While the entire world is injured from deadly Sars-Cov-2 Virus commonly known as COVID-19 the Indian start-ups are bleeding severely every day thereby nearing a major seizure. There is no denial in the fact that the Indian industry is shackled extremely by Corona pandemic followed by lockdown. But the business that deals with services and consumer space like Legal start-ups which were in the early and mid-stage business phase got terribly hit. A two month long survey conducted by NASSCOM (National Association of Software and Service Companies) revealed that out of 250 start ups which were taken as research base in different sectors 40% of them had temporarily halted their operations or facing the threat of shutting down with merely70% having appropriate cash reserves to last less than 3 months.

The situation is such that no one can be blamed, because we don’t have an appropriate precedent to apply or learn from to overcome this stagnant situation. What start- tups are aiming now is to survive by managing with a meagre cash flow hoping for a better tomorrow. The after waves of the COVID-19 has made the economy witness a sudden drop in the supply chain provoking the demand chain also to fail. This rigidness in the working of the entire invisible forces of the economy, the failing global market, scare cash reserves and slump in the marginal profits is creating a reckoning effect on start-ups and people associated with it. This devastating effect is clearly proved when one sees the figures. There was a dramatic surge in the investments in Indian start-ups to dollar14.5 billion in 2019 when compare to $550 million as in 2010. The investments in India fell from 1.73 billion in March,2019 to merely 0.33 billion in March,2020. With some maths one can figure out there has been more than 80% drop in Investments in the country. The present step undertaken by the start up eco system has been striving their best to adapt continuously to the present situation as flexible as possible thereby creating an environment which can open up for interrogation and innovate themselves in the best possible way and diversify their business techniques and its operations. Yes surviving this downturn is not an easy catch for any start up and it is indeed a harsh reality.

It is important to note here that legal start ups fall under B2B (Business to Business) as well as B2C (Business to Consumer). With the current trends and research done by Local Circles, it was conclude that the situation of B2C is very vegetative in comparison as these are small legal start-ups which is entirely dependent on Consumer base. B2B start-ups are facing lesser money churn and few showed a slight improvement in their revenue generations. This is because of the recent government promotion in e-filing system for judicial process backed by stronger and richer client base, and wider access to the new technology and proper mobilisation of capital had made this possible.  

As Debjani Shosh,, the president of NASSCOM said ‘The government should pave more way to provide access to working capital, ease compliances and fiscal policy and funding support.’. Not keeping the fact aside the government has tried to bail out start ups at their best amidst this crisis mainly through their COVID relief Budgets announced by Finance Minister Nirmala Sitaram and saw a massive support for MSMEs(Medium and Small Enterprises). The cabinet has approved Rs.3 lakh crore emergency credit line to MSMEs to sail through this crisis. But the stagnation of resources and sudden halt in the flow of Foreign Direct Investment (FDI) has made the chances for survival on draw of card basis for majority of start-ups. The hounding debts of operational creditors and other defaults add to the existing encumbrance.

Taking into consideration the existing impediments the numerous financial and operational challenges faced by start-ups the Small Industries Development Bank of India (SIDBI)which is acts as the implementing agency for the ‘Fund of Funds’ for start-ups has promulgated a ‘COVID 19 Start-Up Assistance Scheme intended to provide assistance to eligible start-ups that have been able to successfully prove their ability to implement innovative changes so as to ensure the business continuity amidst the COVID-19 crisis toll, at the same time ensured the safety and security of it’s employees financial stability.

Eligibility criteria under the Scheme includes the following start-ups that have:
1. at least 50 employees;
2. a positive net worth;
3. received funding through SEBI registered alternate investment funds or VC/PE/Angel funds that invest in start-ups;
4. a minimum turnover between INR 20-60 crores (for the Financial year 2019 and Financial year 2020);
5. been incorporated for less than ten years; and meets the requirement of the promoters and, or founders of the start-up having invested their own capital in the businesses.

As per the scheme, the start-ups that were EBITDA positive in December, 2019 or, project a positive EBITDA for the quarter ending June, 2020 would also be included.

The eligibility criteria under the scheme is not as solacing as the scheme especially for start-ups who are stuck in the ugly middle position. A large number of start-ups will be unable to avail this these credit facilities under the present Aatmanirbhar Bharat Scheme even if they are registered under the MSME. This is mainly because of the requirement of existing debt loans on their books to qualify while majority of them work with Venture Capital Funding making them ineligible for such government scheme. To add to the burden, the unending chain of paper works is way out of reach for these beginners. This point us to what NASSCOM concluded with their research and survey that more than 90% of start-ups are at the verge of shut down. ‘The Start-up Pulse Survey’ showed a decline of over 80 percentage decline in revenue among 34 percent start ups too. 

So, the need for the hour is to ensure the survival of these start ups for which the required assistance shall reach their bank accounts on time. Such assistance will ensure that no worker gets under paid or laid off. The government has to create more market in the economy, the boosting of the existing forces is a lot reliant on the government. The government should improve it’s effects to bring back and increase the flow of Foreign Direct Investment (FDI). In addition to all this the government should pave more way to interim financing, relief packages especially MSME relief ones and coach start-ups on fund-raising, restructuring, business continuity plans, re-designing business processes and so on. The existing moratorium on repayment of loans and it’s interest should be extended and the burden of taxes should be relieved accordingly. Just because the government announced packages doesn’t mean that the responsibilities are lifted from the shoulder. It should be made sure that these funds reach the start-up pockets on a timely basis with out delay. It is very suggested that the government try to ease a bit on the sophisticated policies it has drafted for availing these grants as discussed in the previous paragraph which has proved difficult for many start-ups. This is a time which emphasises the need to stand and work together. “First Employee Safety, Second Business Continuity, and third, liquidity and runaway a key” should be our present agenda. And as Abraham Lincoln said ‘This too shall pass’, it’s just a matter of time before a better tomorrow.