The COVID-19 pandemic and the resultant lockdowns have caused a massive hit to businesses and their revenues!
With the lockdown impacting businesses, many small startups have reported saying that their capital has started to dry up.
Read to find out more…
Many SMEs May Face Bankruptcy If the Lockdown Gets Extended!
Over the last week, many venture capitalists and entrepreneurs have expressed that the next 6 months will be critical for the Indian startup ecosystem.
According to a new survey conducted by LocalCircles, 47% of startups and small and medium enterprises (SMEs) who participated in a survey said that they have less than 1 month to no capital left to operate. The survey performed in the last week of March by the ocial media and community platform received over 13,970 responses from startups and SMEs located in over 90 districts of India.
LocalCircles remarked that the startups and SMEs have started to reach out to the Government via its platform and other industry associations asking for assistance and guidance in tackling the crises.
On the other hand, 23% said they have a runway for 3-6 months and 24% said they only have cash for 1-3 months. Only 6% of the respondents said that they are covered for over 6 months.
In addition, LocalCircles said that 61% of their respondents are looking at scaling down, looking at the current situation. Whereas 20% were thinking of either selling their business or at a complete shut down. Only 13% of the respondents confirmed that they are looking at growth.
Several startups including Swiggy, Oyo, Meesho, Udaan and VOGO have either laid off or furloughed their staff. Over the next 6 months, Indian startup ecosystem is bound to face massive layoffs.
What Are the Startups and SMEs Demanding From the Government?
The startups and SMEs via LocalCircles’ platform had submitted various demands from the Government to help them keep their head above the water during the current crisis.
The demands include, reimbursement of 50% of startup employee salaries for 1 month or a one-time Rs. 20 lakh grant for Government registered startups.
Along with the above mentioned, some demands ask for expediting PSU, Government and large corporate payments to startups, processing TDS refunds for FY 2019-20 within 15 days and enabling Corporate Social Responsibility (CSR) funds to be deployed into startups.
Furthermore, startups have been looking at newer strategies to help them tide during this crisis. While Financial Technology Companies are starting to focus on groceries in a big way, food delivery players like Swiggy and Zomato have also pivoted towards grocery in order to stay afloat.