreneurs does not seem to be as damaging as you might expect. In all, only 28% of respondents see negatively what may come from there. The positive scenario is highlighted due to many startups singrarem in times of crises, mentioned in the presentation those responsible for this analysis.

Even so, Pedro Oliveira, co-founder of the Landing.Jobs and one of the respondents, said the following about the current scenario that entrepreneurs live: “We came across a market that is anything but growth, it is survival. (…) We’ve been through a lot of crises, but never anything like this.”

For about 42.3% of the startups surveyed, the pandemic generated new business opportunities, demonstrating that it is often in times of crisis that the best business ideas emerge. It is recalled that more than half of fortune 500 companies started their activity during the contraction and more than fifty unicorns were created during the Great Recession (2007-2009),” says the startup study Portugal/EY/SAP.

Finally, the study concluded that the majority of startups surveyed (81%) is at an early stage, with “about 1 to 10 workers”. Therefore, the transition to remote work may have had less impact on the work. Moreover, as for investment, the study highlights that the majority of venture capital comes from abroad, “particularly from countries such as the USA, England and France” and that “this funding may be on hold in the face of the current situation.”

*Article amended at 20:47 minutes. In the third paragraph it was added “within the framework of the Presidency of the Council of the European Union” before the statements of the Secretary of State.


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