Houston's startups and small businesses have a ways to go to truly survive the pandemic, and they should move forward with these things in mind. Emilija Manevska/Getty Images

The effect of COVID-19 on Houston's economy has been unprecedented. While evidence on this impact is only beginning to emerge, it is clear that the economic damage has been particularly severe for startups and small and growing businesses in emerging markets.

Given the importance of startups and small businesses to economic growth and job creation, the survival of these businesses must be a critical part of the global recovery. For example, there are many companies that have seen this pandemic as an opportunity and started providing COVID-19-related services.

Startups are facing financial challenges on multiple fronts

According to a study from Houston Exponential's:

  • Thirty percent of startups reported a loss of revenue due to client uncertainty or delayed contracts. With almost 85 percent of startups identifying as B2B or B2C, many companies are seeing previously guaranteed revenues shrink as enterprise clients cut costs.
  • Twenty-one percent of startups reported paying talent as their biggest talent/hiring challenge. The main concern isn't with finding qualified candidates, it's being able to pay for them. Founders stated that the talent exists, but they can't afford them, or candidates aren't willing to accept a lower salary for equity.
  • Nineteen percent of startups reported a 10 to 20 percent decrease in fundraising valuations. This statistic only includes startups that were raising before and during COVID-19. And 71 percent reported no change in valuations.
  • Fourteen percent of startups reported moving to remote work as their biggest operational challenge. This includes both internal challenges as well as working with clients and prospective customers remotely.

How startups have been using funding amid COVID-19

Post $1 million in funding, the hiring focus shifts to product development.

  • Companies that have raised less than $1 million are looking to drive growth, find sources of revenue and improve their top-line metrics through biz dev, marketing, and sales.
  • Companies that have raised more than $1 million are focusing more on building out and improving their product by hiring engineers and product managers

Note: The median seed round for Houston startups over the past 3 years was $1.9 million and the median angel deal was $610,000, according to Pitchbook.

Tips for surviving the pandemic

The Small Business Continuity Checklist is a diagnostic tool to navigate times of disruption, covering two key areas of management — financial and strategic.

Financial Management Tasks

  • Address future cash shortages, for example, what expenses could be reduced, such as travel and marketing, which operations can be temporarily paused.
  • Consider steps to increase cash coming into the business such as focusing more on product lines/ services that continue to sell well.
  • Explore what grants, subsidies, or loans are available and the eligibility requirements. For example, The Cannon's CERT Program. Here's a list of resources for Houston startups and SMBs.
  • Recycle, re-purpose, or dispose of old or slow-moving stock or inventory. Explore the possibility of sales under special conditions, in order to reduce the projected losses on inventories. Review purchasing policies to prevent overspending on stock/inventory.

Strategic Management Tasks

  • Since user retention is crucial for your future growth, you can provide free subscriptions, contactless delivery, and waive fees to address a larger user base and enhance customer experience. For example, many online learning sites are providing free access to their live and video classes. Similarly, in the healthcare and fitness space, companies can provide for free virtual classes and shift to providing online consultations. Cure.Fit, fitness startup has provided free access to their live classes for 90 days. All hyperlocal delivery companies have rolled out 'contactless delivery' to minimize any contact between the customer and the delivery executive. They have also urged customers to adopt 'digital payments' to again minimize any human contact.
  • Nowadays, most startups and SMBs rely on different kinds of software, web apps, and/or mobile apps. Furthermore, many businesses are dependent on such digital platforms. If you are developing any digital solution then you should consider outsourcing some part of development/design work to app development in Houston to reduce the cost. You can find more local options from sites like Clutch or Upcity.
  • Ensure productivity while working remotely. While fostering collaboration has long been a defined way of working in most modern businesses, proximity is a variable that has always been taken for granted. Don't just limit to video conferencing, also invest in project management tools, time tracking tools, communication tools etc.
  • Build trust, support staff, and understand emotional concerns and the importance of personal well being.

Startups are the engines of progress. Small businesses are the backbone of America. Stay safe. Stay healthy. And keep persevering. No matter how severe and disruptive this crisis is, one thing is for sure, the war on this pandemic will be won.

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Colin Simpson is project manager at BlueKite Apps, which recently started its software development services in Houston.

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CultureMap Emails are Awesome

These are the 10 most promising energy tech startups, according to judges at Rice Alliance forum

best of the best

This week, energy startups pitched virtually for venture capitalists — as well as over 1,000 attendees — as a part of Rice Alliance for Technology and Entrepreneurship's 18th annual Energy and Clean Tech Venture Forum.

At the close of the three-day event, Rice Alliance announced its 10 most-promising energy tech companies. Here's which companies stood out from the rest.

W7energy

Based in Delaware, W7energy has created a zero-emission fuel cell electric vehicle technology supported by PiperION polymers. The startup's founders aim to provide a more reliable green energy that is 33 percent cheaper to make.

"With ion exchange polymer, we can achieve high ionic conductivity while maintaining mechanical strength," the company's website reads. "Because of the platform nature of the chemistry, the chemical and physical properties of the polymer membranes can be tuned to the desired application."

Modumetal

Modumetal, which has its HQ in Washington and an office locally as well, is a nanotechnology company focused on improving industrial materials. The company was founded in 2006 by Christina Lomasney and John Whitaker and developed a patented electrochemical process to produce nanolaminated metal alloys, according to Modumetal's website.

Tri-D Dynamics

San Francisco-based Tri-D Dynamics has developed a suite of smart metal products. The company's Bytepipe product claims to be the world's first smart casing that can collect key information — such as leak detection, temperatures, and diagnostic indicators — from underground and deliver it to workers.

SeekOps

A drone company based in Austin, SeekOps can quickly retrieve and deliver emissions data for its clients with its advance sensor technology. The company, founded in 2017, uses its drone and sensor pairing can help reduce emissions at a low cost.

Akselos

Switzerland-based Akselos has been using digital twin technology since its founding in 2012 to help energy companies analyze their optimization within their infrastructure.

Osperity

Osperity, based in Houston's Galleria area, is a software company that uses artificial intelligence to analyze and monitor industrial operations to translate the observations into strategic intelligence. The technology allows for cost-effective remote monitoring for its clients.

DroneDeploy

DroneDeploy — based in San Francisco and founded in 2013 — has raised over $92 million (according to Crunchbase) for its cloud-based drone mapping and analytics platform. According to the website, DroneDeploy has over 5,000 clients worldwide across oil and gas, construction, and other industries.

HEBI Robotics

Pittsburgh-based HEBI Robotics gives its clients the tools to build custom robotics. Founded 2014, HEBI has clients — such as NASA, Siemens, Ericsson — across industries.

CarbonFree Chemicals

CarbonFree Chemicals, based in San Antonio and founded in 2016, has created a technology to turn carbon emissions to useable solid carbonates.

SensorUp

Canadian Internet of Things company, SensorUp Inc. is a location intelligence platform founded in 2011. The technology specializes in real-time analysis of industrial operations.

"Whether you are working with legacy systems or new sensors, we provide an innovative platform that brings your IoT together for automated operations and processes," the company's website reads.

Amazon unlocks 2 prime brick-and-mortar stores in the Houston area

THAT'S SOME PRIME SHOPPING

The juggernaut that is Amazon considers to rule the universe and expand. Now, local fans of Jeff Bezos' digital behemoth can look forward to two new brick-and-mortar stores in the Houston area.

Amazon announced the opening of two Houston stores on September 18: Amazon 4-star in The Woodlands Mall and Amazon Books in Baybrook Mall.

For the uninitiated, the Amazon 4-star is a new store that carries highly rated products from the top categories across all of Amazon.com — including devices, consumer electronics, kitchen, home, toys, books, games, and more.

As the name implies, all products are rated four stars and above by Amazon customers. Other determinants include the item being a top seller, or if it is new and trending on Amazon.com, according to a press release.

Shoppers can expect fun features such as "Bring Your Own Pumpkin Spice," "Stay Connected Home Tech for Work and Play," "Fresh Off the Screen," and "Trending Around Houston" to discover must-have products. The Woodlands Amazon 4-star (1201 Lake Woodlands Dr.) is the 23rd Amazon 4-star location nationwide.

Meanwhile, shoppers in Baybrook Mall's Amazon Books (1132 Baybrook Mall Dr.) can expect myriad titles rated as customer favorites, whether trending on the site, devices, or listed as customer favorites. Amazon Books in the Baybrook Mall is the 23rd Amazon Books location nationwide.

Books customers can shop cookbooks alongside a highly curated selection of cooking tools, as well as, popular toys, games, and other home items. Amazon Books is open to all: Prime members pay the Amazon.com price in store, and customers who aren't already Prime members can sign up for a free 30-day trial and instantly receive the Amazon.com price in store, according a release.

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This article originally ran on CultureMap.