Indian Startups are collapsing in the market. Because, they have run out of business in the financial year 2020. The COVID-19 Pandemic has caused mass drain out of liquidity in economies causing this. Moreover, businesses took a hit from the spread out of the Pandemic. Lest, about 38% of startups and small and medium enterprises have run dry. From 27% in April, a survey by community platform Local Circles showed. Around 4% of startups have already reported that they have shut down. The number of businesses with 3-6 months of cash runway. Have come down to 16% currently from 23% one week into the lock down in April, as per the survey.
The survey received 28,000 responses from 8,400 startups. Which, included SMEs and entrepreneurs. “Multiple calls to the government. To facilitate bailout of startups have remained unanswered.” Said a venture capitalist who has conveyed the demands of startup to the government.
“Moreover, making it easier for MSMEs to get loans was great for them, but not startups who banks do not lend to.” The person said on condition of anonymity. “It’s perplexing that the government doesn’t want to support startups that can create jobs which is the biggest requirement right now.”
Flushed In The Economy
To be sure, startups have continued to get funding through the lock down. However, the virus outbreak has caused it to slow down. According to data sourced from startup data collector Tracxn. Only 79 seed stage deals amounting to $47 million were closed between the start of April and June 5. Compared to 188 deals worth $154.5 million raised by companies between April and June last year.
Nikunj Bubna, CEO of The Wow Box. A startup that helps FMCG companies market and sample new products to consumers. Has recorded zero revenue since the lockdown.
“We had been working on our pre-Series-A funding deal. Since December last year and now that’s on hold. Our clients are FMCG companies, and large players in this space. Also, they have deferred new launches, smaller players have cut their budgets, so we’ve had zero revenues. I feel that more Startups are collapsing in the market ” He said.
