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COVID-19 impact | Around 70% startups have cash reserves to last a little over two months

Around 90 percent of the startups are facing a decline in revenues, according to a survey by NASSCOM.

May 19, 2020 / 05:33 PM IST

The startup ecosystem is bearing the brunt of the coronavirus-induced disruptions and many startups are battling depleting cash reserves, according to a survey by IT trade body NASSCOM.

Around 70 percent of Indian startups have cash reserves that won't even last full three months, the survey noted.

The report said that another 22 percent of startups have a runway for another three to six months, while the remaining 8 percent have cash for around nine months. Early and mid-stage startups have are the wort-hit by the coronavirus outbreak and the resulting shutdown in economic activity in India.

The ongoing nationwide lockdown has battered the economy, with small and medium businesses and startups having been hurt the most. As the country has entered the fourth phase of lockdown, the Centre has allowed for the limited resumption of business activity in areas with a relatively lesser burden of fresh COVID-19 cases. However, industrial units and firms in red zones will remain shuttered at least until May 31.

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

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There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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Around 90 percent of the startups are facing a decline in revenues as the lockdown has left them bleeding. Up to 40 percent of them have either temporarily halted their operations or are in the process of closing down, the report said.

However, B2C startups have felt the blow harder, with nearly 60 percent of them facing a possibility of a business closure.

NASSCOM conducted a month-long e-survey in April, to study and gauge the impact of COVID-19 on Indian startups. Over 250 startups with diverse profiles, ranging from retail and travel and transport to healthtech, edtech and fintech, were part of the survey.

"While governments have been working diligently to protect and save human lives, businesses have been hit and small businesses and start-ups have been the most affected," said Debjani Ghosh, President, NASSCOM.

The Indian startup ecosystem continues to be the third-largest tech startup ecosystem in the world, with over 9,300 tech startups that provide direct employment to over 400,000 people.

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Moneycontrol News
first published: May 19, 2020 05:04 pm

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