scale-ups - covid-19 survey results deloitte...with 4 out of 5 scale-ups expecting no, limited or...

Scale-ups

COVID-19 Survey Results

A P R I L 2 0 2 0 – R E P O R T

1

Lower or delayed new business and customer signings is the key concern amongst scale-ups, whilst liquidity concerns 1 in 3


Source: Deloitte COVID-19 Scale-ups Survey, April 2020.N = 71

2 | Copyright © 2020 Deloitte Consulting & Advisory. All rights reserved.

For half of the larger scale-ups* cash flow / liquidity

issues and customer default or delayed payments are a

key concern, bringing it much higher on their

agenda compared to smaller scale-ups.

However, new business and customer signings remains the highest concern which needs to be mitigated for.

* > 10 million EUR revenue and > 50 FTEs

Company size

8%

18%

27%

28%

38%

45%

82%

0% 25% 50% 75% 100%

Supply chain disruptions

Employee safety and engagement

Customer default or delayed payments

Loss of existing business

Cash flow / liquidity issues

Cancelled critical customer meetings, trade fairs,

international travel

Lower / delayed new business and customer

signings

Q: What concerns you most about the current COVID-19

situation?

1

Several scale-ups are fine-tuning their business model and way-of-working, with many having adjusted their offering to be most relevant within the current context


3 | Copyright © 2020 Deloitte Consulting & Advisory. All rights reserved.Source: Deloitte COVID-19 Scale-ups Survey, April 2020.

N = 71

51%

41%

39%

31%

15%

14%

0% 25% 50%

Reduce operational costs (excl. temporary

unemployment)

Implement temporary unemployment

Improve working capital

Reduce CAPEX

Freeze / delay hiring

Reduce headcount / dismiss employees

Q: What actions have you already taken in response to

this crisis?

4%

6%

6%

7%

8%

8%

11%

13%

13%

0% 5% 10% 15%

Strengthen current customer relations

New customer acquisition

Re-focus product development

Digital customer engagement

Adjust / new product offering

Adjust market (segment) focus

Pricing model / commercial terms

Teleworking

COVID19 (ready) offering

Q: Please describe the most significant changes you have made in your

business model in response to this crisis.

1

Growth expectations are tempered significantly by the COVID-19 crisis, with smaller companies as expected taking a larger hit in relative terms



Scale-ups with lower revenue had larger initial growth

expectations and are consequently impacted

more compared to the more mature ones.


(< €1M: N = 17; €1 - €3M: N = 22; > €3 - €50M: N = 19 )

Growth impact

98%

49%

10%

49%

29%

3%0%

25%

50%

75%

100%

< €1M Revenue €1 - €3M Revenue > €3 - €50M Revenue

Expected growth pre- and post-COVID-19 per revenue

size (weighted average; excl. > €50M)

Expected growth pre-COVID19 (%) Expected growth post-COVID19 (%)

-49%

-19%

-7%

*Total revenue in sample (excl. > €50M ) represents € 268.767.494

*Only one respondent had more than € 50M in revenue and was excluded from the

sample as it was a clear outlier.

1

However, scale-ups see opportunities for additional growth, in particular those working in crucial sectors and essential services



Most important opportunities for growth can

be found through services that help us being

comfortable at and working from home (17%).

Scale-ups active in these sectors and in providing healthcare and essential

services nuance the negative growth expectations.


Positive factors

11%

8%

8%

17%

0% 5% 10% 15% 20% 25%

Other positive impact

We operate in an essential sector (e.g. food,

groceries, logistics)

We provide equipment for the healthcare sector

(e.g. testing kits, medical equipment, hygiene

products)

We enable those at home to continue to work or

entertain themselves (e.g. workplace collaboration

technologies, gaming, online media)

Q: If you expect a positive impact for your company,

what are the drivers for additional growth?

1

This message is confirmed when looking at impact on growth plans per sector: scale-ups active in healthcare seeing least impact, while the Mobility sector is hit hardest



It remains to be seen whether these effects will persist as we recover from

this crisis. MaaS-innovators for instance may thrive in the future as a result of a new vision of companies and consumers towards

Mobility.


Industry Future

-6%

-34% -38% -40% -44% -44%

-100%

-118%

-150%

-100%

-50%

0%

Growth impact per industry / sector

(weighted average)

-11% -12% -15% -15%-24% -27%

-57%

-160%-175%

-150%

-125%

-100%

-75%

-50%

-25%

0%

Average expected revenue growth reduction due to

COVID-19 per industry/sector (in percentage points)

1

Scale-ups are focused on reducing operational costs and improving working capital, whilst only 1 in 7 has been forced to reduce headcount



N = 71

Scale-ups are clearly focused on reducing operational

costs (excl. temporary unemployment), but only 14% has thus far reduced

their workforce, with it primarily being the case

amongst scale-ups with a larger workforce.

Workforce size

14%

15%

31%

39%

41%

51%

0% 25% 50%

Reduce headcount / dismiss employees

Freeze / delay hiring

Reduce CAPEX

Improve working capital

Implement temporary unemployment

Reduce operational costs (excl. temporary

unemployment)

Q: What actions have you already taken in response to

this crisis?

1

Many scale-ups are closely monitoring government relief measures. However, many still have to make full use or benefit from such measures



N = 71Total “awareness” does not equal 100% due to rounding.

When used, measures are primarily temporary

unemployment and deferred tax payments.

Awareness versus usage

Used

Aw

are

Fully SomeNot yet

Fully 7% 47% 47%

Somewhat 0% 35% 65%

Not or insufficiently

0% 0% 100%

61%

37%

3%

0%

10%

20%

30%

40%

50%

60%

70%

Fully aware Somewhat

aware

Not or

insufficiently

aware

Q: Are you sufficiently aware of

these measures and how your

company might benefit from them?

4%

41%

55%

0%

10%

20%

30%

40%

50%

60%

70%

Fully Some Not yet

Q: Did you already make use of

such government relief measures ?

** Table shows awareness level versus usage. Total “fully aware” does not equal 100% due to

rounding.

1

2 in 3 scale-ups are discussing with their (external) investors, which can provide hands-on advice and support



52%

14%

33%

0%

10%

20%

30%

40%

50%

60%

70%

Q: Have you already been in touch with your

investors to discuss implications for

f inancing? (excl. scale-ups without investor)

Yes Planned No


47%

28%25%

0%

10%

20%

30%

40%

50%

60%

They are

providing regular

hands-on advice

and support

They are closely

monitoring our

situation

No support

provided

Q: Are your investors helping you navigate

this cris is? (scale-ups planned or in touch

with their investors)


1

Almost half of the scale-ups think the pandemic will not have an impact on their funding, while only 1 in 5 is expecting significant negative impact



4%

44%

35%

17%

0% 10% 20% 30% 40% 50%

Positive impact

No impact

Limited negative impact

Significant negative impact and potentially

impacting business continuity

Q: Do you expect the pandemic to have an effect on your

(equity) funding?

With 4 out of 5 scale-ups expecting no, limited or even

positive impact on their financing, most scale-ups

appear to remain confident about the future.

For the remaining scale-ups – although limited to 17% –impact on financing could have dire consequences,

potentially even disrupting their business continuity.

Financing


1

Concerned Somewhat

concerned

Somewhat

confident

Confident Highly

confident

Concerned Somewhat

concerned

Somewhat

confident

Confident Highly

confident

Overall, scale-ups remain mostly confident that they will overcome the COVID-19 crisis and 2 in 3 expect to continue their growth trajectory


Q: How confident are you that your business will weather this storm

successfully?

7/10

Q: How confident are you that your business will come out stronger and be able to continue

or even accelerate its growth trajectory?

7/10

11 | Copyright © 2020 Deloitte Consulting & Advisory. All rights reserved. * Average confidence level ranging from 1 - highly concerned, to 10 - highly confident.Source: Deloitte COVID-19 Scale-ups Survey, April 2020.

N = 71

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