The Pandemic is taking a toll on every sector and startups are not spared.
A survey by community platform LocalCircle showed how startups are reeling under huge distress due to the lockdown. It says around 38 per cent of startups and small and medium enterprises have run dry, as against 27 per cent in April. Also, around 4 per cent of startups have already reported to have shut down.
Throwing light on cash runaway, it says the number of businesses with cash to run up to 3 to 6 months have come down to 16 per cent from 23 per cent in April. The survey also shows 35 per cent of the startups and SMEs are likely to see growth in their businesses and rest are likely to see shut down, scale down and uncertainty. On the basis of Atmanirbhar Bharat package announced by the government last month, 14 per cent of startups and SMEs say they will stand to gain.
Vivek Bindra, Founder and CEO, Bada Business speaking to Outlook Money, says, “Even a study by Nasscom found that during lockdown only 70 per cent of the startups are left with cash to last for just about three months and 92 per cent have witnessed a revenue decline. Being an edtech startup we have been fortunate and we have witnessed a rising graph. But I will not shy away from saying that funding has become a problem as investors become wary and highly selective in choosing their ventures. And many startups will witness funding drying up as investors will prefer profitable ventures to invest in.”
Speaking about the changed priority by investors, Ajay Tiwari, CEO, Happylocate, a relocation startup from Bangalore says, “There is no doubt that the current situation is really challenging but that survey holds true considering variety of factors. There are many startups like edtech, which are witnessing boom story and many are those who are facing existential crisis. But, yes I will say we have witnessed a sustainable V shape recovery and are sustaining it. I don’t have any qualms in saying that priorities and rules of investment have changed. That is why startups in healthcare, edutech, online grocery have got an advantage whereas others are struggling to get a fair attention.”
With Unlock1.0, it would be interesting to see whether startups restore their growth story or continue to confront challenges in future as well.