Indian Startups Strut for the Worst Amid Lockdown
Published on : Friday 29-05-2020
In India, there is a massive prediction in the slowdown of economic growth and the overall GDP growth. The companies involved in the business ecosystem across the edtech, fintech, and health tech sectors are gaining wide attraction in terms of getting customer base and double-digit growth rate in the revenue of the companies amid lockdown.
Considering the current Indian market, the Indian startups invigorating for the biggest shakedown in the economy and overall consumer behavior owing to the spread of COVID-19 pandemic and results in the entire country lockdown, which bring drying up of revenue and angel investing. The leading disrupting startups such as OYO, Swiggy, Zomato, and Uber are widely getting operationally disturbed and finally came out to cut costs through lay-offs and shutting offices to reserve cash to continue their operations in the Indian market, even after raising funds of more than USD 100 million each earlier in 2020.
“Demand and consumption are widely effected in India amidst lockdown, which in turn falling company’s revenues and loyal customer base. This all results in massive lay-offs and salary cuts in most of the private companies” – Venture Catalysts
Even before COVID-19 struck, most of the startups are in the downturn zone further which becomes demolished in the pandemic and results in them to shut the startup. According to the startup analysis company Tracxn, there were over 250 startups already shut down in the last two months, while in-total there were 14,000 startups shut down, since 2016. It is also estimated out of 1,000 startups with uneven revenue, around 200 may not get any funding, and over 50 startups may end up raising venture debt.
“It is incredibly important to prepare for worse scenarios” – CEO, Swiggy
According to the survey data from Nasscom, there is a prediction that around 90% of the companies are affected in their revenue, out of which almost 40% is about to halt their business operations to survive in the coming years. Also, over 70% having a cash runway issue in the next three months.
In the current pandemic situation, it is expected that the Indian market witness a spike in mergers and acquisitions over the future, this will primarily influence by investors and leading public companies. As the small and mid-sized startups are mostly affected by the lockdown, while the large companies are expected to remain intact with the loss which they could cover in less than a year. Moreover, it is expected that the companies from the tech, fintech, and health tech are expected to expand in terms of market position and diversification in their business portfolio amid lockdown. The angel investors are calling off all the investing meetings and delayed all the on-going investment from portfolio startup companies. Also, the investors for the e-commerce platforms are keen to understand the post-pandemic customer behavior and attraction towards the buying products.