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A new report from the National Venture Capital Association indicates that startups will have a tougher time finding fresh capital in the coming quarters. (GeekWire photo / John Cook)

Fasten your seatbelts, it’s going to be a bumpy ride.

That’s how the National Venture Capital Association kicks off a new report detailing how the coronavirus will impact startups in the coming quarters, with the authors writing that venture capital investment is expected to “drop significantly.”

That funding crunch will negatively impact many startups, with projections that the estimated 30,000 layoffs in the startup ranks in the past six weeks is “likely just the tip of the iceberg.”

While great companies were born during economic uncertainty in the past, authors Maryam Haque and Justin Field of the NVCA write that the “sheer force and speed of the COVID-19 crisis and its uncertain impact and duration is not comparable to past downturns.”

Already, more than 300 startups nationwide have cut staff, and one venture capitalist quoted in the report predicted that 80% of startups will cut between 10% to 50% of their workforces over the next four quarters.

A number of venture-backed startups in the Seattle area have already trimmed their workforces, including ExtraHop, RealSelf, Textio and Lighter Capital.

Some prognosticators say more are to follow suit, especially as cash positions deteriorate in light of U.S. government regulations that prevented many venture-backed companies from applying for the recent Paycheck Protection Program.

Cash is certainly king, but the current pain inflicted on startups also depends on the industry those companies operate in.

For example, Seattle-based Rover — which runs an online pet sitting and dog walking marketplace —?laid off 41% of its staff as people cut travel plans and spend more time at home amid the pandemic.

Conversely, heavily-funded startups like Remitly, which facilitates mobile money transfers, and Karat, which helps companies conduct video-based interviews of tech recruits, are seeing business boom as COVID-19 speeds up adoption of their digital technologies. Startups in areas such as telehealth, video streaming or online education also could find new customers amid the crisis.

And it also depends on when companies last raised capital — for example a company that raised a large round of funding just prior to the coronavirus outbreak could weather the storm better than a company that was planning to raise its next round this spring or summer.

In that regard, COVID-19 doesn’t treat all startups equally.

Even so, the authors of the NVCA report do not paint an optimistic picture.

For one, while venture capitalists are sitting on a pile of $120 billion in unused capital — so-called “dry powder” in the vernacular of the VC industry. Much of that historical record cash hoard is reserved for existing portfolio companies, and the authors write that this “capital will not be nearly enough to blunt the negative impact of the COVID-19 crisis.”

Venture capitalists also may find themselves struggling to raise money, which means less cash for young startups. During the financial crisis of 2008 to 2009, the money venture capitalists raised fell by nearly 60%, according to the report.

And with less capital available, venture capitalists may reverse any progress that has been made to diversify portfolios by backing women founders, entrepreneurs of color or those living in more distant geographies.

“With investors turning their attention to existing portfolio companies and less likely to travel or hold in-person meetings, it will bring new challenges to founders who do not already have relationships with VC investors,” the authors write.

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