Startups Slow Growth Plans, Hire Remotely as Funding Stalls
May 23 2022 - 8:30AM
Business Wire
1 in 4 startups plan to hire remotely in less
expensive markets and the majority (78%) will maintain a fully
remote or hybrid working model this year
Nearly 2 in 3 startup founders and CEOs (63%) say their business
has declined or stalled due to the pandemic, according to new
research from Qualtrics’ (Nasdaq: XM) Delighted. The economic
pullback is slowing hiring growth among startups — only one in
three (32%) is planning to grow its employee base by 10% or more
this year, and 12% plan to pause hiring or even downsize.
Startups have felt the pain of an economy stretched by the
global pandemic, inflation, and the war in Ukraine. IPOs are being
put on hold, funding is drying up and investors and boards are
looking at companies more critically, asking them to use their
funding more efficiently. During downturns, organizations are
forced to intensely focus on what’s most important. Every company
is trying to find and keep customers, and startups feel times of
uncertainty even more acutely than larger, more established
companies.
The current fundraising environment is keeping startup
founders and CEOs up at night
Most (88%) startup founders are worried about the current
fundraising environment and ranked a lack of operating funds as
their top challenge for this year, followed by lacking product
market fit and talent acquisition. Additionally, startup founders
said their investors are putting the most pressure on them to
improve their tech infrastructure and simplify their supply chains,
ranking those investor priorities above even achieving
profitability and improving their pace of innovation.
“It was easy for startups to raise capital in recent years as
markets valued growth over profitability,” said Qualtrics’
Delighted CEO, Caleb Elston. “During an economic shift or downturn,
knowing what matters most to customers is mission critical. The
companies that get that right — quickly — stand to pick up outsize
gains in market share, and experience management is at the center
of getting it right.”
Startups are focused on improving the customer experience and
investing in their technology infrastructure over the next 6
months
In the face of these pressures from investors, startup founders
ranked improving their customer experience and investing in
technology as their two highest priorities for the next 6 months,
above customer acquisition, securing funding, and acquiring talent.
With investors putting more value in business models and capital
efficiency, startups are focused on reducing friction and better
understanding how to serve their customers.
Startups are planning to hire remote workers in less
expensive markets and raise current employee salaries
Despite setbacks from the pandemic, many startups are still
planning to pay current and future employees more in both salary
(49%) and bonuses (43%). However, 1 in 4 startups say they plan to
hire remotely in less expensive markets, potentially to offset some
of these other pay increases. Most startups will operate under a
hybrid model this year — 78% will be fully remote or hybrid for the
remainder of 2022. A majority (68%) of startups said improving the
diversity of their teams is a very important focus area this
year.
Inflation is a growing concern
Eight out of 10 founders are worried about the rising cost of
doing business due to inflation and most (79%) plan to raise the
prices of their product or service in the next three months to
combat inflation and rising costs.
With the uncertainty and volatility of the markets putting many
IPO plans on hold, only 3.2% of startups surveyed were planning for
an IPO. For tech startups, it’s slightly higher at 4.9%. For most
startups — across all industries — M&A is the most commonly
planned exit strategy (32%) followed by family succession (24%) and
management and employee buyouts.
Methodology:
This study was fielded between April 6 and April 11, 2022.
Respondents were selected from a randomized panel and considered
eligible if they live in the United States, are at least 18 years
of age, employed full-time, self-identified as a co-founder,
founder or CEO and self-identified as having taken VC funding for
their current company. The total number of respondents was 251.
Respondents who did not pass quality standards were removed. See
additional research results on the Delighted blog.
Qualtrics’ Delighted:
Acquired by Qualtrics in 2018, Delighted is one of the fastest
and easiest ways to collect and act on customer feedback. Startups
worldwide use Delighted to stand up multichannel NPS, Product
Market Fit, and CSAT feedback programs in minutes. Learn more about
Delighted solutions for startups here.
About Qualtrics
Qualtrics, the leader and creator of the Experience Management
(XM) category, is changing the way organizations manage and improve
the four core experiences of business — customer, employee, product
and brand. Over 16,750 organizations around the world use Qualtrics
to listen, understand and take action on experience data (X-data™)
— the beliefs, emotions and intentions that tell you why things are
happening, and what to do about it. The Qualtrics XM Platform™ is a
system of action that helps businesses attract customers who stay
longer and buy more, engage employees who build a positive culture,
develop breakthrough products people love and build a brand people
are passionate about. To learn more, please visit
qualtrics.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20220523005072/en/
Tyler Petersen press@qualtrics.com
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