12% Indian startups shut down due to COVID-19 impact: Survey

12% Indian startups shut down due to COVID-19 impact: Survey

A survey of 250 startups has revealed that the ongoing Covid-19 pandemic crisis has deeply impacted on the business, with 70 percent saying that their business has been affected severely, and close to 12% startups shutting operations.

The survey was jointly conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Angel Network (IAN).

The nationwide survey on the 'Impact of COVID-19 on Indian start-ups', said 33% of the startups stated investors have put investment decisions on hold, with only 22% startups claiming to have required cash reserves left to meet the fixed cost expenses over the next few months.

Meanwhile, another 10% startups said deals were cancelled, with only 8% of startups receiving funds due to agreements that were signed during the pre-COVID-19 outbreak.

68 percent of Indian startups are even cutting down on their operational and administrative expenditure, while, close to 30 percent of these organizations may have to let go of employees or carrying out a pay-cut if the lockdown continues to extend in their respective states and territories.

In this connection, Secretary-General of FICCI, Dilip Chenoy said, "The startup sector is stressed for survival at the moment. The investment sentiment is also subdued and is expected to remain so in the coming months. Lack of working capital and cash flows may lead to major layoffs over the next 3-6 months by startups. The survey indicates that Indian startups need an enabling ecosystem and flow of funds to continue operations".

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