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Survey finds 27% startups and SMEs already out of funds


The ongoing COVID-19 lockdown has impacted all businesses, including startups and small and medium enterprises or SMEs, with less cash on hand are being hit hard. While sources of revenue for most have nearly dried up, the challenge to survive is for all due to the contagion effect of the economic downturn triggered by the ongoing pandemic.

Amidst the gloomy weather of layoffs, pay cuts and stopping of services, a survey conducted by social media and community platform LocalCircles has brought out the struggle of the startups and SMEs during the current lockdown.

According to the survey that was conducted in the last week of March, 27% of startups and SMEs said they are already out of funds and 20% of startups and SMEs said their cash would only last them less than a month.


Collectively, 47% of startups and SMEs then have less than one month of cash left.

The survey further revealed that 6% of them can survive for 6 months whereas 23% said they have a runway for 3-6 months. Another 24% said they only have cash for 1-3 months.

The survey received over 13,970 responses from startups and SMEs located in over 90 districts of India.

Zooming in on their survival strategy in the next 6 months, 61% of startups and SMEs are looking at scaling down while 7% were looking at selling their business. About 13% of these startups and SMEs are looking at a complete shut down while only 13% said they are looking at growth.


These startups and SMEs had also submitted via LocalCircles various demands to the government to help them tide through the current crisis, a statement issued by the company said. 

These include reimbursement of 50% of startup employee salaries for one month or a one-time Rs. 20 lakh grant for government registered startups, processing TDS refunds for FY 2019-20 within 15 days and enabling CSR funds to be deployed into startups.

Many VCs and entrepreneurs have said that the next 6 months will be very critical for the Indian startup ecosystem and thousands of people will face layoffs. Already, B2B e-commerce platform Udaan has laid off over 3000 contract employees.

After the announcement of the lockdown, a bunch of startups have either fired their employees or slashed their salaries. The list includes Swiggy, Paytm, OyoIxigo, Travel Triangle, BlackBuck, Bounce, Acko, Fab Hotels, InMobi and Treebo.

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