Indian Startups face the biggest challenge due to Covid19
The present situation of pandemic across the country has shacked the root of the economy. The country has gone to a complete lockdown, restricting all economic activity. All the travel routes have been blocked across the states. People are stranded where they are. Public transport is suspended with no way for people to move from place to place.
The lockdown announced across the country has a huge effect on the economy. Even the monetary policy committee that met on May 20-22 has published in its minutes of meetings that the economy has gone to a very bad state. The covid19 effect on the economy is very disturbing that it takes years for the economy to recover.
The mention of the economic situation on the monetary policy minutes has worried many. But the situation is visible many days back. The startup ecosystem has been suffering from day one. Many of the startups which depend on day to day revenues for their operations have reached to an uncertain situation.
If we carefully analyze the different startups in the country, startups belonging to different domains have affected differently. for example, the startups which work of tourism are affected the most as there are complete blockage and restriction. Startups in the logistics domain have no business has there is a restriction on the interstate and even within the state movement.
Now these two domains, take any other domains. In some way other the startups are going to have a difficult time in the near future.
Many startups are already in the situation of facing the cash crunch. some startups already started to layoff people to save revenues for sustaining in the markets. Giants companies like Uber and Ola are of a hot topic as they already announced that they are laying off thousands of people to save revenues. This has made the startup ecosystem worry.
Not just the business and operation of the startups that have to be discussed. Think about the investment that the startups are supposed to get. Because of the effect of the Pandemic on the economy, the investors are not ready to invest in any startup or provide funds for the startups at this crisis. This will make the startups suffer on their own.
Trends tell us that More than 90% startups will see negative revenue, more than 70% of the startups will reach to no cash situation within 3-4 months, and more than 30% startups will suspend their operations with no option left.
Out of all these bad news, as a supporter to all the startups out there we wanted to give some positive news.
It is true that when there is an economic crisis, startups are the one most affected. But when we look at history, that teaches us some different story. If you look at any economic crisis that happened in the past. Take the Great economic crisis of 2008. That is the time when most of the present billion dollars startups are founded. This tells us that if you face the situation you will have the opportunity to capture the market and then rise with great acceleration.
I would say, it is very well written. In the context of last paragraph, this time is the best for investing your money. By saying this, I am pressing on middle class person’s investment on share market and VCs investment in startups. In the next, 12 months, share market is going to see a giant plunge. Sensex might get to 39k. Edutech startups like pariksha, byju, vedanta are getting 30x-40x growth. So much to say, but I will wind up saying, this is a gr at opportunity.