Around 27% startups are either out of funds or on verge of shut down: Report
By MYBRANDBOOK
With the prolonged ongoing COVID-19, lockdown has impacted all businesses, the ones that really have suffered the burnt are startups and small and medium enterprises or SMEs, with less cash on hand are being hit hard. While sources of revenue for most have nearly dried up, the challenge to survive is for all due to the contagion effect of the economic downturn triggered by the ongoing pandemic.
Amidst the gloomy weather of layoffs, pay cuts and stopping of services, a survey was conducted by social media and community platforms that has brought out the struggle of the startups and SMEs during the current lockdown.
According to the survey that was conducted in the last week of March, 27% of startups and SMEs said they are already out of funds and 20% of startups and SMEs said their cash would only last them less than a month. Collectively, 47% of startups and SMEs then have less than one month of cash left.
The survey further revealed that 6% of them can survive for 6 months whereas 23% said they have a runway for 3-6 months. Another 24% said they only have cash for 1-3 months.
Zooming in on their survival strategy in the next 6 months, 61% of startups and SMEs are looking at scaling down while 7% were looking at selling their business. About 13% of these startups and SMEs are looking at a complete shut down while only 13% said they are looking at growth.
These startups and SMEs had also submitted, via social media platforms, various demands to the government to help them tide through the current crisis, a statement issued by the researchers said.
These include reimbursement of 50% of startup employee salaries for one month or a one-time Rs. 20 lakh grant for government registered startups, processing TDS refunds for FY 2019-20 within 15 days and enabling CSR funds to be deployed into startups.
Many VCs and entrepreneurs have said that the next 6 months will be very critical for the Indian startup ecosystem and thousands of people will face layoffs.
After the announcement of the lockdown, a bunch of startups have either fired their employees or slashed their salaries., confirms report.
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