BENGALURU: With the revenues of 90 per cent of start-ups declining and nearly 40 per cent of them either have temporarily shut operations or are in the process of it, the survival of India’s start-up industry is hanging by a thread, said a survey by apex IT body Nasscom.
The report, which analysed the impact of Covid-19 on India’s start-up ecosystem, found that 70 per cent of these firms have revenues that will last them for only next three months, whereas just 8 per cent can continue operations for nine months and beyond.
Sectors most impacted
Start-ups in the retail and fintech sectors were found to be the most impacted, with delayed client payments, shortage of funding, disruptions in business operations and technology or product upgradation as major challenges. Nearly 69 per cent of the B2B start-ups surveyed said delayed client payments were a major issue. Ninety per cent of start-ups in the travel and transport sectors had challenges in scaling or expanding their operations now.
Cutting cost, wages, jobs
Reduction in marketing spends, employee pay cuts, switching to low-cost vendors and employee right-sizing are the various ways by which start-ups have begun to address the damage Covid-19 has made on their businesses, the survey said. Around 65 per cent of the start-ups said they have reduced marketing expenses, whereas 53 per cent have gone for pay cuts.
With nearly two-third of the start-ups predicting the Covid-19 impact on the industry to remain for at least one year, at least 80 per cent of the early-stage tech ventures have sought government or NBFC aid, especially in healthtech, travel and transport sectors. Only 22 per cent of firms felt that new investors will help them tide over the crisis. About 70 per cent felt that changes in policy regulations like GST refunding, opening start-up-specific government tenders and waiver of other taxes will be necessary to help the industry survive.
The disruption caused by Covid-19 has led to start-ups realigning their business models with nearly 40 per cent saying that healthcare will now present many opportunities for them. About 50 per cent believe that Artificial Intelligence tools present a big technology opportunity, whereas edtech, fintech and Blockchain are other areas where the start-ups spot the dough.