38% Startups face fund crisis as bailout calls go unanswered


The COVID 19 Pandemic is affecting the entire world, and its effects can be seen on Indian Startups. The small and medium-sized startup companies have run out of funds. This happened as an outcome of the lockdown which is induced to prevent community spreading of this disease. This affected the startups adversely, and around 4% of small and medium-sized companies have already shut down.

According to a survey by Local Circles, it is reported that the number of startup companies that run dry has increased by around 11% in comparison to April. The numbers increased from 27% in April to 38% at present.

This survey by Local Circles received a response from more than 8400 startup companies. The survey also figured out that those businesses with cash runway of 3-6 months have dropped from 23% in April to currently 16%. The companies have requested the government to facilitate
bailout to save them from getting collapsed, but they never get any response.

The venture capitalist who conveyed the demand of companies to the government said that the government doesn’t seem to be interested in saving startup companies from getting collapsed. He added that startup companies can generate a number of jobs, which is very much needed and their decline will affect the economy adversely.

According to Tracxn, just 78 seed-stage deals amounting to a total of $47 million is raised this year, which is very less in comparison to $154.5 million raised by companies between the months of April and June last year.

Some companies like TheWowBox whose CEO is Nikunj Bubna, said their company has generated no revenue since lockdown because their company supplies products from FMCG Companies who have deferred their new launches.

Startups companies play a major role in generating new jobs, which is a major requirement these days. This makes it important for the government to look at their current condition and provide necessary relief to prevent their downfall.


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