How to run a startup in the time of coronavirus (Covid-19)

05.05.2020 10:00, Stefan Steiner

Many companies will face challenges during the coronavirus crisis such as dropping business activities, supply chain disruptions, difficulties in fundraising, home office, and travel bans.

Swiss Startups Tackling coronavirus (COVID-19)

The Swiss startup ecosystem stays strong and startups are providing services that are tackling coronavirus. Discover the Swiss startups that support our society during the corona crisis.
 

Measures and support from the Swiss federal government and the cantons

Given the urgency, the Federal Council decided on 22 April 2020 to use the existing system of guarantees for SMEs to provide support for start-ups. This approach can be implemented without the need for a time-consuming legislative amendment.
It is planned to create a new procedure for start-ups under the existing system of guarantees by 30 April 2020. The confederation will guarantee 65% of a credit, and the cantons the remaining 35%. It is for individual cantons to decide whether they wish to offer this guarantee facility, originally intended for SMEs, to their start-ups. Some cantons have already committed considerable resources to other kinds of support for start-ups.

If a canton decides to offer this new instrument, start-ups can submit a guarantee application to the relevant cantonal office by 31 August 2020. Where necessary, the office can consult an advisory board set up by the Swiss Innovation Agency (Innosuisse). If the office approves the application, it is passed on to a federally recognised guarantee organisation. The latter will issue the guarantee confirmation, which the start-up can use to apply for credit from a bank of its choosing. In this way, the Confederation and the cantons jointly guarantee 100% of a credit. The Confederation can guarantee up to CHF 100 million in total with this process. Including the cantons, guarantees can thus be provided for up to CHF 154 million in credits. Details can be read here (German, French and Italian). Startups submit a loan guarantee application via the website. 

Cantonal measures and loans

• Canton of Zurich: In addition to the federal guarantee, Zurich is providing an additional CHF 500 million, which is also available for start-ups.
• Canton of Bern: Immediate financial contribution for research and development projects
• Canton of Schaffhausen: CHF 50 million for liquidity requirements for the months April to September 
• Canton of Aargau: CHF 150 million for immediate payments
• Canton of Zug: CHF 20 million if no other support aid is available

 

COVID-19 Bank Loans for Startups

You have probably heard, that as of Thursday 26.03.2020, SME in Switzerland can apply at their bank for bridge loans to survive the current corona crisis. Companies can get loans up to CHF 20 million - up to CHF 500’000 with a 100% and above CHF 500’000 with an 85% guarantee by the Swiss Confederation: https://covid19.easygov.swiss. The specific amount you can apply for is 10% of your turnover.

For 70% of startups, the current loan concept does not work

 

Short-time working in the context of the coronavirus and other cantonal information:

Have a look at our webinar and the corresponding factsheet about short-time work due to the coronavirus crisis 
 

• Canton of Zurich
• Canton of Vaud (Indemnité pour réduction de l’horaire de travail) - (Coronavirus - informations pour les entreprises vaudoises) - (FAQ Economie) and Innovaud
• Canton of Geneva
• Canton of Basel-Stadt
• Canton Aargau
• Canton of Zug
• Canton of Valais/Wallis
• Canton Bern and BeAdvanced

Remote Work

The rapid spread of the coronavirus also poses great challenges for employees and employers. As many people as possible should stay at home and minimize their social contacts in order to stretch the infection curve, which in the worst-case scenario will increase exponentially. But how can companies and employees respond to this challenge and send their employees to the home office without losing significant productivity?
 

• Experience sharing - Remote work: 10 DOs and DON’Ts! by CodeControl
• Work From Home Playbook by GetYourGuide
• Working from home: Best Practices by Personio
• COVID-19: All the HR resources you need to survive and succeed by Workable

 

How to run your startup

Unless your startup is responding to a digital need that is needed right away such as video conferencing or e-commerce, then prepare your startup for a downside scenario and consider cash conservation. At times like these, it can make sense to avoid decisions that commit to increase future expenses in a more permanent way. Consider more flexible alternatives than hiring full-time employees, including delaying hiring and reframing your model for how much revenue is needed before hiring another employee. Develop cost-saving measures that can be implemented quickly (trim marketing and sponsorships, reduce travel, etc.) for both minor and worst-case revenue decline scenarios. Cash is king for your business.

If your business has less than 9 months of cash, consider accelerating the close of your fundraising. For example, if you are currently raising don’t worry about small legal terms or explore establishing a bridge financing since a hit to revenue could shrink cash runway. Also, consider adding venture debt or look for grants.

Review your operational actions and plan for employee absences. Check remote technology access and security. Communicate a policy so employees know they should stay home if they or their family members are sick. Identify essential functions and the employees who are responsible. Create a redundancy plan so operations are maintained even during employee absences. Work with your suppliers and vendors on their planning and potential production/delivery delays that might impact your product development/business.

Implement a robust communication plan. Communicate frequently and transparently with your board, shareholders, and investors. Be upfront about what the company is doing, planning to do under different scenarios, strategy and forecasting changes, updates on staff and other changes. 

Read more recommendations in our curated list of corresponding articles:

 

• Coronavirus: The Black Swan of 2020 by Sequoia Capital 
• Funding in the Time of Coronavirus by Mark Suster
• What I Expect in the Next Few Months in Startupland by Tomasz Tunguz
• Fundraising during coronavirus: Are startups screwed? by Amy Lewin
• Coronavirus Survival Guide for Startups: 15 options to bring your startup through a crisis by Herbert Bay

The articles above have been curated in our daily Startup Funding newsletter. Each morning we visit about sixty news sites and from that swirling nightmare of information quicksand, we pluck the topmost fascinating items of the day. Subscribe now to get our free daily “Startup Funding” newsletter to stay a step ahead on fundraising, how to pitch to investors and lessons learned.

In any case, keeping the momentum for your startup is of the essence, even in uncertain times, so join our Ask the Expert workshops or training to get ready for investors.
 

International coronavirus best practices:

• COVID-19: Collected Best Practices of the German Startup Scene
• Two billion Euros - German government plans corona aid for start-ups
• France Pushes $4.3 Billion Support Package for Startups
• Taiwan offers helping hand to startups affected by coronavirus

 

Coronavirus related webinars for Swiss startups

Do you want to know how to best prepare for the upcoming year, and manage the impact of coronavirus? Register now to our webinars to take the opportunity to learn from experts and other entrepreneurs.

Past webinars:

 

• 31.03.2020, 8:30-10:30: WEBINAR: ADAPTING YOUR BUSINESS TO COVID-19 #2
• 20.03.2020, 12:45-14:45: LABOUR LAW IN TIMES OF CORONAVIRUS with Kellerhals Carrard experts
• 23.03.2020, 16:00-18:00: HOW TO ADAPT YOUR BUSINESS TO COVID-19 with Keynote Speakers Patrick Barbey, Managing Director at Innovaud and Jordi Montserrat, Co-Founder and Managing Partner at Venturelab.
• 27.03.2020, 17:15-19:00: WEBINAR: ADAPTING YOUR BUSINESS TO COVID-19 IN GENEVA