Over 42% of startups in Bulgaria are at medium or high risk of going bankrupt in the next three months due to the coronavirus disease (COVID-19) pandemic, the Bulgarian Startup Association (BESCO) said on Wednesday, quoting the results of a recent survey.
If economic environment changes resulting from the COVID-19 crisis persist over the next six months, this share reaches 75%, BESCO said in a statement citing the results of a survey conducted in partnership with EDIT.bg, the Bulgarian Private Equity and Venture Capital Association (BVCA), entrepreneurial organization Endeavor Bulgaria and the Association of the Bulgarian Leaders and Entrepreneurs (ABLE). The survey was based on the responses of representatives of a hundred startups.
A total of 39% of the companies said they are at low risk of bankruptcy in the next three months, while 19% see no risk at all.
Two-thirds of all the survey respondents expect a drop in revenues by over 40% compared to the previous months, while 63% are planning layoffs due to the COVID-19 crisis.
According to 65% of the startups, the biggest problem regarding the current situation is the loss of local clients, while 54% pointed to the loss of international clients.
As of March 13, Bulgaria is in a state of emergency due to the COVID-19 pandemic.
“As a result, lack of liquidity is an issue which is concerning or already affecting 53% of the companies’ part of the Bulgarian startup ecosystem,” BESCO said.
To mitigate the effect of the pandemic on the local startups, BESCO proposes a set of measures including facilitated access to public procurement, support from the state-run Fund of Funds and an increase in capital investments through venture capital and venture debt.