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Representative image (Photo: iStockphoto)
Representative image (Photo: iStockphoto)

47% of Indian startups and SMEs have less than a month of cash left: Survey

The finding is part of a new survey conducted by social media and community platform LocalCircles in the wake of pandemic

Bengaluru: The impact of covid-19 can be seen on businesses, as several startups including Swiggy, Oyo, Meesho, Udaan and VOGO have either laid off or furloughed their staff. And now, with the lockdown impacting business and revenues, many small startups have reported saying that the capital in the bank has started to dry up.

According to a new survey conducted by social media and community platform LocalCircles, 47% of startups and small and medium businesses (SMEs) who participated in a survey said that they have less than one month to no capital left to operate. The survey performed in the last week of March by the social community platform received over 13,970 responses from startups and SMEs located in over 90 districts of India.

LocalCircles said that startups and SMEs have started to reach out to the Government via its platform and other industry associations asking for help and guidance in tackling the situation.

Another 23% said they have runway for 3-6 months and 24% said they only have cash for 1-3 months. Only 6% of the respondents surveyed by LocalCircles said that they are covered for over 6 months.

In addition, startups and SMEs via LocalCircles had submitted various demands from the Government to help them tide through the current crisis.

These included reimbursement of 50% of startup employee salaries for one month or a one-time Rs. 20 lakh grant for Government registered startups. Asks also included expediting PSU, Government and large corporate payments to startups, processing TDS refunds for FY 2019-20 within 15 days and enabling CSR funds to be deployed into startups.

LocalCircles also said that 61% of their respondents are looking at scaling down, looking at situations currently while 20% were looking at either selling their business or at a complete shut down. Only 13% of the respondents confirmed that they are looking at growth.

Many venture capitalists and entrepreneurs over the last week have stated that the next six months will be critical for the Indian startup ecosystem and thousands of people will face layoffs.

Further, startups have been looking at newer strategies to keep them afloat. While fintechs are starting to focus on kiranas in a big way, food delivery players like Swiggy and Zomato have pivoted towards grocery in order to cope with the loss.

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