Industry body Nasscom on Tuesday said that the country’s famed start-up sector is facing serious revenue and cash flow issues, adding that 70 per cent have cash reserves that will last less than three months.
The Nasscom e-survey, titled ‘Reviving the Indian start-up engine during Covid-19’, showed that about 90 per cent of start-ups in India saw a decline in revenues, while 30-40 per cent have halted their businesses temporarily.
The situation is worse for early and mid-stage startups who have been affected severely due to the coronavirus pandemic and the subsequent lockdown in India.
Of over 250 start-ups that took part in the survey — ranging from nascent to mature ones — 62 per cent are suffering revenue decline of over 40 per cent while over 30 per cent have suffered revenue losses up to 80 per cent.
The survey also noted that 60 per cent of B2C start-ups face closure of businesses if the situation does not change soon.
Large scale disruption
Nasscom said the entire startup ecosystem has been affected by the pandemic and the disruption is being felt across the value chain.
Many plans that start-ups had have been delayed by almost two months including technology upgradation, product development, business operations, funding roadmap and growth and business development.
Start-ups also say that the uncertain situation has become a nightmare for them as nearly 69 per cent of surveyed B2B companies cited client payment delays. Retail and Finch start-ups have been hit hard.
Meanwhile, B2C start-ups are facing a severe manpower crunch.
While start-ups are trying to rethink their businesses and align them with the current requirements and trends, Nasscom’s survey shows that the sector needs some sort of funding support to mitigate the economic crisis.
“Funding scenario is precarious, needs urgent government intervention,” said Nasscom’s survey. It said that over 80 per cent of agritech and fintech start-ups may be facing significant funding crunch due to the lockdown.
With more than two-thirds of the survey start-ups expecting the impact of the start-up to last up to 12 months, over 70 per cent are seeking policies that support easing regulations and opening up of government procurement.
Meanwhile, 50 per cent start-ups are looking for partnership opportunities and an equal percentage of start-ups are seeking support to reimburse immediate fixed costs.
Nasscom has suggested the government to provide working capital for start-ups besides easing compliances and additional funding support.
FROM THE MAGAZINE | Migrant worker crisis: The long road home
ALSO READ | Scientists in China believe new drug can stop pandemic ‘without vaccine’
INTERVIEW | ‘We’re in a safe place’ if mortality rate kept down: Kiran Mazumdar-Shaw