Coronavirus: Survey projects 47pc of startups, SMEs have less than one month cash reserve

The coronavirus-led lockdown has severely crippled the businesses of startups and SMEs, and their future looks very bleak unless the Indian government comes out with revival package, says LocalCircles survey.

27th Apr 2020
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The nationwide lockdown to combat the coronavirus pandemic has bought the economy to a grinding halt, which could lead to around 74 percent of the startups, and small and medium enterprises (SMEs) to either shut down or scale down their operations in the next six months, according to a survey.


The survey conducted by LocalCircles, a community social media platform, which reached out to startups, SMEs, and entrepreneurs, revealed a dire projection on the cash position. Around 27 percent of the startups and SMEs were already out of funds, while 24 percent of them have the cash to sustain for one to three months. Only a small minority of six percent have cash reserves for over six months.


lockdown



On the future prospects, about 61 percent of the startups and SMEs were looking at scaling down their operations, while seven percent are looking at an exit option. Further, around 13 percent of them are staring at the prospect of complete shutdown, but an equal percentage are looking at growth.


In an earlier survey conducted by LocalCircles during the last week of March on the wish list of startups and SMEs to the government, they had sought relief on the salaries of startup employees, a one-time grant of Rs 20 lakh for government registered startups, expediting payment for startups, processing of tax deducted at source refunds, among others.


According to the survey, many venture capitalists (VCs) and entrepreneurs have said that the next six months will be extremely critical for the Indian startup ecosystem, and thousands of people could face potential lay-offs.


Even the technology companies who have seen a spike in the usage of their platforms have not been able to translate this demand into revenue. Some entrepreneurs also believe that the lockdown will push back their startups by one to two years.


There are currently reports that suggest the Indian government is planning for a second stimulus package to help the economy tide over the serious crisis.

(Edited by Suman Singh)

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