For startups, cash is king during an economic crisis. The more dollars in the bank, the longer a company can survive as revenue dries up.
More than half of Seattle-area startup leaders surveyed by the Washington Technology Industry Association said that they have less than six months of cash runway remaining, and 23% have less than two months.
The survey results show how the clock is ticking for many tech startups as the global pandemic continues and questions swirl about when the economy will bounce back.
There is a high correlation between size of company and runway, the survey found, as 61% of mid-sized startups (11-100 employees) have at least six months of runway, while only 35% of small startups (10 or fewer employees) have the same.
Some companies got help from the federal government’s Paycheck Protection Program (PPP); 39% of startups surveyed received PPP loans.
As GeekWire reported earlier Tuesday, various venture capital-backed startups had their PPP applications approved but ultimately declined to take the money due to concerns about the intended recipients of the PPP. Startups with deep-pocketed investors sit in a different class than the local bar or restaurant down the street.
Even so, the survey found that less than a quarter of startups have commitments from investors to provide additional capital if needed.
About a quarter of startups surveyed have furloughed or laid off at least 10% of staff. More than 400 tech startups globally have slashed 45,000 jobs since March, including several from the Seattle region.
But there are still tech companies of all sizes looking to fill roles. Some of them share common traits, including the good fortune of having raised funding in the weeks or months prior to the downturn. And certain tech sectors are still booming. Telemedicine and cloud computing startups, for example, need help meeting demand due to the outbreak.
WTIA recommended that landlords provide rent relief to struggling startups, and that the city and state defer B&O tax payment through 2020.
The survey polled more than 140 startups earlier this month. About two-thirds of respondents employ between two and 10 employees, while less than 5% have more than 100 employees.
