How Coronavirus Pandemic will Financially Impact the Startup Ecosystem

By Tanuja Akkannavar Friday, 10 April 2020

How Coronavirus Pandemic will Financially Impact the Startup EcosystemThe scenario of various business domains has witnessed a drastic change over the last few days due to lockdown. Because of the Coronavirus pandemic, most of the countries have been locked down and is undergoing a major economic crisis. With all these changing commercial situations, one key domain that is Start-ups, which was emerging as a major economic sector has been completely collapsed. Though the food start-ups can use online food delivery services or the education start-ups can render their services by providing online education, but every start-up will not be able to provide their services online.

The major financial impact that the start-ups are facing due to Covid-19 pandemic is the funding. The banks have put their services on hold, and almost all the companies have temporarily withdrawn their services due to which the businesses are under loss, mainly the international companies. Therefore all the ways or resources through which the start-ups would raise funds to establish their companies have been disturbed and this will also affect the start-ups which were being planned to implement their services this year. 

The WHO has declared Covid-19 as the global emergence and the number of Coronavirus cases are increasing as the days are passing and, the people are unsure about anything related to the end of the lockdown period. If the government implements the seal down concept, then even the start-ups who are working and providing their services during this lockdown will have to stop their functions. The travel, hospitality, clothing, accessories and many more transferable goods providing start-ups are the main industries which are undergoing great losses as the supply chain management has been on hold due to lockdown. Also the service rendering start-ups are on the borderline of sustainment in the market. 

In recent years the Indian start-up market had the major investors from the overseas countries, but due to the lockdown in those countries have resulted in a huge loss in the country’s start-up economy. Another factor that has impacted negatively on the start-up domain is, even though the companies are able to render their services there is no market as the people are not allowed to set out. 

So what will be the future of the start-ups? This is an important question that most of the start-ups have to find an answer for. Till the time the companies and businesses will start functioning normally and will be able to gain back all their losses and stand back strong in the market, they will think twice before promising for any investment. And the banks, at present all the banks have put a hold on their functions and services, due to which a large amount of work will be pending. Due to this pandemic lockdown the end and start of the accounting year of 2020, has been postponed to June also this is another disadvantage for the banks. Hence when the bank restarts their functions, they will under a great pressure to complete the workload that has been increasing due to lockdown. Seeking the help of the banks to arrange funds to establish and run their services is also a difficult task for the start-ups. 

Hence this Covid-19 pandemic has impacted very badly on the financial ecosystem of the start-ups.

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