The start-up industry that depends largely on the funds by the angel investors and revenue to stay in the business, have taken the biggest blunt of the times, as the big investment houses are reluctant to put money at disposal for the growth-stage businesses, and startups are forced to burn cash for mere existence. Adding fuel to the fire, the economy is now projected to enter recession by November, as disclosed by RBI in its recent report. Furthermore, the increased joblessness has created a panic, as already more than 38 million employees have been laid off and startups don’t have enough cash flow to even pay their resourceful employees.
With customer base disappearing, FDI retreating, new investments being stranded in between, the concerns rise for the survival of the small ventures and startups that live at the lowest point of the economic food chain and also important to mention, the startups in real estate, travel businesses, marketing, hospitality have suffered more than other industries.
Now, where there’s a will, there’s a way, for startups that are knee deep in the economic floods, the government has stood up to the occasion by providing a series of funds and compensations, like economic packages of 3 lakh crore Rupees as Emergency Working Capital Facility for Businesses, including MSMEs; another 50,000 crore Rupees as Equity Infusion and 20,000 crore as Subordinate Debt For Stressed MSMEs. In addition to these SIDBI has set up various schemes to provide financial and R&D help to start-ups that are engaged in the manufacturing of products or offering services related to fighting the novel coronavirus.
Other than the measures taken by the government, the Startups themselves can take certain steps to combat the economic turbulence, i.e. by keeping new acquisitions and expansions on the back burner to keep cash flow running, moving towards co-working spaces to reduce cost of operations and accommodations, putting resources at hand in projects that are highly efficient and yield more output. Apart from these, welcoming innovation and creativity can go long way into not only keeping start-ups afloat but also making them viable for success and the same has been adopted by e-commerce based start ups and by budding E-learning, E-pharmacy, online grocery shopping apps to small businesses who are now collaborating with MNCs like Amazon to extend their customer base and earnings.
If we can acknowledge one thing about starting a business, we can agree to the fact that it is not an easy road, there are numerous hurdles on the way and in the worst case scenario, these hurdles come in the form of a global pandemic. In these unprecedented times, we have witnessed some traditional start-ups who took a nosedive, and at the same time, there were entrepreneurs who earned sky rocketing profits, by being versatile and agile enough, to change the processes and capabilities as per the existing circumstances. So, what is needed for start ups is to keep an eye on the silver lining and take intelligible and dynamic approach in regards with their resources.