PROJECT REPORT ON

Financial problems faced by start-up in india post covid

IN PARTIAL FULFILLMENT
OF THE DEGREE
AWARDED AT
M.COM PART II
(ACCOUNTANCY
SEMESTER IV

SUBMITTED
TO
UNIVERSITY OF MUMBAI
FOR ACADEMIC YEAR 2022-2023
SUBMITTED BY
NAME:- SINGH RAVISHANKAR RADHESHYAM
ROLL NO:- 63

VIVA COLLEGE OF ARTS, COMMERCE AND

SCIENCE VIRAR (WEST) 401303
 DECLARATION

I hereby declare that the project titled

“ financial problems faced by start-up in india post covid ” is
an original work prepared by me and is being submitted to
University of Mumbai in partial fulfillment of “M.COM – PART II
SEM III / IV (ACCOUNTANCY)” degree for the academic year
2022- 2023.
To the best of my knowledge this report has not been submitted
earlier to the University of Mumbai or any other affiliated college
for the fulfillment of “M.COM” degree.

Date: Name :
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ACKNOWLEDGEMENT

I SINGH RAVISHANKAR RADHESHYAM the student Of

VIVA College pursuing my “M.COM – II (ACCOUNTANCY)”, would
like to pay the credits, for all those who helped in the making of this
project.
 The first in accomplishment of this project is our Principal
Dr. V. S. Adigal, Vice-Principal Dr. Prajakta Paranjape,
Course
Co-ordinator Dr. Nilima Bhagwat and Guide Dr. Deepak Gupta
and teaching & non teaching staff of VIVA college. I would also
like to thank all my college friends those who influenced my
project in order to achieve the desired result
correctly.

Shri. Vishnu Waman Thakur Charitable Trust's Bhaskar Waman

Thakur College of Science, Yashvant Keshav Patil College of
Commerce, Vidhya Dayanand Patil College of Arts,
M.B.Estate, Viva College Road, Virar (West), Pin - 401303

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Thakur College of Science, yashvant Keshav Patil College of Commerce, Vidhya Dayanand Patil

College of Arts studying in M.com Part II Accountancy has completed project on Financial problems

faced by start-up in india post covid in the academic year 2022 - 2023. The information submitted in

the project is true & original to the best of our knowledge.

Internal Examiner _________ PG Co- ordinator

External Examiner _________ Principal

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 INDEX

SR NO: TOPIC PG NO:

1. INTRODUCTION . 2-16

1.1 Definition of Start-up 3

1.2 Start-up India 4

1.3 Start-up Company 7
1.4 Here are the 19 plans given by Government 8
2. Literature review. 17-21

2.1 The impact of COVID on India start-ups ecosystem 18

2.2 After COVID struggles of a start ups in India 19
2.3 Challenges in obtaining finance for start ups 21

3. Research Methodology. 22-30

3.1 Objectives of the study 23

3.2 Data Collection Method 26
3.3 Reasons for limited start-up in India post COVID 27
3.4 Importance of finance Agency in India 28
3.5 Highlights of Start- up in India 29

4. Data Analysis. 31-38

5. Suggestions. 39-42

6. Conclusions. 43-45

7. Bibliography & Webliography. 46-48

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 CHAPTER 1
INTRODUCTION

INTRODUCTION

1.1 Definition of Start-up:

A start-up company or start-up or start-up is a young company that is just beginning to

develop. Start-ups are usually small and initially financed and operated by a handful of
founders or one individual. These companies offer a product or service that is not
currently being offered elsewhere in the market, or that the founders believe is being

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 offered in an inferior manner. In the early stages, start-up companies' expenses tend to
exceed their revenues as they work on developing, testing and marketing their idea. As
such, they often require financing. Start-ups may be funded by traditional small business
loans from banks or credit unions, by government sponsored Small Business
Administration loans from local banks, or by grants from non-profit organizations and
state governments. Paul Graham says that "A start-up is a company designed to grow
fast. Being newly founded does not in itself make a company a start-up. Nor is it
necessary for a start-up to work on technology, or take venture funding, or have some
sort of "exit". The only essential thing is growth. Everything else we associate with
start-ups follow from growth.
Startup is basically a small newly opened organization which in form of a small
business, a partnership or a small venture formed to grow rapidly a new business
model.In other words, startup is a new young company which aims to work with
dynamic approach to develop a business model which earns huge amount of revenue.
Typically, a startup starts with the beginning of building Minimum Viable Product
(MVP), a prototype, to assess and develop the new initiative and business methods. In
addition of this, the founders do researches and surveys to deepen their understanding
of new concepts, technologies, ideas, market concepts and commercial potential

Then a shareholder's agreement (SHA) required agreeing on early stage to confirm the
ownership, commitment and contributions of founders and investors.India is the third
largest base for the startups in the world and has a great market for various products. But
the failure rate of startups in India is significantly very high. And around 90% of the
startups in India have to finally shut down due to various factors.

1.2 Start-up India:

Start-up India is an initiative of the Government of India. The campaign was first
announced by Indian Prime Minister, Narendra Modi during his 15 August 2015 address
from the, in New Delhi. The action Red Fort plan of this initiative, is based on the
following three pillars:
1. Simplification and Handholding.
2. Funding Support and Incentives.
3. Industry-Academia Partnership and Incubation.
An additional area of focused relating to this initiative, is to discard restrictive States
Government policies within this domain, such as Land License Raj, Permissions,
Foreign Investment Proposals, and Environmental Clearances. It was organized by The
Department for promotion of industry and internal trade (DPI&IT). A start-up defined
as an entity that is headquartered in India, which was opened less than seven years ago,
and has an annual turnover less than 25 ₹ crore (US$3.5 million). Under this initiative,
the government has already launched the I-MADE program, to help Indian

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entrepreneurs build 1 million mobile app start-ups, and the scheme (Pradhan Mantri
Mudra Yojana), a MUDRA Banks initiative which aims to provide microfinance, low-
interest rate loans to entrepreneurs from low socioeconomic backgrounds. Initial capital
of 200 ₹ billion (US$2.8 billion) has been allocated for this scheme. The start-up
scenario in India has gone a huge makeover, now people are not alien with the concept
of start-ups. Earlier people had no idea what this concept is all about, thanks to the rise
in media’s encouraging coverage towards start-ups recently. The concept of start-up is
somehow different for Indians and not so different for people of developed economies.
Start-ups are something to do with new product/process for the entire market or fraction
of the market. Start-ups must not be confused with small business, as the biggest
difference being is INNOVATION. Recently government of India has launched “Start-
up India” initiative to foster/support and encourage start up efforts in India. The results
are very satisfactory with initiative being accepted with open arms in country, various
state governments have also started the similar efforts. India stands at a very important
cross road, India stood at number three in overall technology driven stat ups in the world
(Top two positions are held by USA and UK respectively). The very nature of start-ups
in India is technology based which is fuelled by young IIT’s graduates as the patterns
of startups in India further suggests, they are undertaken in very unconventional terrain
like medical etc. The important question remains is, how start-ups are shaping the very
structure of economy in India or elsewhere (In similar economies). The overall impact
of start-ups is very visible initially then, only those ideas persist which are smartly
implemented. In India government is constantly trying to create an environment which
is both conducive and optimum for stat ups. The reason is very simple, start- ups are
necessary for the entrepreneurial and innovative growth of any nation. There are nations
which are smaller than ours and less naturally equipped than ours but made tremendous
growth and advancements in the field of economy and overall development. The secret
of their success is nothing but an appetite for innovation. If India wants to be in the front
lines with developed nations in the world, innovation is the key to become so.
Fortunately, India is endowed with youngest population which is primarily required for
setting up start-ups. With the growing inclination towards “Having something of my
own” attitude is also helping in bringing new ideas into successful implementation.
India has produced some of the leading start-ups in the world, which are working as the
lighthouse for the rest. The prominent example being OYO Rooms and Zomato (both
catering to a very different market segment and objectives). In short, the start-up
scenario is looking very convincing and bright as the investments is growing in India
start-ups from worldwide investing bodies both organized and individuals. The recent
example of such investment being the huge multibillion-dollar investments in various
start-ups functioning in India like Ola and Flipkart. In a way start up era has started in
India, and it is the time to give its due push.
The Ministry of Human Resource Development Department of Science and the and
Technology have agreed to partner in an initiative to set up over 75 such start-up support
hubs in the National Institutes of Technology (NITs), the Indian Institutes of
Information Technology (IIITs), the Indian Institutes of Science Education and
Research National Institutes of Pharmaceutical (IISERs) and Education and Research
(NIPERs). The Reserve Bank of India said it will take steps to help improve the ‘ease
of doing businesses in the country and contribute to an ecosystem that is conducive for
the growth of start-up businesses. Soft Bank Japan, which is headquartered in, has
invested US$2 billion into Indian start-ups. The Japanese firm has pledged to

4
 investment US$10 billion. Google declared to launch a start-up, based on the highest
votes in which the top three start-ups will be allowed to join the next Google Launchpad
Week, and the final winner could win an amount of US$100,000in Google cloud credits.
Oracle on 12 February 2016 announced that it will establish nine incubation centers. In,
Bengaluru Chennai Gurgaon Hyderabad, Mumbai, Noida Pune Trivandrum and
Vijayawada. The result of first ever start-up state ranking were announced in December
2018 by the Department of Industrial Policy and Promotion (DIPP) based on the criteria
of policy, incubation hubs, seeding innovation, scaling innovation, regulatory change,
procurement, communication, North-Eastern states, and hill states.

CURRENT STATE OF STARTUPs IN INDIA:

1. India is the third largest Startup hub.
2. Average age of startup founders is 28 years.
3. 9% of the total startup founders are women
4. Total tech startups are expected to increase from 5300 in 2016 to 11500 in 2020.
5. Average number of new technology startups has moved from 480 in 2010 to 1000
in 2016. Expected to increase to 2000 in 2020.
6. Majority of startups and investors are from metro cities.
7. Approximately, 50% growth in share of female entrepreneurs in the last 12 months.
8. The number of Private Equity and Venture Capital firms has doubled in the last 12
months.

Start-up State Ranking are as follows:

Best performer: Gujarat

Top performers: Karnataka, Kerala, Odisha, and Rajasthan
Leader: Andhra Pradesh, Bihar, Chhattisgarh, Madhya Pradesh, and Telangana
Aspiring leaders: Haryana, Himachal Pradesh, Jharkhand, Uttar
Pradesh, and West Bengal

Emerging states: Assam, Delhi, Goa, Jammu & Kashmir,

Maharashtra, Punjab, Tamil Nadu, and Uttarakhand Beginners:
Chandigarh, Manipur, Mizoram, Nagaland, Puducherry, Sikkim, and
Tripura.

Kerala has initiated a government start-up policy called "Kerala IT Mission" which
focuses on fetching ₹50 billion (US$700 million) in investments for the state's start-up

5
ecosystem. It also founded India's first telecom incubator Start-up village in 2012. The
state also matches the funding raised by its incubator from Central government with 1:1.
Telangana has launched the largest incubation centre in India as "T-Hub". Andhra
Pradesh has allocated a 17,000-sq.ft.

Technological Research and Innovation Park as a Research and Development

laboratory. It has also created a fund called "Initial Innovation Fund" of ₹100 crore
(US$14 million) for entrepreneurs. The government of Madhya Pradesh has
collaborated with the Small Industries Development Bank of India (SIDBI) to create a
fund of ₹200 crore (US$28 million). Rajasthan has also launched a "Start-up Oasis"
scheme. In order to promote start-ups in Odisha, the state government organised a two-
day Start-up Conclave in Bhubaneswar on November 28, 2016.

1.3 Startup Company:

A start-up or start-up is started by individual founders or entrepreneurs to search for a

repeatable and scalable business model. More specifically, a start-up is a newly emerged
business venture that aims to develop a viable business model to meet a marketplace
need or problem. Founders design start-ups to effectively develop and validate a
scalable business model. Hence, the concepts of start-ups and entrepreneurship are
similar.

However, entrepreneurship refers all new businesses, including self-employment and

businesses that never intend to grow big or become registered, while start-ups refer to
new businesses that intend to grow beyond the solo founder, have employees, and intend
to grow large. Start-ups face high uncertainty and do have high rates of failure, but the
minority that go on to be successful companies have the potential to become large and
influential. Some start-ups become , i.e. unicorns privately held start-up companies
valued at over $1 billion. According to TechCrunch, there were 279 unicorns as of
March 2018, with most of the unicorns located in China, followed by the United States.
The largest unicorns founded as of October 2018 included Ant Financial, Byte Dance,
Uber, Xiaomi, and Airbnb.

1.4 Here are the 19 plans Modi has for start-ups:

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 1. Self-certification:

The start-ups will adopt self-certification to reduce the regulatory liabilities. The
selfcertification will apply to laws including payment of gratuity, labor contract,
provident fund management, water and air pollution acts .

2. Start-up India hub:

An all-India hub will be created as a single contact point for start-up foundations in
India, which will help the entrepreneurs to exchange knowledge and access financial
aid.

3. Register through app:

An online portal, in the shape of a mobile application, will be launched to help startup
founders to easily register. The app is scheduled to be launched in April.

4. Patent protection:

A fast-track system for patent examination at lower costs is being conceptualized by the
central government. The system will promote awareness and adoption of the Intellectual
Property Rights (IPRs) by the start-up foundations.

5. Rs 10,000 crore fund:

The government will develop a fund with an initial corpus of Rs 2,500 crore and a total
corpus of Rs 10,000 crore over four years, to support upcoming start-up enterprises.
The Life Insurance Corporation of India will play a major role in developing this corpus.
A committee of private professionals selected from the startup industry will manage the
fund.

6. National Credit Guarantee Trust Company:

A National Credit Guarantee Trust Company (NCGTC) is being conceptualized with a

budget of Rs 500 crore per year for the next four years to support the flow of funds to
start-ups

7. No Capital Gains Tax:

At present, investments by venture capital funds are exempt from the Capital Gains
Tax. The same policy is being implemented on primary-level investments in start-ups.

8. No Income Tax for three years:

Start-ups would not pay Income Tax for three years. This policy would revolutionize the
pace with which start-ups would grow in the future.

7
9. Tax exemption for investments of higher value:

In case of an investment of higher value than the market price, it will be exempt from
paying tax.

10. Building entrepreneurs:

Innovation-related study plans for students in over 5 lakh schools. Besides, there will also
be an annual incubator grand challenge to develop world class incubators.

11. Atal Innovation Mission:

The Atal Innovation Mission will be launched to boost innovation and encourage talented
youths.

12. Setting up incubators:

A private-public partnership model is being considered for 35 new incubators and

innovation centers at national institutes.

13. Research parks:

The government plans to set up seven new research parks, including six in the Indian
Institute of Technology campuses and one in the Indian Institute of Science campus,
with an investment of Rs 100 crore each.

14. Entrepreneurship in biotechnology:

The government will further establish five new biotech clusters, 50 new bio incubators
,150 technology transfer offices and 20 bio-connect offices in the country

15. Dedicated program in schools:

The government will introduce innovation-related program for students in over 5 lakh
schools.

16. Legal support:

A panel of facilitators will provide legal support and assistance in submitting patent
applications and other official documents.

17. Rebate:

A rebate amount of 80 percent of the total value will be provided to the entrepreneurs on
filing patent applications.

18. Easy rules: Norms of public procurement and rules of trading have been simplified for
the startups.

19. Faster exit:

8
If a start-up fails, the government will also assist the entrepreneurs to find suitable
solutions for their problems. If they fail again, the government will provide an easy way
out.

Government Initiatives for Startups

Now a day's government of India is taking lot of steps towards the development of
startups. There are some schemes launched by Indian government which is headed by
different ministry and further headed by various departments. Some of the schemes are:

Start-up Scheme Launch :

9
The event was inaugurated on 16 January 2016 by the finance minister Arun Jaitley.
Among the attendees were around 40 top CEOs and startup founders and investors from
Silicon Valley as special guests including Masayoshi Son, CEO of SoftBank, Kunal
Bahl, founder Snapdeal, Ola founder Bhavish Aggarwal, Paytm founder Vijay Shekhar
Sharma, Travis Kalanick, founder of Uber, Adam Nuemann, CEO of WeWork, Sachin
Bansal, founder of Flipkart and others.

“ Start Up India Is a revolutionary scheme that has been started to help the people who
wish to start their own business. These people have ideas & capabilities , so the
Government will give them support to make sure they can implement their ideas and
grow. Success of this scheme will eventually make India a better economy and a strong
Nation.”
During the speech at the event, Mr. Modi said that we are trying to make the young job
creators rather than job seekers. He also said that we are trying to the young job creators
rather than job seekers. He also said that one’s mindset should not be towards earning
money in the initial phase , it should be rather on grabbing and using the opportunities.

Startup Scheme 1 : Performance & Credit Rating Scheme

Launched In: August 2016
Headed By: National Small Industries Corporation (NSIC)
Industry Applicable: Sector-agnostic
Eligibility: MSMEs registered in India are eligible to apply under this scheme. In May
2017, the guidelines were revised which stated that a unit with a turnover of INR 1 Cr
or above will be eligible under the scheme. Now the case of rating needs to be
recommended by a bank or NBFC.
Overview: The scheme aims to create awareness about the strengths and weaknesses
of small-scale industries. It was formulated by the Ministry of MSME under the Indian
government in consultation with various stakeholders i.e. Small Industries Associations
& Indian Banks’ Association and various rating agencies viz. CRISIL, ICRA, Dun &
Bradstreet (D&B) and ONICRA.
Fiscal Incentives: The incentives are proportional to the turnover of the MSMEs. For
instance, up to INR 50 Lakhs, 75% of the rating fee or INR 25,000 (whichever is less)
will be contributed under the scheme. For turnover above INR 50 Lakhs to INR 200
Lakhs, 75% of the fee or INR 30,000 (whichever is less) while for turnover more than
INR 200 Lakhs, 75% of the fee or INR 40,000 (whichever is less).
Time Period: N/A

Startup Scheme 2 : IREDA Scheme For Discounting Energy Bills

10
Launched In: April 2016
Headed By: Indian Renewable Energy Development Agency (IREDA)
Industry Applicable: Renewable energy, clean energy, green energy
Eligibility: The applicant should be an existing borrower of IREDA (Sole/co-
financing/consortium financing). The borrowers should not be declared as NPAs by any
of the lenders. The discounted amount will be utilised only for clearance of dues of term
lenders of the project and also working capital lenders overdue, if any on a pro-rata
basis, in terms of financing documents.
Overview: This scheme by the Indian government proposes to provide bill discounting
facility for the energy bills of Indian Renewable Energy Development Agency (IREDA)
borrowers which are pending for payment with Utilities for upto six months.
Fiscal Incentives: Upto 75% of the invoice value pending for maximum six months
from the date of the application subject to a maximum bill discounting facility of INR
20 Cr. The minimum amount of transaction covering a set of bills shall not be less than
INR 1 Cr.
Time Period: Terminal date of repayment will be 12 months from disbursement date

Startup Scheme 3 : Credit Enhancement Guarantee Scheme

Launched In: October 2016
Headed By: Indian Renewable Energy Development Agency (IREDA)
Industry Applicable: Renewable energy, clean energy, green energy
Eligibility: Commercially viable, grid-connected renewable energy projects
(solar/wind) with a minimum average DSCR of 1.2 can apply under the scheme. Also,
the minimum issue size of the proposed bonds should not be less than INR 100 Cr.
Overview: This scheme by the Indian government acts as a non-fund partial credit
guarantee instrument for project developers/ promoters to raise bonds against
commissioned and operationally viable renewable energy projects.
Fiscal Incentives: The IREDA will provide credit enhancement by way of
unconditional and irrevocable partial credit guarantee to enhance the credit rating of the
proposed bonds. The IREDA can extend guarantee upto 25% of the proposed issue size
of the bonds and, in any case, it should not be more than 20% of total capitalised project
cost. The guarantee fee to be charged by the IREDA shall be in the range of 1.8%-2.9%
p.a. of its exposure.
Time Period: The guarantee period will be linked with the period for which bonds are
issued, the maximum tenure of the project bonds may be upto 15 years.
Startup Scheme 4 : 4E (End to End Energy Efficiency)
Launched In: September 2016
Headed By: Small Industries Development Bank of India (SIDBI)

11
Industry Applicable: Sector-agnostic
Eligibility: MSME units in the manufacturing or services sector which are in operation
for at least three years and have earned cash profit in the last two years of operation are
eligible. The startup should not be in default to any bank/FI. The unit should have
undergone a process of Detailed Energy Audit (DEA) through a technical
agency/consultants having BEE certified Energy Auditors. Furthermore, the Detailed
Project Report (DPR) prepared by the technical agency/consultant should have been
vetted by the EEC, SIDBI. Also, the unit should not have availed a Performance Linked
Grant under the WB-GEF Project for the proposed EE Project and should be in
compliance with the Environment & Social Management Framework.

Overview: The scheme has been launched jointly by India SME Technology Services
Ltd. (ISTSL) in association with the World Bank. The main objective is to implement
energy efficiency measures on an end-to-end basis. For meeting part costs of (i) capital
expenditure including for the purchase of equipment/machinery, installation, civil
works, commissioning, etc. (ii) Any other related expenditure required by the unit,
provided it is not more than 50% of (i). The scheme by the Indian government, also, it
aims to help startups finance second-hand machinery/equipment for use.
Fiscal Incentives: Under the 4E scheme, the MSME unit has to pay only INR 30,000
and applicable taxes and the balance fee will be paid by SIDBI to auditors. Up to 90%
of the project cost with minimum loan amount of INR 10 Lakhs and maximum loan
amount not to exceed INR 150 Lakhs per eligible borrower can be granted under this
scheme. Eligible loan amount should not exceed one-fifth of the total turnover of the
applicant unit. Also, the repayment period including initial moratorium period of up to
six months, shall not be more than 36 months for loans up to INR 100 Lakhs and 60
months for loans beyond INR 100 Lakhs.
Time Period: N/A

Startup Scheme 5 : Pradhan Mantri Mudra Yojana (PMMY)

Launched In: February 2016
Headed By: Micro Units Development and Refinance Agency Ltd. (MUDRA) Industry
Applicable: Sector-agnostic
Eligibility: Non–Corporate Small Business Segment (NCSB) comprising millions of
proprietorship / partnership firms running as small manufacturing units, service sector
units, shopkeepers, fruits / vegetable vendors, truck operators, food-service units, repair
shops, machine operators, small industries, artisans, food processors and others, in rural
and urban areas can apply for the loan. All kinds of manufacturing, trading and service
sector activities can get a MUDRA loan.

Overview: MUDRA provides refinance support to banks / MFIs for lending to micro
units having loan requirement upto INR 10 Lakhs. As per recent media reports, loans
extended under the PMMY during 2016-17 have crossed the target of INR 1.8 Lakh Cr.
The estimated number of borrowers in this fiscal were more than 4 Cr, of which 70%

12
were women. Furthermore, for the fiscal year 2017-18 the target has been kept at INR
2.44 Lakh Crore for Mudra Loans.

Fiscal Incentives: MUDRA offers incentives through these interventions:

>Shishu: covering loans upto INR 50,000/-
> Kishor: covering loans above INR 50,000/- and upto INR 5 Lakhs
> Tarun: covering loans above INR 5 Lakhs and upto INR 10 Lakhs

Generally, loans upto INR 10 Lakhs issued by banks under Micro Small Enterprises are
given without collateral. Also, within these interventions, MUDRA ensures to meet the
requirements of different sectors/business activities as well as business/entrepreneur
segments.
Time Period: N/A

Startup Scheme 6 : Stand Up India

Launched In: April 2016
Headed By: Small Industries Development Bank of India (SIDBI)
Industry Applicable: Sector-agnostic
Eligibility: The enterprise can be in trading, manufacturing, or services. In the case of
non-individual enterprises, at least 51% of the shareholding and controlling stake
should be held by an SC/ST or woman entrepreneur. The borrower should not be in
default to any bank or financial institution.
Overview: This scheme by the Indian government facilitates bank loans between INR
10 Lakhs and INR 1 Cr to at least one Scheduled Caste or Scheduled Tribe borrower
and at least one women borrower per bank branch for setting up a Greenfield enterprise.
Fiscal Incentives: Composite loan between INR 10 Lakhs and INR 1 Cr to cover 75%
of the project cost can be taken up, inclusive of the term loan and working capital. The
stipulation of the loan being expected to cover 75% of the project cost would not apply
if the borrower’s contribution along with convergence support from any other schemes
exceeds 25% of the project cost. The rate of interest would be the lowest applicable rate
of the bank for that category (rating category) not to exceed (base rate (MCLR) + 3%+
tenor premium).
Time Period: The loan is repayable in seven years with a maximum moratorium period
of 18 months.

Startup Scheme 7 : Atal Tinkering Laboratories (ATL)

Launched In: July 2016
Headed By: Atal Innovation Mission

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Industry Applicable: Chemicals, technology hardware, healthcare & life sciences,
aeronautics/aerospace & defence, agriculture, AI, AR/VR (augmented + virtual reality),
automotive, telecommunication & networking, computer vision, construction, design,
non-renewable energy, renewable energy, green technology, fintech, Internet of Things,
nanotechnology, social impact, food & Beverages, pets & animals, textiles & apparel.
Eligibility: Schools (Grade VI – XII) managed by the Government, local body or private
trusts/society can apply to set up an ATL.
Overview: The objective of this startup scheme by the Indian government is to foster
curiosity, creativity, and imagination in young minds; and inculcate skills such as design
mindset, computational thinking, adaptive learning, physical computing etc. As per the
Startup India Action Plan, 500 Tinkering Labs are to be established. NITI Aayog has
selected 457 schools for establishing Tinkering Labs. Of the selected, 350 Tinkering
Labs have received a Grant-in-Aid of INR 12 Lakhs each. Earlier this month, NITI
Aayog CEO Amitabh Kant stated that this year, the Atal Innovation Mission (AIM)
scheme will look to select 1,000 schools. They will receive a grant of about $31K (INR
20 Lakhs) each. The money will be utilised to set up tinkering labs to foster innovation.
Fiscal Incentives: AIM will provide grant-in-aid that includes a one-time establishment
cost of INR 10 Lakhs and operational expenses of INR 10 Lakhs for a maximum period
of five years to each ATL.
Time Period: N/A

Government’s Role:

The Ministry of Human Resource Development and the Department of Science and
Technology have agreed to partner in an initiative to set up over 75 such startup support
hubs in the National Institutes of Technology (NITs), the Indian Institutes of
Information Technology (IIITs), the Indian Institutes of Science Education and
Research (IISERs) and National Institutes of Pharmaceutical Education and Research
(NIPERs). The Reserve Bank of India said it will take steps to help improve the ‘ease
of doing businesses in the country and contribute to an ecosystem that is conducive for
the growth of start-up businesses.

14
 CHAPTER 2
LITERATURE REVIEW

2. LITERATURE REVIEW

2.1 The impact of COVID on India start-ups ecosystem

At present India has the third-highest number of unicorns (startups with a valuation greater than
USD 1 billion) in the world, after the USA with 243 and China with 227. The year 2021 alone
has added 10 unicorns to the list despite the 2nd wave of COVID-19 still ravaging the country,
and lockdown suppressing the demand. It is pretty impressive, considering 12 unicorns were
added in the previous year and we are only halfway through 2021. During the same period,
1600 new startups were founded.

India’s startup ecosystem is an emerging market for venture capital and private equity from all
over the world with firms like Naspers, SoftBank and Tiger Global being the dominant
investors. China is one of the biggest stakeholders and backs almost 18 unicorns in India, but
with the new Foreign Direct Investment rules, such investments would require the Indian
government’s prior approval.

However, the situation is not so optimistic for all startups. A survey conducted in April 2021
by NASSCOM reports that 9 out of every 10 startups saw a decline in their revenue. The growth
of most Indian startups, especially the non-tech ones, has been remarkably restrained.

15
The global pandemic situation has accelerated the implementation of online technology
globally, and more so in India. Many businesses are shifting online, with VC (Venture Capital)
firms especially focussing on tech startups. The popular tech sector’s include digital insurance,
FinTech, HealthTech, and social commerce platforms.

The Indian government in 2016 began an initiative called – Startup India to help create an
enabling environment for entrepreneurs. Startup India provides support in three areas: it
provides subsidies and assistance financially, it reduces regulatory burden, and it helps provide
an environment for industry-academic partnerships by establishing bootcamps and innovation
labs. However, the funds of Startup India have been invested in less than 1% of all Indian
startups, meaning most of them still depend on private funding. Additionally, the distribution
and funding for these startups are highly concentrated in large urban cities with few options for
those in rural areas. There is a disparity of investments among different sectors as well, with IT-
enabled technology sectors attracting most of the funding. The success of the entire ecosystem
depends on the diversification of investments into sectors like agriculture, healthcare, education,
and social services.

India has the potential to become a bright spot in the world economy because of the unmet
demand of a large population. There is a disparity between what India has achieved so far and
what it is capable of achieving. The pandemic has surely been a defining moment in the
evolution of India’s startup scenario. There is an increasing requirement for digital solutions
which again enables the development of new unicorns, however it is possible that many small
startups are bound to fail. Booms and busts are a part of the startup cycle. A few of the
noteworthy startups like WhatsApp, Pinterest, and Uber were formed right after the 2008 Great
Recession, so we can possibly witness the same pattern after the current financial crisis.

2.2 After COVID struggles of a start ups in India

Going through the countless memes during COVID lockdown, I could safely say that I've
witnessed at least one "Black Swan" event in my life. As the COVID19 pandemic slowly
unfurled its wings plunging us into excruciating grief, we nonetheless found our genes
through the Gig Workers who became not only our food delivery friends but also the crucial
economy's frontrunners!

However, it’s not hard to see the economic devastation suffered by small Indian businesses.
The stores were closed, the lights turned off with apology signs hanging from the windows.
Small take-out tables and restaurant windows allow only the quickest exchanges on the
sidewalk. The proof was literally in front of us.

It was a little harder to see the economic damage to startups and the country: tech-focused
young companies working primarily in software and life sciences. Their offices were above
street level and inside anonymous office buildings. But, as a new report from Startup Genome
makes clear, many startups are still struggling just as much as other small businesses.

The Ugliest Effect of COVID on Startups:

16
According to the research, two-thirds of companies worldwide were running out of money
within six months of the Pandemic. Within three months of the COVID Crisis, four out of ten
startups believed that had occurred with them. The number of organizations categorizing
themselves as being in the "red zone," already defined by the survey, has increased by 40%
since December.

Not Only Businesses But,

Employees broke a disproportionate amount of the negative effect, just as they do in other
types of small firms. Three-quarters of startups say they've already had to lay off full-time
employees. At the moment, the cuts do not appear to be substantial. Half of the organizations
that have laid off employees have laid off less than 20% of their workforce. That's a lot less
than I've seen in other statistics regarding small businesses in general.

Yet, the struggle is not over. Many startups in India are still facing many challenges to
strengthen their roots in the market.

● B2B VS B2C
The suffering and the growth have not been distributed evenly. When opposed to B2B
organizations, B2C firms are almost three times more likely to be in industries undergoing
growth as a result of the COVID-19 issue.

On the other hand, B2B companies serving Large Enterprise clients are more likely to be in
industries badly impacted by the crisis than B2B startups serving small and Medium
Enterprises and B2C startups. And they are the least likely to be seeing sales growth.

● Hospitality Industry:
Think about new companies in the accommodation area. Since the chance of movement and
the travel industry has been close to nothing throughout the course of recent months, and with
the recovery of the area expected to take anyplace six to a year from now because of the
anxieties in regards to disease and wellbeing ventures in the friendliness area have been
battling just to remain above water.

● Lack of Knowledge:
A lack of information is one of the most widespread issues that companies face to govern their
legal entities in their attempt.

According to the survey, more than two-thirds of respondents (68%) say their company lacks
up-to-date information on their entities, and a similar proportion (66%) say they struggle to
meet the numerous compliance requirements in the jurisdictions where they have entities
around the world.

● Shortage of Resources:
Perhaps the most unavoidable difficulty that associations are looking at in their battle to deal
with their legitimate elements is an absence of data. As per the overview, more than 66% of

17
respondents (68%) say their business doesn't have state-of-the-art data on their elements, and
a comparable extent (66%) report that they experience difficulty staying aware of the
numerous consistency prerequisites in the wards where they have elements all over the planet.

● No Smart Financial Planning:

A further intensifying component is spending plan requirements. Just about nine of every ten
respondents (88%) show their organizations are under enormous strain to reduce expenses, to
such an extent that many are not putting resources into working on these cycles.

● Impulsive shopper requests:

Early signs are that COVID-19 has adjusted the brain science of shopping. Brands will need
to realize how these movements might reach out into what's to come. Will people be anxious
throughout 2020, 2021, and maybe 2022, as well as in the past? Finding the replies will need
statistical surveys to assess buyer sentiment and respond to emerging purchasing designs.

● A Powerful Digital Shift:

Buyers of any age put a high worth on internet shopping during COVID-19. For individuals
under severe development controls, locally situated purchasing offered crucial support. As
shops, shopping centers, and eateries return, the basic significance of the "Home Economy"
may begin to decrease.

In any case, eCommerce has drawn in a new and faithful after. In this manner, the finish of
year internet shopping celebrations will probably draw in record quantities of buyers looking
for limited items amid financial vulnerability.
● Production network Reanimation:
Carrying on with work in India has consistently involved exploring cross-cutting public,
provincial and worldwide complexities. As the locale's economies modify at various rates
after the pandemic; new arrangements are expected to adjust transient interest and supply
shifts. The dexterity and adaptability to react to unexpected disturbances will be key
indicators of accomplishment.

“Every challenge comes with an opportunity.”

Challenges are an inevitable element of the path to success. Everything is manageable with a
plan, patience, and hard effort. If you are experiencing any of the above-mentioned
challenges, please remain in touch with us. We will shortly provide the solutions.

2.3 Challenges in obtaining finance for start ups

The COVID-19 pandemic has had a significant impact on the global economy, and startups in
India have not been immune to the challenges it has presented. Here are some of the financial
problems faced by startups in India post COVID-19:

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Cash flow issues: Many startups have experienced a decline in revenue due to the pandemic,
which has affected their cash flow. This has made it difficult for them to pay salaries and
other operational expenses.

Difficulty in raising funds: The pandemic has made it harder for startups to raise funds as
investors have become more cautious about investing in risky ventures. With the uncertainty
of the market, investors are looking for startups that have a proven track record of success.

Increase in operational costs: The pandemic has also resulted in an increase in operational
costs for startups, such as the cost of sanitization and personal protective equipment for
employees. This has further impacted their cash flow and profitability.

Delayed payments: Startups that work with large corporations or government agencies have
faced delayed payments due to the pandemic. This has caused further cash flow problems for
them.

Supply chain disruptions: Startups that rely on global supply chains have faced disruptions
due to the pandemic. This has impacted their ability to produce and deliver their products,
resulting in further revenue losses.

Overall, the financial problems faced by startups in India post COVID-19 have been
significant. However, some startups have been able to adapt and pivot their business models
to survive and even thrive during these challenging times.

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 CHAPTER 3 RESEARCH
METHODOLGY

RESEARCH METHODOLGY

3.1 Objectives:

The objective of the study is to investigate the financial problems faced by startups in India
post-COVID-19. The study aims to:

Identify the major financial challenges faced by startups in India due to the COVID-19
pandemic.

20
Explore the impact of these financial challenges on the growth and survival of startups in
India.

Analyze the strategies adopted by startups to address these financial challenges.

Provide suggestions for startups to overcome these financial challenges and continue to grow
and succeed in the post-COVID-19 era.

To achieve these objectives, the research methodology for the study may include a
combination of qualitative and quantitative methods. The study may involve a literature
review to identify the existing research on financial problems faced by startups in India
postCOVID-19. Additionally, primary data collection methods such as surveys, interviews,
and focus group discussions may be used to collect data from startups and other stakeholders
in the startup ecosystem. The collected data will be analyzed using appropriate statistical
techniques to draw meaningful conclusions and provide suggestions to address the financial
problems faced by startups in India post-COVID-19.

The study attempts to understand the following:

1. To understand Indian start-up ecosystem in the pre-coronavirus period:

The Indian startup ecosystem was growing rapidly in the pre-coronavirus period, with a
number of factors contributing to its growth. Here are some of the key factors that impacted
Indian startups in the pre-coronavirus period:

• Government Support:

The Indian government launched several initiatives to support the growth of startups in
the country, such as Startup India, Standup India, and the Atal Innovation Mission. These
initiatives provided funding, mentorship, and other resources to help startups grow.

• Rise of Digital India:

The government's push for digitalization through initiatives like Digital India and the
Unified Payments Interface (UPI) helped create a favorable environment for startups in
the technology and digital sectors.

• Access to Funding:

The Indian startup ecosystem was attracting increasing amounts of funding from both
domestic and international investors. This provided startups with the necessary capital to
fuel their growth.

• Skilled Talent Pool:

India has a large pool of talented and educated individuals, which provided startups with
access to skilled talent at a relatively low cost.

21
• Consumer Demand:

The rise of the Indian middle class and increased consumer demand for digital products
and services helped create a market for startups to target.

Overall, the pre-coronavirus period was a time of rapid growth and expansion for Indian
startups. Government support, access to funding, a skilled talent pool, and rising
consumer demand helped create a favorable environment for startups to thrive. However,
the pandemic has had a significant impact on the startup ecosystem and has created new
challenges for startups to navigate.

2. To evaluate the measure being taken by Indian start-up companies in

dealing with the pandemic

Indian startups have been forced to adapt quickly to the challenges presented by the
COVID-19 pandemic. Here are some of the measures being taken by Indian startups to
deal with the pandemic:

• Remote Work:

Many startups have shifted to remote work to comply with social distancing guidelines and
protect the health of their employees. This has required startups to invest in digital
infrastructure and tools to ensure effective communication and collaboration.

• Cost Optimization:

With the pandemic causing a slowdown in economic activity, startups have been forced to
optimize their costs and conserve their resources. This has led to a greater focus on
efficiency and a reassessment of priorities.

• Pivoting to New Opportunities:

Some startups have pivoted their business models to address new opportunities arising
from the pandemic. For example, startups in the healthcare and e-commerce sectors have
seen increased demand and are adapting to meet this demand.

• Innovating to Solve New Problems:

Startups are leveraging their agility and innovation to develop solutions to address the new
problems arising from the pandemic. For example, startups are developing new
technologies to enable remote healthcare consultations and improve logistics for essential
goods.

• Government Support:

22
 Startups are also taking advantage of the various government support initiatives launched
to mitigate the impact of the pandemic. These initiatives include funding support, tax
relief, and other measures to support the startup ecosystem.

Overall, Indian startups are taking a range of measures to deal with the challenges
presented by the pandemic. These measures include adapting to remote work, optimizing
costs, pivoting to new opportunities, innovating to solve new problems, and leveraging
government support. While the pandemic has presented significant challenges for
startups, it has also highlighted their agility and innovation in the face of adversity.

3. To study the impact of coronavirus pandemic on consumer preferences.

The COVID-19 pandemic has had a significant impact on consumer preferences worldwide,
with a shift in behavior and attitudes towards consumption. Here are some of the key ways in
which the pandemic has impacted consumer preferences:

• Health and Safety:

Consumers are now placing a greater emphasis on health and safety when making purchasing
decisions. Products and services that can demonstrate health benefits or are perceived to be
safer are likely to see increased demand.

• E-commerce:

The pandemic has led to an acceleration in the adoption of e-commerce as consumers

increasingly prefer to shop online to avoid exposure to the virus. This trend is likely to
continue even after the pandemic subsides.

• Value for Money:

With the economic impact of the pandemic, consumers are becoming more price-sensitive and
seeking greater value for money. This has led to a shift towards more affordable products and
a focus on essential goods.

• Sustainability:

The pandemic has also highlighted the importance of sustainability, with consumers becoming
more aware of the environmental impact of their purchases. Products and services that are
eco-friendly and sustainable are likely to see increased demand.

• Local Products:

The pandemic has led to a renewed interest in supporting local businesses and products.
Consumers are more likely to purchase products that are locally produced and support their
community.

• Contactless Payments:

23
With the need to reduce physical contact, consumers are adopting contactless payment
methods such as mobile payments and digital wallets.

Overall, the COVID-19 pandemic has had a significant impact on consumer preferences, with
a greater emphasis on health and safety, e-commerce, value for money, sustainability, local
products, and contactless payments. These shifts are likely to have long-term implications for
businesses and their strategies for meeting evolving consumer needs.

3.2 Data Collection Method:

The data collection method for the study is involved a combination of primary and
secondary data collection methods.

For primary data collection, the following methods is used:

• Surveys:
Surveys is used to collect data from a large sample of startups in India. A structured
questionnaire is designed to collect information on the financial problems faced by startups,
the impact of these problems on their growth and survival, and the strategies adopted by
them to address these problems.

• Interviews:
In-depth interviews with startup founders and financial experts provide valuable insights into
the financial problems faced by startups in India post-COVID-19. These interviews is
conducted face-to-face, over the phone and through video conferencing.

• Focus group discussions:

Focus group discussions is conducted with a group of startup founders and financial experts
to discuss the financial problems faced by startups in India post-COVID-19. This method
can provide a platform for startups to share their experiences and perspectives on the
financial challenges they have faced.

For secondary data collection, the following sources is used:

• Online databases:
Online databases such as Bloomberg, Pitchbook, and Crunchbase is used to collect data on
funding trends, investment patterns, and startup financial performance.

24
• Reports and publications:
Reports and publications from industry bodies such as Nasscom and TiE provide valuable
information on the impact of COVID-19 on startups in India and the financial challenges
they have faced.

The combination of these primary and secondary data collection methods provide a
comprehensive understanding of the financial problems faced by startups in India
postCOVID-19.

3.3 Reasons behind limited start-ups in India due to COVID:

The COVID-19 pandemic has had a significant impact on businesses and start-ups all
over the world, including India. Here are some of the reasons behind the limited number
of start-ups in India due to COVID-19:

• Funding Challenges

Many start-ups rely on funding from investors to keep their businesses running. Due to
the economic impact of COVID-19, many investors have become more risk-averse and
are less likely to invest in start-ups.

• Supply Chain Disruptions:

COVID-19 has caused disruptions in supply chains and logistics, which has made it difficult
for start-ups to source raw materials and products needed for their businesses.

• Reduced Demand:

With lockdowns and social distancing measures in place, many start-ups that rely on
physical retail or in-person services have seen a significant reduction in demand for their
products or services.

• Staffing Issues:

Many start-ups have had to lay off or furlough employees due to the economic impact
of the pandemic, which has made it difficult for them to continue operating at full
capacity.

• Regulatory Hurdles:

25
COVID-19 has also led to changes in regulations and policies, which may make it more
difficult for start-ups to operate or access resources.

Overall, the combination of funding challenges, supply chain disruptions, reduced

demand, staffing issues, and regulatory hurdles has made it difficult for start-ups in
India to thrive during the COVID-19 pandemic.

3.4 Importance of financing agency’s in India:

The COVID-19 pandemic has had a significant impact on the Indian economy, leading to
disruptions in various sectors and industries. In this context, the role of finance agencies in
India has become even more critical in providing financial assistance and support to
businesses and individuals affected by the pandemic. Here are some of the key ways in which
finance agencies in India are playing an important role post-COVID:

• Providing Financial Assistance:

Finance agencies such as the Reserve Bank of India (RBI) and the National Bank for
Agriculture and Rural Development (NABARD) are providing financial assistance to
businesses and individuals affected by the pandemic through measures such as loan
restructuring, credit guarantees, and interest rate cuts.

• Promoting Digitalization:
The pandemic has accelerated the shift towards digitalization, and finance agencies are
playing a key role in promoting digital transactions and reducing the reliance on
cashbased transactions.

• Facilitating Economic Recovery:

Finance agencies are also playing a critical role in facilitating economic recovery by
providing liquidity support to the financial system, easing credit availability, and
providing targeted support to sectors and industries that have been most impacted by the
pandemic.

• Ensuring Financial Stability:

• Finance agencies are also responsible for ensuring financial stability in the post-COVID
period by monitoring and managing risks in the financial system, ensuring compliance
with regulatory requirements, and implementing measures to prevent fraud and
malpractice.

Overall, the role of finance agencies in India has become even more important in the
postCOVID period, as businesses and individuals face unprecedented challenges and

26
 disruptions. Finance agencies are playing a critical role in providing financial assistance,
promoting digitalization, facilitating economic recovery, and ensuring financial stability, all
of which are essential for ensuring a sustainable and resilient post-COVID economic
recovery

3.5 Highlight of start-ups in India.

The COVID-19 pandemic has been a challenging time for businesses in India, including
startups. However, there are several highlights of start-ups in India post-COVID. Here are
some of the key highlights:

• Digitalization:

The pandemic has accelerated the digital transformation of businesses in India, and start-ups
have been quick to adopt digital technologies to continue serving their customers. This has led
to a surge in demand for digital solutions, including e-commerce platforms, online education,
and remote work tools.

• Healthcare Innovation:

The pandemic has highlighted the need for healthcare innovation, and several start-ups in
India are working on developing new solutions for healthcare delivery, such as telemedicine
platforms and remote monitoring devices.

• Fintech Growth:

Fintech start-ups in India have seen significant growth post-COVID, as consumers have
become more reliant on digital financial services. This has led to increased investment in
fintech start-ups and the development of new solutions, including digital payment
platforms and lending platforms.

• Sustainability Focus:

Start-ups in India are increasingly focused on sustainability, as consumers and investors

are becoming more conscious of the impact of business on the environment. This has led
to the development of new solutions in areas such as renewable energy, waste
management, and sustainable agriculture.

• Government Support:

The Indian government has launched several initiatives to support start-ups post-COVID,
including the Startup India Seed Fund, which provides financial support to early-stage

27
 start-ups, and the Atmanirbhar Bharat Abhiyan, which aims to promote self-reliance and
entrepreneurship in India.

Overall, while the COVID-19 pandemic has presented significant challenges for start-ups in
India, it has also created opportunities for innovation and growth in several key areas.

CHAPTER 4 DATA ANALYSIS

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4.1 PESTLE Analysis:

PESTLE analysis is a business measurement tool to assess the overall macro environment of
business.

PESTLE is acronym,
for Political, Economic, Social, Technological, Legal and Environmental. It is a part of
the external analysis while conducting market research, and it gives an overview of
multiple macro-environmental factors before taking business decision.

Political Factors: Political factors are the medium by which Government intervenes the
functioning of an enterprise. Government regulations are evaluated in terms of its
capacity to influence the business environment and markets. The principle issues in this
segment are political stability, tax guidelines, trade regulations, safety regulations, labor
laws, and business laws.

Startups India Action Plan Impact: The action plans suggest law enforcement agencies to
keep off the functioning of startups in the first three years of its operations. But after
three years, companies need to follow the regulations.
Example- Tax exemptions, Self-certifications for 3 years
Economic Factors: These factors include economic growth, interest rates, exchange
rates, and inflation rate. These factors extraordinarily affect how businesses operate and
make decisions.

Startups India Action Plan Impact: There will be an improvement in the ease of doing
business especially for startups which will boost entrepreneurship. There is a corpus
fund for startups at lesser interest rate which will improve the ease of setting up news
businesses.

29
Social Factors: These factors have a great impact on the buying patterns which is an
important determinant for businesses. High trends in social factors affect the demand
for a products and operational mode of enterprises.

DATA ANALYSIS

A survey was conducted to understand consumer behavior and changing patterns in

consumption habits due to the pandemic. Respondents mainly comprised mostly
millennials and Gen Z. The questions primarily revolved around the alteration in regular
habits due to the lockdown and expectations going forward. With over 100 responses,
the industries have been categorised as ‘gainers’ and ‘losers’ based on the impact.

Gainers from the Corona Pandemic

I. EdTech Industry

Online Learning has seen immense growth since the lockdown was announced by the
Government of India. Companies putting out their content for free for students to
increase their customer base. EdTech is set to remain a very competitive and hot market
in Venture capital investments. In March alone, Byju's experienced 6 million new
students accessing its platform, its rival Toppr saw an unprecedented 100% growth in
free user engagement in March, Unacademy clocked over 1 billion watch hours, reports
The Financial Express. Byju’s is currently valued at a whopping $11billion, third highest
in the Indian start-up ecosystem.

As collected data suggests, the sentiments suggest that there will be a significant drop in
physical classroom studying going forward coupled with a steep rise in online learning.

30
 Although the internet has facilitated this change, it only remains to see if educational
institutions and students believe in ‘study from home, in the long run.

II. Fintech Industry

Owing to the pandemic, the Reserve Bank of India (RBI) has emphasised on transacting
digitally and urged customers to use online banking facilities, ensuring contactless
transactions. Further, local kiranas stores, digital learning, ATM withdrawals, and
broadband usage are also giving a much-needed boost and promoting the use of digital
payments. During such tough times, to meet consumer needs, digital fintech platforms
have leveraged their delivery mechanisms.

Fintech companies have witnessed a spike in online payment mechanisms as people attempt
to go contactless during the pandemic. The sentiment is expected to remain moving forward.
Paytm is the most valued startup of India currently standing at $16billion although Google
Pay has the highest market share in this segment.

31
III. Groceries Delivery Industry

The nationwide lockdown to stem the spread of coronavirus has led to a spurt in on-demand,
doorstep delivery of essential goods. With increased numbers of grocery orders, online
grocery platforms such as BigBasket and Grofers are facing a manpower crunch. Food
delivery giants Swiggy and Zomato are helping out by providing their delivery-partners to
ensure the effective supply of grocery orders.

Citing closure of shops and establishments, masses were prompted to switch towards online
substitutes leading to a spike in the number of users for existing retailers like BigBasket,
Grofers. In a Forrester Report, Online demand surged 10X to a whopping 3,00,000 orders
per day to a point where new delivery slots were shutting within 10mins.

32
Losers from the Corona Pandemic

I. Transport Industry

The fallout of the virus has been very tough for the industry. Revenue has come down 95 per
cent over the first 2 months of the lockdown. Cab aggregator Ola is laying off 1,400 staff from
rides, financial services and food business due to the coronavirus pandemic.

33
II. Hospitality Industry

Hotels and hospitality industry are one of the worst-hit sectors due to coronavirus
lockdown with the sector witnessing almost zero revenues for a full quarter as
governments across the world imposed travel restrictions. According to the Federation
of Associations in Indian Tourism and Hospitality (FAITH), around 70 percent out of a
total approximate workforce of 5.5 crores (direct and indirect) could face unemployed
(around 3.8 crores).

Oyo plans to lay off around 5000 employees as a part of its restructuring programme.
OYO has seen a 50-60% drop in terms of sales. The company has imposed pay cuts and
had to let go of several employees. Since the industry had already adapted to the online
system, the user base hasn't been affected. Nevertheless, the sector has experienced a
massive cut in consumer spending, hence the drop in revenues.

34
 III. Food Delivery Industry

Food Delivery business was severely affected by COVID-19 lockdown and the
restaurant industry itself could shrink by 25 to 40 per cent over the next 6-12 months.
The fear of getting infected has reduced the demand for online food ordering.
Fooddelivery volumes have dropped by 60-70% in the past two months compared to
preCOVID19 period, as many restaurants remain shut and consumers keep away from
ordering in.

Food delivery platform Zomato has said to lay off 520 employees, or 13%
of its workforce, and temporarily cut salaries of the rest. Swiggy has also
announced to lay off 1,100 of its employees. Owing to the COVID
precautionary measures and uncertainty around hygiene, people have turned
towards home-cooked food.

35
 CHAPTER 5
FINDINGS / SUGGESTIONS

FINDINGS / SUGGESTIONS

Findings:

Many businesses start with a dream, but it takes more than just a dream for them to
grow into successful businesses—including the tenacity to overcome the many
challenges facing start-ups today. Start-ups take time, effort, and energy. Funding is a
major concern for start-ups and small businesses. When the economy tanked, it made it

36
harder to convince investors and banks alike to part with the cash that’s essential for
growth in the early days of a business. Credit today is tight, and it’s not clear precisely
when it will become more readily available. Plus, there’s a growing trend of smaller
initial investments in early stage start-ups. Intensifying the challenge of raising funds,
major leaps in technology have led investors to raise the bar in terms of how much
legwork entrepreneurs are expected to do before even pitching their companies.

Suggestions:

Solutions for reason of failures:

Entrepreneurs should conduct in-depth market researches to understand the need
of the society and then proceed to the product design phase.
Entrepreneurs need to analyse their business idea and think out of the box. An ideal
example can be the number of start-ups in the ecommerce industry, but rarely anyone
focuses on logistics-based start-up ideas, where the need is.
Start-ups should aim to hire those people who share the same zeal to make the start-up
successful.
Entrepreneurs should reach out to multiple venture capitalists and know who is better aligned
towards the goals of start-ups.
Business process should involve meetings of the management team and technical teams
on weekly basis to ensure a smooth workflow.
Start-ups should be policy driven and offer same salaries to team members. It should
offer incentives for performance-based work. Doing so will help manage the funding in
an appropriate way.
Entrepreneurs can enrol themselves at personality development classes to improve their
soft skills or hire an experienced person for business communication.

Entrepreneurs should keep a close watch on the growing demand for their product
and focus on response time and capacity planning.

An entrepreneur should keep up with changing market dynamics to see a decline in the
demand for their product and take necessary steps to run the start-up profitably.

• Embrace Digitalization:

The pandemic has accelerated the shift towards digital solutions, and start-ups in India
should embrace this trend by developing digital products and services that cater to the
changing needs of consumers.

• Focus on Innovation:

37
 Start-ups in India should focus on innovation to stay ahead of the competition and adapt to
the changing market landscape. This could include developing new products and services,
leveraging emerging technologies, or finding new ways to deliver value to customers.

• Build Resilience:

The pandemic has highlighted the importance of building resilience in business, and
startups in India should focus on building resilience into their operations, including their
supply chains, finances, and business models.

• Invest in Talent:

Start-ups in India should invest in attracting and retaining top talent, as this will be critical
to their long-term success. This could include offering competitive salaries, providing
opportunities for professional development, and creating a positive work culture.

• Collaborate with Others:

Collaboration can be a powerful tool for start-ups in India post-COVID, as it can help them
share resources, leverage complementary strengths, and access new markets. Start-ups
should look for opportunities to collaborate with other businesses, organizations, and
stakeholders to achieve mutual success.

• Seek Government Support:

The Indian government has launched several initiatives to support start-ups post-COVID,
and start-ups should explore these opportunities to access funding, mentorship, and other
forms of support.

Overall, start-ups in India post-COVID should focus on building resilience, embracing

digitalization and innovation, investing in talent, collaborating with others, and seeking
government support to achieve long-term success.

38
 CHAPTER 6 CONCLUSION

Conclusion:

Startups in India have faced significant financial challenges due to the COVID-19 pandemic.
Cash flow issues, difficulty in raising funds, increase in operational costs, delayed payments,
and supply chain disruptions have been the major financial problems faced by startups in

39
India post-COVID-19. These challenges have had a significant impact on the growth and
survival of startups in the country.

To address these financial problems, startups in India need to adopt the following suggestions:

Focus on cash flow management: Startups need to focus on managing their cash flow
effectively by optimizing their revenue streams and reducing expenses. This can be achieved
by adopting cost-cutting measures and exploring alternative funding sources.

Explore alternative funding sources: Startups can explore alternative funding sources such as
crowdfunding, government grants, and debt financing to raise funds. They can also leverage
their networks and engage with angel investors and venture capitalists who are interested in
investing in startups.

Diversify revenue streams: Startups can mitigate the impact of supply chain disruptions by
diversifying their revenue streams and exploring new markets. They can also pivot their
business models to adapt to changing market conditions.

Build resilience: Startups can build resilience by developing contingency plans and risk
management strategies. This can help them to prepare for unforeseen events and mitigate the
impact of external shocks.

Seek support from policymakers: Policymakers can play a role in supporting startups by
providing financial assistance, creating an enabling environment, and promoting innovation
and entrepreneurship.

In conclusion, startups in India need to adopt a multi-pronged approach to address the

financial problems they face post-COVID-19. By focusing on cash flow management,
exploring alternative funding sources, diversifying revenue streams, building resilience, and
seeking support from policymakers, startups can overcome these challenges and continue to
grow and succeed in the post-COVID-19 era.

The sudden jolt brought about by the Covid-19 the outbreak has unexpectedly changed the
free-flowing and steep rising world of startups in many ways. It has had its fair share of
gainers and losers. Tech-centric and digital businesses have seen their business grow during
the period while the traditional businesses have faltered under the COVID pressure. Crisis
begets opportunity for strong and dynamic companies that are willing to change quickly.
Start-ups that will be swift in capitalizing the underlying opportunities will unlock the growth
potential and, in the process, discover a new lease of life.

India is growing to be one of the world's biggest markets, only after China considering the
population and scope of opportunities. The incomes and consumption habits of not just the
thriving middle class but even the rural economy are rapidly growing. Considering there are a
lot of big hurdles to be solved - be it in education, infrastructure, agriculture, logistics, retail,
healthcare, a combination of such circumstances is the most fertile ground for start-ups as
there is scope to penetrate. The big businesses are comfortable making money off the
shortcomings rather than resolving them or altering their existing established business models.
The biggest impact start- ups will have on the Indian economy is that it will come up with
innovative disruptive business models to solve the challenges the country faces. The Prime

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Minister has talked about an “ aatmanirbhar ” or self-reliant vision of India that he has for the
future of our country, and while the emotion and meaning behind this vision are strong, there
are a lot of changes we need to bring in to actually enable us to become “atmanirbhar”.
Startup companies would play a key role in leading India to a more self-reliant version of
itself.

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 CHAPTER 7 BIBLIOGRAPHY &
WEBLIOGRAPHY

BIBLIOGRAPHY

Mascarenhas, Romeo S, Business Planning and

Entrepreneurship
Management, Published by-Vipul Prakashan ,2017. Article-The
Economic Times News Paper

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 WEBLIOGRAPHY

Sharifi, Omid, PhD Scholar, Aligarh University, Understanding the financing challenges
faced by start-ups in India-Research Paper.

Start-up India- https://en.wikipedia.org/wiki/Startup India.

Economic Times Website-Challenges and Opportunities

Indian Startups: Challenges and Opportunities", Economic Times,

startups.in/sights/on-getting-published
http://www.indianstartups.com indianexpress, 2016 thehindu,
2016
https://economictimes.indiatimes.com/small-biz/startups/indian-startupschallenges-
and- opportunities/articleshow/45272. Accessed on 21.02.18 "5 Reasons Startup
Fail",Matrix Partners, 2016. http://www.forentrepreneurs.com/why-startups-fail/.
Accessed on 22.02.18.

Nasscom. (2020). Indian tech start-ups funding report 2020. Retrieved

from https://www.nasscom.in/knowledge-center/publications/indian-tech-start-ups-funding-
report-2020.

Pitchbook. (2021). Indian start-ups struggle to raise funds amid Covid-19. Retrieved from
https://pitchbook.com/news/articles/indian-startups-struggle-to-raise-funds-amid-covid-19.

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