Global venture capital funding has dropped by 20% since the onset of the coronavirus crisis in December 2019, according to a new report by Startup Genome.

The drop was even more pronounced in China, where the pandemic began. China had a drop of over 50% in funding relative to the rest of the world in January and February. The country did see a rebound in March, although with numbers still lower than pre-crisis levels, Startup Genome said.

Asian venture capital investments (excluding China) also saw a major drop beginning in January, with no rebound as of March, the report found. Separately, Layoffs.fyi reports that 436 startups have laid off 55,764 employees since March 11.

The United States has so far experienced only relatively small changes in startup funding since December: a drop of less than 10% by March. However, when Startup Genome took into account the seasonality pattern from previous years, with January consistently showing more activity than December, the small drop between December and the beginning of the year means that every month of the first quarter of 2020 in the U.S. saw over 15% fewer deals than the same months in 2019. The capital invested also showed a decline from the fall through February.

VB Transform 2020 Online - July 15-17. Join leading AI executives: Register for the free livestream.

But European venture capital investments only saw drops in funding activity starting in March, making Europe the last big region to see a pronounced impact on tech deals.

Above: How different regions are faring when it comes to VC investments.

Image Credit: Startup Genome

The global drop in VC funding is ominous. Four out of every 10 startups globally are in what Startup Genome calls the “red zone,” meaning they have three months of cash or less. For startups that have raised series A (first institutional round) or later rounds, 34% have less than six months’ worth of cash — a danger zone in the current situation, where fundraising is difficult.

The double whammy of the drop in demand (three out of every four startups have had their revenue decline) with the capital crunch makes this global drop in venture capital particularly worrisome, Startup Genome said.

Above: Capital flowing into startups is dropping.

Image Credit: Startup Genome

Startups will be key to the economic recovery: They create most of the net new jobs in the economy, and are especially relevant now as our society becomes increasingly digital, Startup Genome said.

As for the rest of the economy, Candor reports that 46% of 7,000 companies are hiring, 21% are laying off people, and 32% have frozen hiring.

Sign up for Funding Weekly to start your week with VB's top funding stories.