Startup Statics are showing a grim future: the majority of the startups are running out of funds, and desperate measure like layoff is being taken to prevent further financial strain. In this era reigned supreme by COVID-19 and video conferences, are startups only set for doom? As scary as it may look, this also has another side and there are startups that have experienced growth as well.
Problems Due to COVID-19:
1. Economic Recession: World bank forecasts tell a gruesome tale: the economy is set to shrink by 5.2% this year, the worst fall since world war 2. And this is going to have a major impact on the fundings startups receive. Funding is a crucial factor when it comes to Startup success, putting it bluntly: many startups are going to fail.
2. Lockdowns: In order to flatten the curve governments have imposed lockdowns. And not being able to meet in person or have businesses working means that production has slowed down or stopped entirely. This is hard on companies and worse on startups.
3. Loss of Jobs: An estimated 122 million people have lost their jobs due to COVID-19, in India alone. This means that people have less spending ability.
Struggling Startups: "70 percent of start-ups stated that their businesses have been impacted by COVID-19. 12 percent of the start-ups have shut operations and 60 percent are operating with disruptions", a research conducted by FICCI jointly with the Indian Angel Network said.
There are some industries which have suffered more than others:
1. Aviation and Transport:
The aviation industry is the worst hit by the COVID pandemic and startups from this industry, like travel websites, or startups that were developing different ways to air-travel have also suffered.
2. Hospitality:
Startups like Oyo, Airbnb which catered to travelers are also suffering due to the multiple travel bans imposed. And other startups related to hospitality are also destined to the same fate.
3. Retail:
Due to various lockdowns and the concept of maintaining a safe distance, retail shops have suffered, and companies which relied on these retail shops as well.
4. Clothing:
Fashion isn’t a necessity, and with the shrinking economy at hand, fashion brands are suffering due to a lack of costumers.
5. Food:
Many restaurants have closed down due to a lack of demand, and only the essential core of the food industry has stayed unaffected.
6. Automobile:
With a slowdown in the economy, many automobile startups like ola, faraday are facing losses.
That said there are also startups rising from these industries which are taking advantage of the pandemic and establishing themselves as a necessity during these tough times.
Startups That Are Experiencing Growth:
The pandemic, in general, has a negative effect on industries, but some industries are exempt from these rules. These industries are necessities during the pandemic and hence people are willing to spend more money on these. These industries may or may not have grown bigger, but are close to at least pre-pandemic levels.
Industries:
1. Health
With a worldwide health emergency in play, it's a huge opportunity for the health and wellness sector to place itself as a necessity among the users. Branding themselves as a pivotal and much-needed support mechanism, this industry is already on a rise to becoming the one with most growth perspectives in the future.
2. Financial Services
One thing that's inevitable in the upcoming days is an all-time economic low. In such times, the regulated financial service providers have a pivotal role to play.
3. Sanitation
Another need that came up due to COVID was the need for hand washes, hand sanitizers, and the need to prevent the virus from harming us. As an irreplaceable Industry, this has seen a boom in growth, with startups and other major companies emerging.
4. Online Education
Online education has come up to be the need of the hour when schools and educational institutions are not allowed to function. Irreplaceable, the online education sector is observing a sudden surge, and people looking up to alternatives to conventional teaching and learning.
6. Online Retail
With national lockdown imposed in various countries, social distancing being practiced as the new normal for upcoming months if not years, and people refraining from gathering up at markets, grocery stores, and public places, the E-commerce & Delivery based sectors are booming at large.
What’s After
To read more about this topic, check startups impacted by Covid19. Covid-19 is an unforeseen and unprecedented situation that has turned the world upside down. And like every major disruption, it is pushing the industry’s boundaries of resilience. As the business world slowly gears-up to reach pre-pandemic levels we can say with certainty that it is going to be harder for industries to survive. Only those companies and startups that prove themselves to be essential will make it out.
Written By - Joshua
Edited By - Vaibhav Sharma
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