Confidence levels among UK tech startups have dropped significantly over the past three months as the fallout from the coronavirus pandemic takes hold, Studio Graphene’s latest Tech Tracker survey reveals.
The quarterly Tech Tracker surveys more than 100 business leaders within early stage UK-based technology companies to assess and monitor their confidence levels. In late March, the fifth iteration of the survey was carried out, building on those conducted in March, June, September and December of 2019.
The Q1 2020 Tech Tracker found that only 32% of tech startups are ‘confident’ or ‘very confident’ they will increase their turnover in the coming 12 months. This is 42% lower than three months ago, and down 47% when compared with Q1 2019.
Over the coming year, 58% intend to hire more staff (down 19% quarter-on-quarter); 60% hope to raise investment (down 7%); and 49% plan to expand into new territories (down 18%).
Studio Graphene’s Tech Tracker shows that increasing sales is now the biggest challenge currently facing tech startups – 61% cited this as an issue, which is up from 45% in Q4 2019.
The vast majority of entrepreneurs (91%) said they are worried about the impact that COVID-19 will have on their business, with 35% saying that they do not feel their business is well prepared to withstand the potential fallout.
One in three (31%) have not made contingency plans for how to weather the fallout from COVID-19.
An overwhelming majority (69%) of the respondents lack confidence in the Government’s ability to support the tech sector through the COVID-19 pandemic.
Ritam Gandhi, founder and director of Studio Graphene, said: “We launched the Tech Tracker survey 12 months ago to see how tech firms were responding to Brexit and the general pains of growing a business. But everything has been turned upside down; today’s data shows just how damaging coronavirus has been to business confidence.
“This is the biggest challenge many businesses have ever faced. And with smaller reserves and less nascent customer-bases to fall back on, it is understandable that many startups will be concerned about what the coming months will bring.
“But startups are also well placed to weather this storm. They are nimble, agile and able to respond to the challenges that arise on a day-by-day basis. What’s more, demand for technology is higher than ever – consumers and businesses need innovative solutions to the problems they are currently facing. So, there are opportunities for those who can pivot and keep pushing forward.
“Importantly, the Chancellor must continue to assess the ways in which he can support businesses. The UK’s tech startups need support but lack faith in the Government’s ability to deliver it. We must all hope that the Government can prove the sceptics wrong.”