‘Pandemic shutters 15% of start-ups, funding dips 50%’

But pace of recovery faster than expected, report reveals

Severely impacted by the pandemic outbreak and subsequent lockdowns, about 15% of start-ups in India had to discontinue their operations since March, according to a report. Their overall funding dipped by about 50% during the lockdown as compared to pre-COVID levels, the report released on Wednesday said.

Overall, while 40% of start-ups have been negatively impacted, 44% have cash runway for less than six months and 52% of start-ups are struggling to raise another round of funding, the report ‘COVID-19 and the Antifragility of Indian Startup Ecosystem’ released by TiE Delhi-NCR in partnership with Zinnov, said.

The report noted that India exited 2019 as the third largest start-up ecosystem in the world with more than 38,000 active start-ups and receiving $14.5 billion in funding. In the second quarter of 2020 (April-June), the total funding declined 48% to $1.3 billion as against $2.5 billion in the same quarter last year. During the first quarter of the year, funding stood at $2.8 billion.

However, the report added that as the economy opened, the pace of recovery in terms of demand and investor sentiment has been faster than expected.

“Although the immediate impact of the lockdowns on the Indian start-up ecosystem was severe, we have been amazed to witness how quickly Indian founders have acted to re-imagine their businesses,” Rajan Anandan, president, TiE Delhi-NCR, said.

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