After finance minister Nirmala Sitharaman announced the central government’s INR 170K Cr relief package this week, the Reserve Bank of India came up with a slew of measures to revive the economy but neither announcement did anything to soothe the fears of the business community or the Indian startup ecosystem.
Even as India Inc awaits the government’s relief package, startups are continuing to take charge of the situation created by lockdown, slowly but steadily.
Of course, the business impact is expected to last longer than the next few weeks and entrepreneurs are getting ready to deal with tough times. So what challenges can they expect and how can businesses deal with these?
How Can Startups Deal With The Impact?
To answer some of these questions, Inc42 conducted the first #StartupsVsCovid19 ‘Ask Me Anything’ session. Speaking to Inc42’s CEO and cofounder Vaibhav Vardhan, 3one4 Capital founding partner Siddarth Pai said that this market crisis is a combination of previous three slowdowns — dotcom bubble burst, 9/11, and the 2008 recession. During the interaction, Pai also raised the issue that the government is yet to bring relief measures to prevent the ecosystem.
He explained that most of the funding in the ecosystem comes from public markets at the end of the day. VCs raise funds from limited partners, who depend on the public markets for liquidity and impact the startups at the end. Pai said that India has seen much of the wealth accumulated over the last 10 years erode, with 30%-40% portfolio drop.
To raise the issues of startups, industry body Nasscom has listed various measures that can help startups maintain their longevity. To start with, it has suggested that the government offer a rental subsidy for state-owned workspaces, suspension of deadlines including tax payment and filing until for at least four weeks post lifting of the lockdown, deferring payments of provident fund and gratuity deposits for the duration of the lockdown, one-time PF opt-out option for employees, among others.
Additionally, it has urged companies to defer EBITDA guidelines for a quarter or two. For solving the cash-flow issue of startups, NASSCOM has urged the government to refund all outstanding tax refunds, pay GST collected from startups back to them as a loan, issue Mudra loans, extend CGTMSE scheme to startups, collateral-free loans, postponement of interest by a quarter, among other things.
Startups Pool Funds To Take On Covid-19
Even as startups are still waiting for the government to launch a business relief fund, they are still doing their bit to tackle the situation with various measures. To start with, a number of startups have come up with different funds to help those people who have been affected the most by this pandemic, either directly as a result of contracting it or for those who have lost their livelihoods as a result of the lockdown.
For instance, India’s two payment giants startups — Paytm and PhonePe have launched donations on the application. Both these players have also pledged to add additional INR 10 by themselves for every donation made on the platform. While PhonePe is planning to raise INR 100 Cr with the platform, Paytm is aiming to contribute INR 500 Cr to the PM CARES Fund. PhonePe has additionally committed INR 1oo Cr to help the government fight coronavirus.
Also, Gurugram-based hyperlocal services provider Urban Company has launched an interest-free loans programme under which INR 11 Cr is being disbursed to eligible partners associated with the company. Approximately 85% i.e. 22K of the company’s total gig partners are eligible for the programme.
Startup Innovations Continue
Startups have already pooled resources and are also working independently for solutions to the most common and complex problems related to the pandemic. In these times, many of them are also coming with unique propositions which can come effective in the fight against the novel coronavirus.
- Healthtech platform Practo is now offering Covid-19 test booking on its platform. The company has partnered with Thyrocare to conduct coronavirus detection tests, which has been authorised by the Indian Council of Medical Research (ICMR).
- Edtech startup LearnTEZ has announced that it is going to offer its online tutoring platform at free of cost to teachers and students. On LearnTEZ teachers can create their courses which are offered to students. The platform has both free and paid courses.
- Wingify founder Paras Chopra along with cofounder Sparsh Gupta has launched an online Covid-19 hackathon to invite volunteers across India and overseas to help find solutions to ease the struggle against the virus.
- Automobile manufacturer Maruti Suzuki has partnered with AgVa Healthcare to rapidly scale up production of ventilators. The intention is to reach a volume of 10,000 units per month. AgVa Healthcare would provide the technology, performance and related matters for all the ventilators produced and sold by them.
Besides startups, the likes of Tata and Google also joined the forces in the fight against the novel coronavirus. The Tata Trusts has announced that it is committing INR 500 Cr to improve the availability of healthcare facilities across the country.
On the other hand, tech giant Google has committed over $800 Mn to address some of the challenges faced by businesses in these times. The fund will help SMBs, World Health Organisation (WHO) and over 100 government agencies, community financial institutions and NGOs.
Moreover, online donations platform GiveIndia has started a platform to support families employed in the unorganised sectors, impacted by the Covid-19 pandemic in India. For this, GiveIndia has partnered with the other non-profits to help families in need and prevent the spread of the coronavirus in India.