As domestic and global economies grapple with the COVID-19 era, its impact on startups is coming into focus: All will be impacted, many will suffer and some will close.
Boston, a city that TechCrunch keeps tabs on, has seen a number of well-known startups struggle in recent weeks. Their misfortunes come quickly after companies in the region recorded huge venture raises, generating notable momentum.
In December, TechCrunch wrote that “despite winter’s chill, the Northeast’s tech ecosystem is white-hot,” taking into account Boston’s historical gains in the venture world. And earlier in 2020 we covered a few huge rounds that the city’s own Toast and Flywire had put together; worth $520 million as a pair, the two venture deals stood out for how large they were and how close to one another they were announced.
Indeed, looking at preliminary venture data from Crunchbase, Boston was on track to crush its 2019 tally of venture rounds of $50 million or more in 2020. That record-setting pace is now in doubt.
To get a feel for Boston’s new reality, we’ve collected the region’s recent news and spoke to area investors and founders, including David Cancel of Drift (the previous founder of Compete and other companies), Drew Volpe of First Star VC and a team of folks from Underscore VC.
TechCrunch had intended to start a monthly series on Boston and its venture capital and startup scenes later this month. We’re kicking it off early because the news is already here.
Slowdown
Earlier this week, restaurant management platform Toast cut 50% of its staff. The Boston-based company was valued at $5 billion in recent months, and — before the pandemic hit — was planning to spend the next few years gearing up to go public. Toast sits uniquely between fintech and restaurant tech, industries that have been arguably impacted the most by COVID-19’s spread and widespread restaurant closures.