The first Big50-2020 Challenge is complete. We asked startups to tell us how the are navigating the CV-19 pandemic, and we had a flood of strong entries.
Today, we’re announcing four winners in the alumni category. These startups have all participated in previous Big50 competitions, and/or they have been featured in Jeff’s startup roundups for Network World or IDG Insider Pro.
As challenge 1 winners, these startups have earned 10 of the 50 points needed to guarantee a spot in this year’s Big50 Startup Report.
Five more winners are on the way from the large pool of new startups that have entered this year’s competition. We’ll announce those five winners soon. Stay tuned. . .
The Agile Startup Model Adjusts Well in a Crisis
In total, 56 startups completed the first challenge, sharing their main challenges in adapting to COVID-19 and telling us how they believe this crisis will impact the startup ecosystem.
In general, the startups in this competition believe that the textbook startup model – the lean, agile, VC-backed startup – will have an easier time adjusting to the COVID-19 pandemic than legacy businesses. VC-backed startups are also predicted to fare better than startups with alternative forms of funding, such as self- or crowd-funded startups.
The startups competing in this year’s Big50 say that the pandemic has impacted them only a moderate amount. On a scale from 1 (not much) to 10 (a lot), the average was 4.2, with 4X as many 1’s as 10’s.
Next, while the current batch of startups in this competition has already embraced the idea of remote work, 68% say that teleworking has increased during the pandemic, and 57% say that teleworking has increased by 50% or more.
However, the news was not all rosy. A quarter of these startups say they have had to slow hiring or even furlough staff. We’ll have some more data points in coming days, but now, let’s take a look at the four alumi winners:
Challenge 1 Alumni Winners
JetStream Software
How CV-19 impacts the startup ecosystem: “Early stage companies are likely very lean, and they are not yet trying to scale the business, so for them, it is not so bad. It is most likely difficult for later stage startups that should be growing from 20 to 200 customers or should be scaling from millions to 10’s of millions in revenue. With respect to the business sector, startups offering products as-a-services, cloud services, collaboration tools, are probably finding a burst in opportunities.”
Main CV-19-related challenge for this startup: Standardizing the transition from face-to-face collaboration to remote collaboration, so that all team members are using the same communications platforms.
“Like many software startups, our company culture involves a lot of scrum meetings, in which small teams of engineers hash out important decisions on a whiteboard. In general, we feel that things move faster when anyone can just walk over and talk to someone about a particular issue. . . Most of us used Slack, but we had a few laggards who had never taken the time to get comfortable with the platform. They’re not Luddites; they just preferred Skype or other tools.”
Actionable info: “When everyone is remote, there has to be one platform that you know everyone can access and be accessed on. Skype, Zoom, and WhatsApp are all fine if that’s what people want to use in one-on-one or small group meetings. But there has to be one real-time platform where everyone can be found.”
NGD Systems
How CV-19 impacts the startup ecosystem: “[The CV-19-triggered recession] will force a slowing of growth due to a lack of funding in the market. Timelines are changing, but no one is sure how long this crisis will last, so the winners will be those who remain nimble and are able to quickly adapt.”
Main CV-19-related challenge for this startup: “The impact on customers is a big unknown. Many customers are in a state of shock and aren’t sure how to move forward. . . Maintaining traction and customer adoption will be an ongoing challenge.”
Actionable info: “It’s important to understand that everyone is struggling through this pandemic. Focus on your employees health and well-being first, and then cut expenses to the bone to stave off shortages.”
Virgil Security
How CV-19 impacts the startup ecosystem: “In many instances, we are seeing more fiscal responsibility on the part of startups. We’ve seen a long-standing trend to investors writing smaller early checks while expecting the startups to be progressively further advanced – we expect this to continue.”
Main CV-19-related challenge for this startup: “Everyone has ‘turtled up’ for the pandemic. Our customers are launching few projects and those that they’re launching they’re doing slower with fewer resources. Our investors have become ultraconservative, are barely investing at all, and when they do, they’re writing smaller checks.”
Actionable info: Don’t expect investors to pour money into your startup if you can’t show them that you have a viable pathway to profitability.
Webscale
How CV-19 impacts the startup ecosystem: “Over half the companies on the Fortune 500 were founded during a recession or bear market. That’s not to say it’s going to be easy, but society as we know it will have different needs coming out of this pandemic, and businesses that build themselves around these preferences, and focus on delivering against those needs will likely fare better than most.”
Main CV-19-related challenge for this startup: “Like all businesses, we have had to adapt to a 100% remote working environment, but one of our core strengths as a company, and as a technology platform, is our distributed nature. The pandemic put this concept to the test. . . Our global team is highly experienced in managing and supporting customers all over the world, from wherever they are. As we all shifted to remote working environments, our team knows that. . . our customers need us to deliver, no matter what demands are being placed on ecommerce [infrastructure].”
Actionable info: Startups seeking funding should understand that “VCs are more focused right now on protecting their existing investments, so we’re seeing lower seed/A rounds. That said, good companies in advanced stages of build-out will shine bright.” Unicorns don’t always win and are often “the ones that have the biggest downsides. The Softbank implosion” should also serve as a cautionary tale.
Congratulations Challenge 1 Alumni Winners! And stay tuned, we’ll announce the next batch of winners soon. . .
