---
title: "Estimating the Impact of the Coronavirus on Growth"
description: "Learn how to model COVID-19's impact on SaaS growth rates with data-driven analysis. See how a 15M ARR company's growth could drop from 107% to 40% annually."
categories: ["financials","trends"]
keywords: ["Theory Ventures","Tomasz Tunguz","venture capital","SaaS growth","COVID-19 impact","financial modeling","ARR growth","business valuation","cash management"]
ai_summary: "Learn to model COVID-19's impact on SaaS growth rates with a basic financial model for estimating changes."
date: 2020-03-16
lastmod: 2026-07-31
canonical_url: https://www.tomtunguz.com/estimating-impact-to-growth-coronavirus/
author: "Tomasz Tunguz"
---

As we readjust to the impacts of the coronavirus, I've been asking myself: what is a basic useful model for estimating the growth impact to a software company? Of course, every business should develop a more conservative model, focused primarily on cash management to provide a longer runway. I expect the venture market to slow round counts for a quarter, but then resume. As growth rates fall, valuations should move similarly. My hunch originates from [this analysis of the 2008 crisis](https://tomtunguz.com/analogy-coronavirus-2008-crash/). But it's too early to say for sure. 

Getting back to the original question, what's a basic model to box the impact of the virus to a business? Here's [a basic model you can download](https://docs.google.com/spreadsheets/d/170XeKFnkxsx2wff9STVBjOXZ7k2hierWW6VIKAlCfLw/edit#gid=0) and play with the inputs. You can change the bolded numbers.  The idea is to create a ballpark estimate. 

Let's use the example in the sheet. 

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/v1584465034/growth_rate_estimator_screen_cap2.png)

This is a company at 15M in ARR. They were growing at 20% per quarter before the virus or 107% annually. The company estimates that Q2 bookings will fall by 90% in Q2, 75% in Q3, and 50% in Q4 relative to their 10% quarterly growth rate. Instead of growing 107% annually, they will grow 40%. The COVID Growth/ARR Growth shows the growth rate is about 58% of the previously projected growth rate. 

This is a very high-level tool. It doesn't model cash, hiring, account churn, new latency in sales cycles. But it's a quick way to understand the impact to a business' growth trajectory during this turbulent time.