December 2020: The unprecedented outbreak of COVID-19, which resulted in a global pandemic, also affected global investment towards the start-up ecosystem. Speaking from an optimistic point of view, recovery is indeed possible, but the road is much longer than expected.
This global nightmare has forced a plethora of unforeseen decisions, such as layoffs, and in some cases, companies have shut down due to a lack of financial stability. One thing is certain people are concerned and are unaware of how the situation would shape up. Who has been affected the most by this crisis? Small start-ups that were on the edge of a break-even point are now facing the heat of the pandemic. Some experts estimate that the effects of this current situation will be much worse than that of the 2008 recession. This only proves to be a testimony to how vulnerable these start-ups may be at this point in time.
Start-ups scene in India
As everyone’s well aware the Government of India introduced 'Startup India' in 2016 - a marquee initiative to ignite Indian entrepreneurial dreams with the support provided by the state. Over the years, the Indian start-up ecosystem has been growing at a rapid pace from having investments of $550 Million in 2010 to $14.5 Billion in 2019, showing the signs of becoming a hub for start-ups.
How is the start-up ecosystem defined in India?
A young, vibrant, creative, pioneering vision of the future. Well, we have all heard the saying, “living the American dream.” It's now time for us to believe in, “igniting the spirit to perceive the Indian dream,” and make it come true.
According to research by Hurun Research Institute, it is worth noting that Indians have brought 61 unicorns into life, the start-ups which are valued at over $1 Billion. The Indian e-commerce domain has had the major chunk in this scenario. Start-ups have played a key role in shaping India's push to become a global leader in technology, – for example, Edu-Tech, Health-Tech, Agri-Tech for digitalising essentials such as education, health care, agriculture and rural development. The state-of-the-art technologies are capturing investments from around the globe.
Various studies have indicated that 73 per cent of the Indian start-up ecosystem consists of young entrepreneurs who are below the age of 36. The empowerment of women through entrepreneurship has been performing consistently well and there's a promising surge in women-led start-ups. The opportunities created by the start-up ecosystem are enormous. Nearly seven lakh and 27 lakh direct and indirect jobs by the end of 2020 respectively make these start-ups so very important for the path of recovery.
Bengaluru is known as the ‘silicon valley’ of India and to justify that claim - the city contributes the most number of unicorns with eight of them based in the capital of Karnataka. The cities Gurugram and Noida have produced six and two unicorns respectively. “Bengaluru contributes to the list by adding unicorns worth $29 billion in total, while Gurgaon and Noida contribute by $19 billion each,” the Hurun report said. “Despite being home to only two of India’s unicorns, Noida has a 24% valuation share since Paytm has a base in the city.”
We need to understand the fact that India has a young demographic population with 50 per cent of the population are below the age of 25 and 65 per cent of the population are below the age of 35. This can certainly mean one thing i.e, “Youth of today are today's leaders, too.” They can aspire to become what they want to be, not in the future, but even today. There might be a few hurdles in the race but, there’s no one stopping such an entrepreneurial dream from finishing the lap because it’s ‘ours to write’.
How effective has work-from-home been?
In the early days, there might have been a few signs of hiccups, but when there is a better understanding of such aspects with regard to the use of technology, then camaraderie will be unaffected. After all, it is productivity and efficiency that matter.
What did the industrial revolution do? It made people go to the office/ workstation/ place to ply their trades. Well, this COVID-19 pandemic has given us a makeshift change to this culture. On the brighter side, work-from-home has become a phenomenon that would potentially favour both employees and employers be it - cost efficiency, personal space, work efficiency and productivity. This could be seen as a modern industrial revolution without a written handbook.
There are some concerns regarding this work-from-home model, we all can agree that not all scopes of work could be executed remotely. A certain number of jobs need to be performed on-field/ workplace.
COVID-19 startup assistance scheme
The Government of India has set up a COVID-19 startup assistance scheme (CSAS) to lend a helping hand to the start-ups that require some assistance for continuing their operations. An interim solution to overcome the stringent phase and adapt to the new economic standards. This assistance can be used for a number of working capital requirements and also it can be deemed against GST refunds.
Who all are eligible for this?
- A minimum of 50 employees
- A minimum turnover between INR 10-60 crores in FY 2019 and 2020
- A positive net worth
- Ensuring employee safety and financial stability
- Should have been incorporated for less than 10 years
Comments and suggestions
Shark Tank - an American business television reality show 10 years ago, became a platform for entrepreneurs to pitch their business to seek investments and mainly to have a ‘shark’ or investor on board. Sharks are celebrity entrepreneurs and venture capitalists. When we talk about numbers - we see over 222 episodes, 895 pitches, 499 deals, $143.8m worth of invested capital, and nearly $1B in company valuations in the past 10 seasons of the show.
That’s great business, why am I talking about it here? If we (in India) were to have our own version of our Shark Tank, it would immensely help start-ups to get the opportunity to seek investments and ensure their longevity. This would also motivate someone, especially the younger generation to innovate something and become an entrepreneur. It's not just the motivational part, but the real business to be learned. When the sky's the limit, there's nothing that could dissuade one from aspiring to something that they can be. What would an increase in the number of start-ups mean? More entrepreneurs, more employment opportunities, more contribution to the economy, exponential GDP growth and development.
Saikrishna M D
Bibliography
https://www.mondaq.com/india/operational-impacts-and-strategy/949762/impact-of-covid-19-on-start-ups
https://digest.myhq.in/coronavirus-business-impact-india-startups
https://www.lexology.com/library/detail.aspx?g=2223bb49-941b-4121-be7f-1b9a1a73d759
https://www.bloombergquint.com/business/two-thirds-of-indian-unicorns-arent-based-in-india
Very well written...
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