The industry body's month-long e-survey, which was conducted to study the impact of the COVID-19 pandemic on Indian startups, found that around 40 percent of startups have either temporarily shut down operations or are on the verge of shutting down. Out of the blue, this flourishing growth saga has suddenly been hit by a roadblock: the COVID roadblock. A month-long survey undertaken by Nasscom (National Association of Software and Service Companies) to gauge the impact of COVID on startups has revealed that 90% of startups are facing a decline in revenues, almost 30-40% are temporarily halting their operations or in the process of closing down, and 70% of startups have a cash runway of less than 3 months, with early stage and mid stage startups the worst affected.
More than half the startups said they are looking to pivot to newer business opportunities, with verticals such as healthcare and technologies such as artificial intelligence (AI) and Internet of Things (IOT) being the top choice.
Further, the worst-hit segments are early and mid-stage businesses, especially in the business to consumer space. In terms of steps taken to address the impact, 70% of B2B startups are opting for substantial marketing spend reduction and 3 out of 4 low revenue startups are going for pay-cuts. About 34 per cent of startups have seen revenue fall of over 80 per cent, it added.More news: WNBA postpones start of 2020 season
While 70 per cent of travel and transport startups reported suffering 40 per cent revenue plunge, 14 per cent of edtech, fintech and healthtech startups expect growth in revenue amid the crisis, the survey added.
For the remaining startups (over 60 percent), the decline in revenues is expected to be more than 40 percent.
The disruption is being felt across the value chain with growth and business development the most impacted for 36% startups.More news: Fed minutes show officials saw coronavirus as severe economic threat
One in three startups have either temporarily halted operations or are in the process of closing down due to the impact they have faced from the COVID-19 crisis. Many additionally requested aid in taxations for just a few years.
According to sources, around 70% startups have cash reserves to last a little over two months.
To combat the funding crunch, startups are resorting to several measures such as seeking government support, loans from banks and non-banking financial institutions, and capital infusions from existing and new investors, the survey showed.More news: Harry Styles Dedicates "Watermelon Sugar" Music Video to "Touching"
To ensure that the Indian startup movement and its growth trajectory is not derailed, coordinated support from key stakeholders is the need of the hour. Nasscom also put forth its recommendations on funding support and fiscal relief for startups.