Funding crunch forces Indian start-ups to get creative

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Funding crunch forces Indian start-ups to get creative
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An online apparel store switched to selling masks when pandemic hit. FMTNews Flipkart

BENGALORE: Samik Sarkar was managing to eke a profit out of his online apparel store before the coronavirus crisis hit India, forcing the 36-year old to reinvent his business overnight.The rapid global economic slowdown, India’s coronavirus lockdown of 1.3 billion people and an exodus of venture capital are testing a start-up community that has quickly become one of the world’s biggest, raising a record US$14.9 billion last year.

A group of the top venture firms, including US groups Sequoia and Accel, warned start-ups this month that it will be “very difficult” to raise financing anytime soon. Data from Tracxn, which monitors start-up investments and financials, shows there were 1,406 funded start-ups in India in 2019, compared with 351 in 2008.

And with SoftBank, another major funder of Indian start-ups, facing setbacks elsewhere there is little relief expected from the Japanese technology backer. “We had big expansion plans just before this hit,” said Sujata Biswas, who co-founded Mumbai-based online clothing brand Suta with her sister Taniya.Suta, which saw sales triple for three years before India’s lockdown stopped all business, would be unable to stay afloat beyond a month and a half without a cash infusion, Biswas said.

BookMyShow, an online ticket seller, is promoting free-to-watch Instagram Live performances in an effort to keep its users engaged, while restaurant aggregator and food delivery firm Zomato is targeting a push into alcohol delivery.

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