Startups facing biggest challenges, 70% have less than 3 months of cash runaway

Startup survey in corona crisis

The Indian Startup sector is hanging by a thread. National Association of Software and Service Companies (Nasscom) conducted a survey to study the impact of coronavirus crisis on Indian Startups.

Survey statistics

The survey showed the biggest challenges for Indian Startups as;

  • 90% registered a decline in revenues
  • 70% have less than 3 months of cash runaway
  • 30-40% have suspended their operations

Survey also reported that 70% of travel and transport startups have faced 40% revenue decline, 50% of fintech and logistics startups have seen a similar dip whereas 14% of edtech and health tech startups expect revenue growth amid coronavirus crisis. Infact, B2B startups have seen lesser revenue drops.

Another report conducted online over 250 startups across sectors by ‘Start-up Pulse Survey’ showed 92% decline in revenue for about 34% of such startups.

Worst-hit segments

Nasscom survey revealed that early and mid-stage business are the most affected segments, especially in B2C (Business to consumer) space. It also found that around 60% of B2C startups were facing closure as revenues plummeted to near-zero levels after businesses were forced to shut for nearly 2 months into the nationwide lockdown in order to curb the spread of the virus.

However, India continues to be 3rd largest tech startup ecosystem in the world with over 9,300 technology startups. They are rebounding with 54% respondents as they were looking to spindle their business.

Service startups are looking at different ways to survive. Infact, they are growing due to increasing utilization of Artificial Intelligence, blockchain and IoT.

President Speaks

Debjani Ghosh, president of Nasscom, stated, “However, it is not all doom and gloom; more than half of the start-ups are looking to pivot to new business opportunities, diversify into growth verticals like healthcare, and enhancing focus on emerging tech like Artificial Intelligence, Internet of Things (IoT), Cloud.”

She also added, “to ensure that the Indian start-up movement and its growth trajectory is not derailed, coordinated support from key stakeholders is the need of the hour. Some of our key recommendations to the government include access to working capital, easing compliances and fiscal policy and funding support.”

Time to wake up

The study was analysed on various parameters like growth stages, revenues, employee strength, revenue verticals and lots of more. This focussed on the need for integrated central-state initiatives on procuring Made-In-India startup products and solutions.

This is because many startups were forced to undertake severe cost-cutting measures, such as laying off staff, slashing salaries, and ceasing all expansion plans and projects, in a bid to preserve cash and have a longer runway in an uncertain operating environment.

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