70% Of Start-Ups Say Their Businesses Impacted By Covid-19, 12% Have Shut Operations: FICCI

The Covid-19 pandemic has had an unprecedented impact on the Indian businesses and more so for the SMEs and Start-ups. With uncertainty in the business environment and an unexpected shift in the priorities of the government as well as the corporates, many start-ups are struggling to keep the operations going. As per a nationwide survey on the 'Impact of COVID-19 on Indian Start-ups' conducted by FICCI- IAN, stated that their businesses have impacted by Covid-19. 12% of the start-ups have shut operations and 60% are operating with disruptions.

The survey depicts that only 22% of the start-ups have cash reserves to meet the fixed cost expenses of their companies over the next 3-6 months. The findings show that 68% of the start-ups are majorly cutting down their operational and administrative expenses. Close to 30% of the companies stated that they will lay off employees if the lockdown was extended too long. 43% of the start-ups have already started salary cuts in the range of 20-40% over the period of April-June 2020.

On the investment front, 33% start-ups said that the investors have put the investment decision on hold and 10% stated that the deals have been called off. Only 8% start-ups received the funds as per the deals signed pre-COVID. The reduced funding has led start-ups to put a hold on their business development, manufacturing activities and has resulted in loss of projected orders. The survey highlights the need of an urgent relief package for start-ups including possible purchase orders from the government, tax relief and swifter tax refunds. Further immediate fiscal support measures including grants, soft loans and payroll grants need to be provided.

96% of the investors stated that the investment in start-ups have been impacted by COVID-19. 92% of the investors maintained that the start-up investments will continue to be low over the next six months. 59% of the investors said they would prefer to work with their existing portfolio companies in the coming months and only 41% stated that they would consider new deals. A comparison of priority investment sectors pre and during COVID-19 shows that 35% of the investors are now looking at investments in healthcare start-ups followed by EdTech, AI/Deep Tech, FinTech and Agri.

44% of the incubators surveyed highlighted that their day-to-day operations have been considerably impacted by the COVID-19. Most of the incubators are now supporting their portfolio companies by providing them virtual platforms to interact with mentors, investors, and industries.

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