The Coronavirus Outbreak is single-handedly the most adverse event to impact the global market. In an environment where big businesses like Google, Microsoft, and Facebook are pulling out of high-profile events, startups will inevitably face a downturn.
In India, the situation is no different for startups than anywhere else in the world. Investors are very cautious about placing their money and trust in rising startups and their innovations. These companies are now facing considerable risk. It is because investors will be careful, and funding will be hard to come by.
1. Startups and Coronavirus: A Bleak Reality
Despite RBI recently issuing nationwide policy changes for the Coronavirus, the ground reality has not changed much for startups.
According to Ishpreet Singh Gandhi of Stride Ventures, securing funding will be hard to justify in this health crisis. As the founder and managing partner of the startup, she believes that opening ventures gain most from funding rounds when the market is bullish. Without capital flows directed specifically towards startups, securing adequate funding is difficult at best. It must be done via concrete proof of concept and institutional backing,
At the same time, some startup owners like Deepak Gupta of WEH Ventures believe the market will make a quick turnaround. Once the health situation across the country and the world has normalized a bit, all businesses will be eager to get a move on. They will have a lot of gunpowder pending with companies. So, it is very likely that the cash will gradually funnel into the startup corridor. However, this will demand a specific augmentation of the business plan and procedural.
2. Business After Coronavirus: An Uphill Climb
While the Coronavirus situation significantly impacts startups, it is also true that their limited capital and operational scope gives them an advantage. According to a survey by Indeed, 64% of Indian businesses are already approaching a pivot point in their plans. Further, many investors have shown support for such moves, and they believe this will rekindle faith in startups.
Considering that entrepreneurs will have to do a steep uphill climb, downsizing workforces may be on the horizon. Vela Kola, MD at Kalaari Capital, that the Coronavirus outbreak has thrown businesses out of orbit. So, swift remedial measures have to be taken to address the situation. Part of that process may involve letting go of low-specialization workers. On the whole, it can take between 6 to 9 for the market to fully recover and assume its pre-outbreak pace.
3. Startups In India Witness Project Delays Amid Total Lockdown
At the same time, some firms are also considering the overall impact of the annual audit. Even though the RBI has moved its fiscal year to June, annual audits require boots on the ground, and the quarantine is delaying the process. Still, some companies are moving ahead and already showing signs of recovery. Mumbai-based Unicorn India Ventures recently announced their first close to their 2nd equity fund at $12 million. It indicates that the market is recovering, and with the RBI’s new changes, things might begin to brighten sooner than later.
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