The Covid-19 pandemic has put huge strains on London’s tech community with uncertainty over their very survival, but they are preparing for a central role in the ongoing fight against the virus and the disruption it has caused.
According to a survey of its members by tech network Tech London Advocates (TLA), 50% are prioritising survival for the next three months as they recognise the threat to their viability caused by Covid-19.
When lockdowns were announced across the world, the economy slowed dramatically, with sectors such as retail, hospitality and travel hit the hardest. To heighten the challenge for startups, not only were consumers not spending, but investors were no longer putting money into startups.
This had a huge impact on tech startups that rely on investment capital during their journey to profitability. For example, in the TLA survey, 63% said cashflow was one of their biggest challenges.
When it comes to support from the government, 40% called for deferred payments and tax relief as the best way to help them, while about a quarter wanted the government to guarantee loans.
Tech London Advocates founder Russ Shaw said that after weathering Brexit uncertainty, London’s tech firms face continued challenges.
“Tech businesses in the capital, and in particular early stage startups, are fearing for the worst, so it is crucial that the industry collaborates and shares resources to sustain its global status in the long term,” he said. “The chancellor has already announced landmark legislation, but it’s important that support reaches tech firms quickly to sustain the fastest-growing sector of the UK economy.”
Looking forward, TLA members see a role for themselves in the fight against, and recovery from, Covid-19, according to the survey.
“The crisis also provides an opportunity for our innovative tech companies to step up and work with government, public services and society at large, to mitigate the impact of the virus,” said TLA. “Whether healthtech to support the NHS, enhancing workplace tools and network capabilities, or cyber security solutions that protect citizens against the threat of disinformation, the tech sector will need to be as creative and resilient as ever to safeguard itself and the broader digital economy.”
Greg Michel, partner at Cell Capital, which invests in tech startups, said the avenues for funding startups have not dried up during Covid-19, but have become more targeted.
“The pandemic could be described as a huge sorting machine, with startups in certain areas attracting heavy investment,” he said. “In the past, a lot of companies would have got funded even if they did not have a really tight pitch, but now this funding is more targeted and going to companies that are doing really well.”
Michel added that some companies are doing “exceedingly well in the current market” and for them, it is “the best of times”.
Startups doing well include those in e-commerce, businesses that enable remote working, healthcare startups, cryptocurrency infrastructure providers and food supply chain management, he said.