Pandemic threats: how lockdown affected startups

The data of the start-up survey, that was carried out by “Startup Lithuania” back in March, showed that at this unusual time, companies operating in the sectors of educational technologies, e-commerce, telemedicine, home delivery of goods or cyber-security, as well as innovative businesses in the gaming industry see the greatest demand for products and services and opportunities for business expansion.

“We are continuously following the situation in the country, and we know that some start-ups are really facing challenges at this stage. But the good news is that the majority of Lithuanian start-ups see this crisis as an opportunity to grow their sales, they hope that, after the competitors have weakened, they will be able to occupy a larger market share and grow even faster. We also notice that innovative businesses are currently constantly looking for new employees, and this is a positive signal indicating that companies are developing. And although global trends show that 4 out of 10 start-ups are likely to be gone within the nearest 3 months, if they will not attract additional funding, the situation in Lithuania is more positive. Start-ups in our country quickly adapt to the current situation, and most will be won by those start-ups which will quickly offer solutions, that are relevant during the quarantine, for addressing the societal, state and business problems“, – comments the situation Roberta Rudokienė, the Head of “Startup Lithuania“ of “Enterprise Lithuania”.

According to the data of “Enterprise Lithuania” analysts, in the first quarter of this year, the export of the high value-added goods and services created by the start-ups amounted to EUR 137.4 million. At the same time last year, this figure was much lower (EUR 86.9 million). Furthermore, in the first quarter of 2020, sales of Lithuanian start-ups amounted to EUR 179.8 million, and this is 55% more than in the same period last year.

According to the latest data from Unicorns.lt, sales, number of employees and their salaries in the start-up companies are currently growing steadily. In the first quarter of 2020, 8,476 employees worked in the startup companies, and their gross earnings amounted to EUR 2.4 thousand. At the same time last year, the number of employees in innovative businesses was 6926, and their gross salary amounted to EUR 2.3 thousand.

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“Although the data at the beginning of the year is gratifying, we will probably see the real impact of COVID-19 on the start-ups after having evaluated the results of the second quarter. Attracting investment has become more difficult even for those startups which have adapted to the situation – in the face of the pandemic, investors have reviewed their investment strategies, opportunities to attract foreign investment are limited by closed state borders. In the second quarter of the year, we are likely to see the impact of the pandemic on the decrease in the number of employees, when the start-ups will seek to minimize their costs“, – says R. Rudokienė.

Have reorganized their activities within 36 hours in three countries

ZitiCity, a start-up that provides courier services within one hour, assures that quick response to the situation that has changed and the company flexibility helped to boost sales strongly both in Lithuania and in other countries.

“After the quarantine was declared, security has become a number one priority in our business. Within 36 hours, we have reorganized our activities in all cities in France, Lithuania and Estonia where we operate. We have introduced contactless collection and delivery of goods and authentication. We have abandoned group training for new couriers – we have digitized the whole process of training and customer service quality assurance. Moreover, the quarantine in France was particularly strict – couriers were prohibited from waiting for orders on the streets. For this reason, we had to plan the deliveries accurately in advance together with the customers.

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Such quick solutions have proved to be especially successful, and the total consumption of our services in all countries grew by 45 percent in March. Therefore, we are not going to stop, and we are also currently commencing an aggressive development phase, are investing a seven-digit amount in unique same-day delivery infrastructure and technology“, – tells Laimonas Noreika, the founder and CEO of start-up ZitiCity.

During the quarantine, the number of new employees in the company has increased to 10%

Rytis Lauris, the founder and CEO of Omnisend, a start-up that develops an e-commerce product, says that in the long run, this pandemic will provide tremendous opportunities for their business because e-commerce is growing rapidly on a global scale.

“I recently saw a diagram showing that in the last 10 years e-commerce in the United Stations has grown from 6 to 16%, and in the last few months the trade volumes have grown to 25%. Omnisend is a product that serves e-commerce businesses. Therefore, we see a lot of opportunities in the future: during the quarantine, we have been actively hiring new people – we have currently increased the number of the employees by 10%”, – tells R. Lauris.

Speaking about the company sales, Rytis Lauris discloses that the situation of their customers (e-stores) strongly determines their situation in this regard. Thus, the closure of China has adjusted the sales of Omnisend: “In our case, when China and its factories were closed in February, and supply chains were disturbed, sales of our company dropped, but from March, when China was opened, and western countries were closed, our sales started to rise again. A comparison of March of this year with the same period last year shows that our growth has accelerated by about 25%”.

The global crisis has become an opportunity for companies to demonstrate their social responsibility

The representatives of MailerLite, a Lithuanian start-up providing e-marketing solutions to companies, say that during the global quarantine the company sales continued to grow steadily. But, given the global situation, the company decided to allow some institutions to use their platform for free.

“We decided to provide our services for free to all health, education and government organizations because we work in a global market and we realized how important communication with the community is at the moment.

The Ministry of Education and Religious Affairs of Greece, language and programming schools, Kaunas University of Technology, Cambridge, Columbia and Bucharest Universities, outpatient clinics, pulmonary ventilator developing organizations and those uniting doctors around the world have also started using the services of MailerLite“, – tells Ilma Nausėdaitė, the Operations Manager at the start-up MailerLite.