TRENDS FEATURES
Unboxing Startup Stimulus Packages Governments around the world are funneling money to keep the startup ecosystem alive
crisis-era governments didn’t have to consider where startups fit into the plan–after all, Silicon Valley wasn’t a concept in the 1920s. Should startups be prioritized for government aid? Are there irreversible consequences of not providing them with adequate assistance? These are the questions politicians and regulators have to contend with as they witness their economies fall apart in real-time.
National repercussions of startup struggles
By DANEESH SHAHAR
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he novel coronavirus pandemic has quickly become this generation’s defining event. The fallout has led us to assign the pandemic to a particular tier, where it ranks among the likes of the World Wars and the Spanish Flu. As the crisis has unfolded, more and more governments have chosen to introduce stimulus packages to boost their economies. For the first time in history, startups are the beneficiaries. Stimulus packages provide temporary relief from financial pressures through handouts, forgivable loans, or tax cuts. Historically, they have been criticized for misdiagnosing the problem they’re trying to solve or the lax enforcement of their
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What’s interesting about economic stimuli during COVID-19 is that previous crisis-era governments didn’t have to consider where startups fit into the plan–after all, Silicon Valley wasn’t a concept in the 1920s. terms and conditions. However, in the face of the COVID-19 pandemic, it has become increasingly difficult to argue against them. What’s interesting about economic stimuli during COVID-19 is that previous
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ike most other businesses during this crisis, startups are struggling. However, startups’ unique process of raising capital can make them especially vulnerable to exogenous shocks. When investor funding is contingent on hitting milestones, startups fall prey to excessive cash burn and the need to boost top-line revenue figures at the expense of a sustainable business model. A black swan event like COVID-19 isn’t typically accounted for in the budgets of young, venture-backed startups. Consequently, the pandemic has forced many to lay off their employees as quickly as they hired them. In the early part of the U.S. lockdowns, electric scooter sharing startup Bird laid off 30% of its workforce in a single Zoom
Fall 2020
Jumpstart Magazine
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