Christopher Quek, managing partner at VC firm Trive, sees the recent collapse in oil prices as adversely affecting certain start-ups even if they are not directly plugged into the commodities industry. “There will be more likely indirect negative impact to start-ups that cater to oil-sensitive industries like travel, robo advisories and logistics. Start-ups usually serve larger established companies, so if these companies suffer a negative fallout from declining oil prices, so will the start-ups,” he says.
SINGAPORE (May 22): Big-name start-ups such as Grab and Uber have been forced to cut jobs as they come under strain following the Covid-19 outbreak. SMEs operating on a much smaller scale are suffering too. Their weak cash flow and relative lack of economies of scale make it difficult for them to withstand exogenous shocks. This includes loss-making early-stage startups — an open letter to UK Prime Minister Boris Johnson, warning that Britain could “lose a generation of start-ups and high-growth businesses to Covid-19”, has gathered at least 5,000 signatories.
NUS Enterprise, which incubates start-ups at the National University of Singapore, says: “In general, most start-ups’ revenue has been impacted by 40–50% due to weak market sentiment. Foreign markets also form a large part of our start-ups’ income. Travel restrictions [have] severely affected their business functions — project discussions have been put on hold while others who have secured orders are unable to travel to deliver the solutions/installations. Some are also facing delayed payment upon job completions.”
