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Startups have been at the heart of venture capital (VC) funding for the past few years, and expectations were high at the start of 2020 but the entrepreneurial and investment ecosystem has not been spared by the coronavirus pandemic. In recent years, despite an environment of uncertainty and political-economic tension, great progress has been made in the venture capital space.
Startups in particularly hard-hit industries have found themselves at risk in these uncertain times as sales have softened and private fundraisings have proved more challenging. Founders had to look hard at their businesses, including their cash runways, forecasts, capex and assumptions, in order to weather the storm.
InnoVen Capital’s managing director and chief executive officer Ashish Sharma talked to Entrepreneur India and discussed how startups are being evaluated especially during the COVID-19 pandemic.
Near-Term Market Impact
The pandemic will directly or indirectly prolong to significantly affect business action levels and operations for startups for many months to come.
This will more than likely result in a decline in VC deal volume over the short to medium term, particularly for startups in the travel, ride sharing, workspace sharing, leisure and events sectors given the contraction in consumer activity and government responses to the pandemic. It has resulted in a pronounced uptick in activities in areas such as e-commerce, online entertainment and social media, online medical and health services, home working and education tools, and non-contact services such as robotics and artificial intelligence, particularly for supply chains and logistics.
“Because of the pandemic and consumer behavior, the demand and destruction has been very high and the recovery will take a long time,” Sharma noted.
While the consumer end-markets