There is increasing travel restrictions and slowing of business worldwide due to the novel Corona virus.So investors are expected to fund Indian startups this year. Companies are now looking to close their rounds as soon as possible or launch contingency plans. It has had an effect on startup funding.
Due to travel restrictions, video and teleconferencing calls have replaced face-to-face meetings. Many companies have asked their employees to work from home or remotely. This delays decisions and places greater emphasis on financing. This will ultimately affect the flow of capital to startups funding outside India.
Effect on Startup Funding during COVID-19 pandemic
The first financial year is crucial for startups, as companies need to hold internal meetings and reach investors. However, due to the cancellation of outdoor activities, a partial ban on unnecessary travel and a general reluctance to engage in personal communication, networking opportunities are unlikely.
These networking events give them access to business angels and HNIs. So this is a big challenge for Indian startups looking to raise funds. While seed funding may not be effective, it is more difficult to secure funds. This is because such investments require many meetings with investors and investors.
Funding and their Consequences during COVID-19 Pandemic
Although the COVID-19 is the biggest contributor to the slowdown in transactions and business activity today, the country is still struggling. Investors expect the 2020 mega technology and venture capital deals to slow down after the worst IPOs for tech companies and co-workers.
In increased risks during and after the COVID-19 phase, the startup Fund is interested in investing in low-risk assets. They are particularly looking for employment-certified and under-leveraged assets. For projects that meet these criteria, interest rates may be closer than ever – about 14-15 percent.
What Experts say about Startup Funding during this Time
Now most smart investors continue to invest. Dry powder is still there and it should be carefully invested. Finance providers want to invest in the lowest risk assets. Especially, those who have completed assets with a job certification and a low group level loan.
For projects that meet these criteria, interest rates may be closer than ever – but for others, the rate may be higher. According to another real estate developer, public sector banks start financing for the real estate sector, as financing becomes easier to obtain.
Whats next in Startup Funding
Investors study this effect. In the residential space, there are wage cuts and job-related uncertainties. The trend toward a significant reduction in consumption, especially in relation to long-term commitment. Foreign and domestic funds also play a role. Experts believe that most lenders in the market are offering competitive loans. Banks fill cash flow and offer lower interest rates. Fund managers agree that no new transactions are taking place at this time. No one is assessing new transactions at this time.
Everyone is trying to conserve cash or close the funding round as soon as possible. If there is an opportunity to engage with a domestic player who has a strategic interest in mind, obviously that’s much more useful and beneficial.