• Pradyumna Nag

How hard has the COVID-19 situation been on start-ups?

How hard has the COVID-19 situation been on start-ups?

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42% have less than a 3-month runway.

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But there are more worrying facts.


38% of them are already out of funds.

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This means - 80% of start-ups would have run dry if something big does not happen.


How are they planning to respond?

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Shut-down, for good: 14%

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Scale-down, operations: 35%

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Pump-up, the growth engines: 35%


& 16% don’t really know what to do.


Currently proposed solutions petitioned:

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Solution 1: Many of these start-ups petitioned for bailouts from the Govt.

My 2 cents: This is just not going to happen – simply because an agreeable democratic distribution is impossible for economic bailouts.

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Solution 2: Get banks to lend more.

My 2 cents: A vast majority of banking is run by/ like the private sector with shareholders. Govts could see the move as a band-aid on a deep wound as defaults will rise if recovery takes longer. Capital would erode in both primary & secondary markets. Also, Govt bodies just don’t have the float to cover nationwide lending.


Is there a solution you see? I would love to know.



Source:

LocalCircles

Survey of 8,400 start-ups & entrepreneurs


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