Effects of COVID-19 on Indian Start-ups

The dire state of Indian Start-ups due to COVID-19

India is a country that can definitely be described as a haven for entrepreneurship, as it has the third highest number of start-ups in the world. With fast-paced innovations in technology, and rapid economic growth, it would not be wrong to say that India has the potential to become an economic superpower in the near future.

2019 saw an increase in the investments in Indian start-ups. According to major research firm Tracxn, $14.5 billion was invested in start-ups in the year 2019, an increase of more than 30% from 2018. More than 1000 start-ups were launched in India. 9 companies joined the league as “Unicorns”- companies valued over $1 Billion. Tracxn also believes that 60 companies are soonicorns, or soon to be unicorns, which means that they have the potential to be unicorns in the near future.

Growth of international investors in start-ups: by Tracxn

After the massive increases in investments in 2019, many experts expected 2020 to be a year with even greater profits. However, all expectations were subverted, due to the spread of the novel coronavirus or COVID-19, causing a pandemic that swept through the nation, causing massive damage to every facet of society. The virus resulted in a loss of human lives, but also crippled the economic sector of India- to the point where India witnessed the largest GDP contraction ever in the second Quarter (April–June) of FY2020–2021 at -24%

This also harmed the growth of start-ups in India; According to a report by Venture Intelligence, funding in March 2020 fell by a whopping 50%, which spells trouble for all stakeholders. The plight of the start-ups was exacerbated by a change in the Foreign Direct Investment Policy. The change was made on 18th April, 2020, in order to “protect Indian companies from acquisition during the pandemic by its land neighbours”. This means that any investment by a country sharing land borders with India would have to receive approval from the Government of India, or The Reserve Bank of India, before being made. While this is an admirable step from the point of view of protecting domestic companies from foreign, particularly Chinese, control, this also means that any investment made would take longer than usual. Additionally, 18 of 30 unicorns are backed by Chinese venture capitalists and investors. Chinese investments are valued at about $8 billion, far more than the investments made by the rest of India’s neighbours combined.  

Yet, some start-ups have benefited from this pandemic, and have helped alleviate the damage caused by it. The E-commerce sector has made massive profits- the grocery segment saw a 76% hike in sales due to the high demand for door-to-door delivery services. Tech giant Amazon also reported huge profits in 2020, as did other ecommerce vendors. Uber launched “UberMedics”, to provide transportation in order to support frontline healthcare workers, while Ola provided 500 cars to the Karnataka State Government as a show of support.

Why the discrepancy? Several factors could have caused this. The lockdowns in India drastically affected the production of goods, which caused damage to the supply chain, thus hurting industries. In contrast, tech start-ups soared in value. Zoom, a hitherto relatively unknown company, became a household name over the course of a few months. Its value increased by 569%, raising its market cap to $129 billion, which means that it is one of 20 biggest tech companies in the USA. Zoom is but one example of a tech start-up that increased in market value. Still, the economy as a whole was suffering.

COVID cases reduced from November 2020 onwards- this gave the economy breathing space. However, it was a short-lived relief as India was hit by a second wave, often described as a ‘tsunami’, which brought with it mutant strains of the coronavirus.

The second wave of COVID has also negatively impacted the economy, albeit on a smaller scale, as industries are still functioning to a limited extent, and the chain of supply has not been completely broken. Vaccination drives for adults were also started on May 1, 2021, which will go a long way in helping the nation combat the pandemic.  Thus, things are beginning to look up for the economy. It is likely that India’s GDP will reach 2019 levels by 2022, after which start-ups will also most probably witness an increase in investments.

Black Fungus- the illegitimate child of COVID that appeared after 13 years

A short blog post about Black Fungus and its spread, symptoms, etc.

Mucormycosis Black fungus: All you need to know about the black fungal  infection symptoms, treatment and prevention
Image from The Times of India

COVID-19, caused by SARS-CoV-2, is the first pandemic faced by humanity in 10 years. First discovered on New Year’s Eve in 2019, the virus has wreaked havoc. As if causing untold damage to the economy, to the healthcare system, and to humanity as a whole wasn’t enough, it mutated and created variants that were both, more dangerous, and more contagious. Now, however, we may be facing something far more sinister- something that would be right at home in a post-apocalyptic movie.

A horrifying infection, mucormycosis, or black fungal infection, seems to have ‘resurfaced’ in 2021, as reports are being made of patients contracting it. In Maharashtra, news media reported that 200 patients who had recovered from COVID contracted mucormycosis, and 8 of them died. The threat posed by this disease and its symptoms is enough to plunge even the most optimistic of minds into despair, and seems to be increasing day-by-day; Gujarat recently ordered 5,000 doses of Amphotericin-B medicine to combat it.  

Black fungal infection causes facial swelling on one side, a splitting headache, nasal congestion and black lesions in the mouth, and an extremely high fever. The infection has a mortality rate of 54%, and spells certain doom for those infected by it, if it reaches their brain. To prevent the infection from spreading to the brain, some patients have undergone surgery to have their eye removed. The sheer danger of this disease makes the loss of an eye seem like a trivial sacrifice.

Of course, mucormycosis isn’t a disease caused directly by the virus. In fact, it was first reported by a 2014 study of a fungal outbreak in a pediatric hospital in 2008, where 5 children met their demise due to it. Scientists speculate that the anti-immune steroids taken by COVID patients to reduce inflammation also weakened the body’s immune response, leading to them contracting the fungal infection.  For similar reasons, diabetics are particularly susceptible to it, owing to their compromised immune system. Thus, they, and people with compromised immune systems, should be especially careful about maintaining social distancing rules and wearing masks.

Hopefully, with mass vaccination drives taking place, and with lockdowns being enforced more strictly throughout the nation, we can hope to see an improvement in the condition of the country. For now, all we can do is pray for our ‘happy ending’ to this dystopian movie we seem to be stuck in.