Startups- performance during recessions: evidence from sumup-s merchants

Abstract

Recent studies demonstrate that the attractiveness of entering self-employment in opposition to unemployment outweighs the difficulty of running a business through economic downturns. However, little research has been done on whether startups can grow during recessions and whether B2B or B2C businesses do better then. This paper addresses these questions by employing data on 1,252 SumUp’s merchants operating in Europe between January 2018 and October 2022. I establish three main findings. First, ceteris paribus, B2B merchants enjoy higher income. Second, not B2B but B2C merchants are better off in post-COVID-19. Third, COVID-19 negatively impacted revenues, thus rejecting my first hypothesis