Indian start-ups reeling under pressure due to COVID-19 impact: survey

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MUMBAI, July 5 (Xinhua) -- At least 12 percent of Indian start-ups have shut operations while another 60 percent are operating with disruptions due to the unprecedented impact of COVID-19, according to a survey released by an industry body on Sunday.

As per the survey covering 250 start-ups, only 22 percent of the start-ups have cash reserves to meet the fixed cost expenses of their companies over the next three to six months.

Besides 250 start-ups, the survey jointly conducted by industry body FICCI and Indian Angel Network (IAN), also interviewed 61 incubators and investors, who indicated that investments will continue to be low over the next six months.

The survey depicted that 68 percent of the start-ups are cutting down their operational and administrative expenses, about 30 percent of the companies stating that they will lay off employees if the lockdown was extended for too long, and 43 percent of the start-ups have already cut salaries by 20 to 40 percent during April-June period.

"Start-ups have a huge potential to innovate. However, in the current times, the start-up companies are reeling under huge pressure owing to lack of working capital. We need to act now to save a huge number of innovations created in the last few years," said Ajai Chowdhry, Chairperson of the FICCI Start-up Committee.

Around 35 percent of the investors are now looking at investments in healthcare start-ups followed by Education Tech, Artificial Intelligence, FinTech and Agriculture while 44 percent of the incubators surveyed highlighted that their day-to-day operations have been considerably impacted by the COVID-19.

"IAN recently announced a Debt Fund to help IAN portfolio companies raise working capital and ensure business continuity, by partnering with Debt providers. This must be replicated on a wider scale, so a larger number of start-ups are provided the capital support to make it during these tough times," said Padmaja Ruparel, President, IAN & Co-Chair FICCI Start-up Committee.

India has the third largest startup ecosystem in the world with over 50,000 start-ups of which 20 percent were tech start-ups with a total of 26.3 billion U.S. dollar investments made in the year 2018. Enditem

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