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Today I would like to talk about COVID-19 impact on startups scene in Barcelona as this situation literally changes the way we live and work and many startups go bankrupt because their business models were not ready for online business, while others are booming. So, let’s see what kind of businesses are on the rise and what to expect in the future.
Game-changing coronavirus facts in Barcelona
- Spain sees historic rise in unemployment as more than 1,000,000 lose jobs since coronavirus lockdown.
- The crisis paralyzes new investments and threatens the start-up ecosystem. Professor in the Department of General Management and Strategy of Esade Jan Brinckmann believes that professional investors “will think about it more time” when investing due to the effects of the pandemic. He has also invested in 17 startups and believes that the funds will prefer to remain liquid before taking substantial risks. “For many companies there will be no future because they cannot wait two or three months,” he says.
- With the world’s second highest death toll after the US, Spain’s government has banned almost all outings since 14 March.
- Spanish land borders are closed to foreigners
Coronavirus negative impact on startups in Barcelona
- Cabify and Cooltra say that usage goes down for their mobility apps
- Airbnb says that accomodation booking platform usage keeps going down
- TravelPerk sells less tickets and experience huge decrease in usage
- Virtuo shares that car bookings go down
- Musement shares that there is a decrease in tour bookings
- Andjoy says that there is a decline in sports booking platforms
- Byhours says that startup can’t operate while hotels are closed
“Byhours is an hourly booking platform for hotel rooms with 70% of transactions in Spain and Italy. “If the hotels don’t open, we can’t work,” explains Irene Martínez. The company has liquidity to continue like this only for two months .
- Acqustic says that basically got paralized because of investment collapse in Barcelona
“It is going to be especially difficult for those who now have to start a round of financing,” says Miguel Vicente from Barcelona Tech City. This is the case of Acqustic, a service that organizes concerts in private homes, bars and restaurants with 400,000 euros billed last year, an activity that generates 90% of its income and has been totally stopped. The company wanted to open a financing round of 2 million euros in April that will have to wait. “The entire executive team has offered to give up the salary,” says the founder of the company, Esteve Lombarte. In the meantime, they study whether to apply an ERTE and look for new veins, such as streaming concerts.
- Housefy experiences a huge problem in real estate market
Startup Housfy is suffering because of Covid-19 crisis. Housefy is dedicated to the online sales of real estate and has fallen dramatically in just one week of lockdown. Albert Bosch, co-founder and CEO, ensures that sales have dropped 90%. “If before the arrival of the coronavirus we managed tto sell 50 apartments a week, now we barely reach five. The real estate business, in general, has been practically reduced to zero ”.
Coronavirus positive impact on startups in Barcelona
- Hopin – first all-in-one live online events platform where attendees can learn, interact, and connect with people from anywhere in the world says that conferences shift to remote
- Demodesk and Loom say that experience increase in remote meetings and demos
- Glovo and Deliveroo share that experience increase in # of deliveries
- Freeletics says that there is an increase in downloads for online fitness apps
- Agora Images – photo contests app sees a huge increase in downloads during the period of lockdown
- Nannyfy experiences a huge increase in demand for online nannys
“A lot of corporates are calling us and asking us for help,” says Claudia de la Riva, chief executive and cofounder of Nannyfy, a Barcelona-based marketplace that connects nannies and families. She points to one new contract with Almirall, a leading Spanish pharmaceutical company, where workers on drug production lines are still required to come to work.
“The people that are working there can’t stop working or work from home, so they are asking if we have 75 nannies that are available,” says de la Riva. This contract alone will amount to roughly €80,000 in extra revenue for Nannyfy, and the startup has also seen an increase in requests for mid-term nannies on the business-to-consumer (B2C) side.
“We normally have between 10-12 requests per month, now it’s more like 16-18 per day,” says de la Riva. The startup generated €120,000 in its first nine months and in the first half of March alone it has already generated €100,000.
- HumanITCare sees the rise in platform usage to track COVID-19 patients
HumanITCare – online patient monitoring platform is not noticing the crisis. “Demand has grown 80% and during the first lockdown weekend we had to do overtime,” explains the director of the company, Nuria Pastor.
- Mediquo sees increase in usage of medical consultation platform usage
Guillem Serra, founder of Mediquo, assures that in just one week the daily medical consultations through his platform have gone from 1,000 to 10,000. “We have created specialized channels for coronaviruses, some doctors have volunteered to collaborate. This year we wanted to reach a million turnover but we see that the figure can increase even more”
- Signaturit experiences boost in digital signature usage
In the case of Signaturit, which is dedicated to electronic signatures, teleworking has boosted its business. The use of this service has shot up over 200% during the crisis.
Tech events cancellations & Postponement in Barcelona
In mid-February, while the Coronavirus hotspot was China, Mobile World Congress was one of the first major events that cancelled their 2020 edition due to public health concerns, and due to a large number of dropouts from their exhibitors and partners.
Then, due to the implications of the Coronavirus crisis in Spain, travel restrictions and new rules that prevent larger gatherings, all events that were supposed to take place in Barcelona during spring or summer got cancelled or postponed. Events like Jbcn already postponed event from July to September, but will most likely soon be forced to cancel their 2020 edition. The challenge that international tech events currently face is that they not only have to fear if their event might be legally allowed to take place, but the bigger question is actually if attendees, exhibitors and sponsors would be already willing again to take the risk to participate in mass gatherings. For 2020 this might be impossible.Some events that were about to happen in Q3 or Q4 start communication that there is a high probability cancelation due to COVID-19.
According to EU-startups poll, only 18,6% think that things will “go back to normal” during this year’s summer, 37.2% think this might be possible during the 4th quarter of this year, and 44.2% think that we’re going back to normal only in Q1 of 2021 or later. This is also backed up by many health and pandemic experts, who say that going back to normal life (incl. international travel without restrictions, and allowing large gatherings) might only be possible again if a vaccine is available, which unfortunately is very unlikely to happen before Q1 of 2021.
A lot of large companies announced ERTE due to the coronavirus situation: Nissan, Renault, Seat, Burger King, H&M, Mango, Decathlon, Desigual, Calzedonia, El Ganso, Primark., Tous, Vueling, Iberia, Volotea, Ryanair, Iberostar, NH Hotel Group, Barceló Hotel Group, Meliá Hotels, El Corte Inglés, Fnac, Ikea, Toys’R’Us, Makro, and many many others. That means that all these people who got fired or got temporarily unemployed will start saving money and that means less market for startups that were focused on middle class segments.
Every week there are news that startups go bankrupt and unemployment rate keeps growing.
The situation is very unstable and nobody knows what to expect, but I would like to finish this article with one of my favourite quotes:
“When life gives you lemons, make lemonade”
Every crises gives new opportunities, don’t miss them!