Impact of COVID-19 on Startups in INDIA!
COVID-19 has adversely impacted the overall investment sector and businesses across all sectors can sense the repercussions of COVID-19. Start-ups have particularly been one of the most vulnerable and are facing various formidable challenges both, from a business as well as from an operations’ perspective. Start-ups have witnessed a decline in supply and or demand except for those that are engaged in the supply and or delivery of ‘essential services’, educational technology, or streaming services. In the past couple of years, the start-up ecosystem in India has emerged as a reckoning force, largely attributable to the efforts of the stakeholders, and the initiatives implemented by the government to facilitate the growth of the start-ups. The lock-down has not only impacted the daily business operations, but it has also forced a good-many start-ups into preparing for contingency plans to limit workforce and to cut down employee salaries.
During the COVID-19 crisis, start-ups have continued to play a critical role for economies. Some innovative young firms have reacted fast and flexibly to the pandemic, and have been critical in helping many countries shift towards fully digital work, education, and health services, and have provided innovations in medical goods and services.
The future of Start-ups: what to expect?
The global scale pandemic and the uncertain economic situations is a strong likelihood that fundraising for start-ups would become a significant challenge in the future because various investors may choose to focus their future fund deployments only on the existing portfolio companies in order to ensure that they are able to tide over the present global crisis. Start-ups may witness heavy negotiations on deal valuations since the new investors may now demand bargains or discounts in the value, which may result in potential delays in the deal execution and closing. Significant economic uncertainty and with their revenues affected by containment measures and significant drop in demand, start-ups become even more financially fragile and need support for their short-term liquidity needs, critical for their survival.
Lets Conclude by…
India is contemplating to implement a comprehensive and a more formal relief scheme that would provide access to capital, while also establishing an effective monitoring system to assess the utilization of the funds. Start-ups play an important role since they not only encourage innovation among the home-grown entrepreneurs but also generate employment opportunities and given the vast potential established by the start-ups, a swift and running action by the concerned regulatory authorities would be crucial in shaping the future of our country’s start-up bionetwork.
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