April 8, 2020

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Startup Funding in Coronavirus – Reports and Case Studies

startup funding in coronavirus

The global pandemic coronavirus has affected more than 1million people till now leading to about 60,000 deaths. More than 26 countries got affected and are put under lockdown to prevent it from spreading. With the stock market falling, the lockdown is affecting almost each and every business. Startup funding in coronavirus is another big issue for the owner as well as the investor.

According to a startup data tracker company named Venture Intelligence, Indian startups got $354million across 34 deals in March 2020 while it was $714 million in February 2020. The start-up funding raised in coronavirus in March 2020 is almost half to that of February 2020. Amount raised in March 2019 was $794 million, thus it fell down by 56% in March 2020.

Startups raised an amount of $1.74 billion across 126 deals in the first quarter of the year 2020 which is 22 percent less than the same quarter last year and 7.5 percent less than the December quarter of 2019.

Startup funding in coronavirus outbreak can get even worse in the upcoming days. Generally, deals of $20 million or more take a time of 6 months to 1 year to close. For example – The largest deal of March 2020 is done by a health fitness startup Cure.fit raising $114 million led by swiss investor LGT Lightstone Aspada and Singapore’s sovereign wealth fund Temasek. But the deal had started in the month of November last year according to an investor.

The data for March 2020 consists of almost those deals which started before the coronavirus outbreak and got closed in March. We will get to see the real impact on startup funding in coronavirus in the next six months.

The chief executive of CB Insights, Anand Sanwal said in an interview that declines in funding are expected to be sharp in sectors such as – travel, hospitality, and retail while startups in the field of telehealth, disease diagnosis, and virtual learning can do better than the rest.

For example – TripActions Inc. which is a corporate level startup laid off hundreds of employees this week to counter the losses due to the coronavirus outbreak.

Startups are a major source of new technology and creating skilled workers for big companies especially in the field of technology such as – Artificial Intelligence, Digital Marketing, Robotics Process Automation, and Data Analytics. Without funding, many startups will fail without even emerging properly leading to loss of employment for many.

The managing partner at Arth Venture Fund, Anirudh Damani said in an interview that this is the biggest challenge for startups and VC industries where the priority of the company is just to survive the slowdown instead of growing or competing. He further added that investors need to be more careful for the next 6 months as no one has ever faced such a situation before, so the outcome is very uncertain.

As China is recovering from the pandemic while cases in India are rising rapidly, Indian founders should take reference from the experience of Chinese firms and entrepreneurs. According to top ventures and entrepreneurs from China and India, over communication and having a fixed routine can help startups to deal with the coronavirus effect.

Andi Chen, co-founder of a Chinese startup named Whales that provides software and tech solution to retailers said in an interview that- Things are getting back to normal now but during the lockdown of last 2 months, we gathered data daily, organized brainstorming session on how to operate during this period. He also said that founders should be more selective in hiring and should strengthen objectives and targets. He also advised that companies should not change overall sales predictions despite the virus.

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