Demand has surged for start-ups that offer virtual learning, telehealth, e-commerce, video games and streaming, and software for remote workers. Start-ups in areas like fitness or children’s activities also quickly adapted their offerings to go virtual.
That doesn’t mean tech start-ups have escaped unscathed. Some — like those providing travel services, restaurant software or tickets to events — watched revenue disappear. Stay Alfred, a luxury hospitality start-up in Washington, recently began winding down its operations, blaming the virus. ScaleFactor, an accounting start-up in Texas, and Stockwell, an office vending machine start-up that was previously known as Bodega, did the same.
But over all, the money has continued flowing. Start-ups in the United States raised $34.3 billion in the second quarter, down slightly from $36 billion a year earlier, according to PitchBook and the National Venture Capital Association. Much of the financing went to the largest companies, with the number of “mega-rounds” (deals larger than $100 million) on a pace to top last year’s total.
“People are trying to focus on who they believe the winners are, on companies that have pivoted successfully to meet the new norm,” said Heather Gates, a managing director at Deloitte who advises start-ups.
Across Silicon Valley, the start-up panic began dissipating around May. That was when layoffs slowed to a trickle, according to Layoffs.fyi, a site that tracks start-up layoffs. Just 5 percent of the hundreds of companies that did layoffs went out of business, according to the site.
Hiring is now picking back up. Job openings posted to a network run by Drafted, a recruiting company, increased 30 percent in the last month, said Vinayak Ranade, its chief executive.
Article source: https://www.nytimes.com/2020/08/10/technology/start-ups-pandemic-silicon-valley.html