Covid19, what about the impact on young entrepreneurs ...

THE IMPACT OF COVID-19 ON START-UPS - The Covid-19 pandemic, which has disrupted the smooth running of the economy, has not spared small structures such as start-ups. But what is the real impact of covid-19 on these? THE IMPACT OF COVID-19 ON START-UPS - The Covid-19 pandemic, which has disrupted the smooth running of the economy, has not spared small structures such as start-ups. But what is the real impact of covid-19 on these?

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Startups that adapt

Agility, resilience, more than ever, Moroccan startups have demonstrated their ability to evolve in the most difficult contexts. In fact, almost all of the entrepreneurs surveyed (87%) claim to have easily adapted their work to the context. Resilience and adaptation that still vary depending on the stage of business development of startups or business sectors. The study conducted by StartupSquare found that mid-stage startups (1-2 years) which, contrary to what one might have expected, are less impacted than mature startups whose development process is advanced.This could be explained by their strong growth and their low cost structure. Some sectors experienced significant growth during this period. It is well known: every crisis is a source of opportunity. An opportunity that startups active in industry, e-commerce, edtech and fintech have been able to seize. Conversely, 13% of the startups surveyed (including one in five more than 2 years old) do not think they can survive the crisis. In short, we therefore observe a disparate landscape which remains generally marked by a slowdown or stoppage of commercial activity, a need to adjust its organization to the context of containment (remote management, teleworking) ... 

But finances that get bogged down

Startups are severely impacted by financial difficulties: 64% of them say they have less than 3 months of cash. They design their development strategy just in time commercially, and financial unforeseen events weigh heavily on their future. With the exception of startups offering alternatives to mobility, all the others are faced with cash flow problems, funding and a cruel lack of prospects. More than half of fundraising startups are now subject to postponement of negotiations with investors. This inability to understand the consequences of the crisis caused by the pandemic on their activities generates many concerns. Too often, the Covid has caused delays or even cancellation of purchase orders. Indeed, the priorities of corporates having evolved as a result of the crisis, the projects of startups are the first to be called into question. Indeed, the very nature, eminently innovative, of these projects, worries in times of crisis the decision-makers averse to change. This mistake is too often made by large groups who often forget that adaptation to the crisis could have been achieved thanks to innovations. 2 out of 3 startups surveyed have lost at least one market due to the pandemic, and estimate the decrease in their turnover at 39%.

What to do to help these young entrepreneurs?

Taking into account the impacts previously mentioned, we asked the startups to position themselves on the various aids able to allow them to overcome the crisis. By excluding startups for which the epidemic has been synonymous with growth, it appears that what startups are asking for as a priority to try to survive the crisis are financial aid, that they take the form of subsidies (40% of respondents ) or a 0-rate loan (23% of respondents) on the one hand or reduction in costs (social charges (10% of respondents) and rent (66% of respondents). Mature companies, a large proportion of whom believe they are going bankrupt, are actively seeking solutions so as not to lay off workers while reducing their cost structures, while the early stages, also strongly affected, hope to be able to continue developing their products with a minimum of income.

 Mobilization to be strengthened

It appears that the mobilization of ecosystem actors, state, institutional or private, is not sufficient to protect jobs in the sector. Even more serious, this lack of support jeopardizes the technological value offered by these companies in the whole country. The crisis has shown that Morocco must acquire technological autonomy, such as to enable it to overcome future crises.

Startups mobilized at the height of the crisis to contribute to the national effort, by providing the authorities with all their know-how to fight the epidemic. 3D printing of security equipment, air purifiers, e-health, epidemic modeling, remote payment solution or e-education are some examples of the impact of these young people in ensuring business continuity. National policy and the protection of front-line actors.

However, when the crisis is over, this often voluntary effort should not be forgotten. According to our study, only one in 10 entrepreneurs was helped, when all of them contributed to the fight against SARS-Cov-2. And the private sector, often more promoting these new technologies, contributed up to 50%. It emerges from this fact that the noble wills of technological independence, often formulated as strategic in Morocco, were not in fact accompanied by the means of their ambitions. However, these young people at the forefront of innovation often do not need much to survive, a “not much” that we do not give them, a “not much” that if they had. Conceded by state bodies could have contributed to arming us against future crises, a vital “not much” for the ecosystem of startups in Morocco.

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