The COVID-19 pandemic has emerged as an alarm signal for Indian start-ups. Now they have their own checklist to assess their potential investors. A key requirement is that the investor should not come from China. A recent report by Innoven Capital shows that the ability of an investor to track with more funding was the number one priority for the founders. This appeared to be a more important requirement than the conditions set by the investor in place of the money offered. The pandemic caused several startups to abruptly shut down for months and the liquidity left in their banks suddenly started to shrink. Thus, the founders want to know that the investors on their capitalization table are prepared to pay more money in the event of a crisis.
This year, the capacity to monitor funding has increased and the reason was COVID-19. There was a total market disturbance for at least four to five months. Once the founders go through an event like this, they gain a greater appreciation for having investors who have the ability to sustain , where the outdoor environment is unfavorable. In 2020, major investors including Lightspeed, Sequoia India, Chiratae Ventures, closed their funds during the pandemic. During the pandemic, the bulk of the funding went to companies that are already doing well or are already supported by notable CVs.
For the next 4 years starting from 2020-2021 Startup India Seed Fund Scheme (SISFS) has been approved.Implementing from 1st April 2021 ,Rs.
945 Crore corpus will be divided over the next 4 years for providing seed funding to eligible startups aiming to provide financial assistance to startups as proof of concept, prototype development, product trials, market entry and commercialization.The scheme is expected to support about 3600 startups.Numerous proposals made under Atmanirbhar Bharat Package are supportive for many Startups.Those proposals are: RBI(RESERVE BANK OF INDIA) PAYMENT SCHEDULE for Term Loans and Working Capital FacilitiesAll co-operative banks, all commercial banks (including regional rural banks, small finance banks and local area banks) & all-India Financial Institutions, and NBFCs (including housing finance companies) (âlending institutionsâ)was permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020 in respect of all term loans (including agricultural term loans, retail and crop loans).All lending institutions were permitted to extend the moratorium by another three months i.e.
from June 1, 2020 to August 31, 2020 for payment of all instalments in respect of term loans in consideration with the of the extension of lockdown and continuing disruption on account of COVID-19.Lending institutions were permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 up to May 31, 2020 in respect of working capital facilities sanctioned in the form of cash credit/overdraft .Furthermore extension for this was granted until 31st August 2020.Kamath Committee: Under the chairmanship of Shri K.V.
Kamath an expert committee formed by the Reserve Bank of India (RBI) to prepare suggestions & solutions on the required financial parameters to be factored in the resolution plans under the âResolution Framework for Covid19-related Stressâ along with sector specific benchmark ranges for such parameters.
With their recommendations RBI has specified five specific financial ratios and the sector-specific thresholds for each ratio in respect of 26 sectors to be taken into account while finalising the resolution plans.
Easing of Working Capital Financing  The lending institutions may recalculate the âdrawing powerâ by reducing the margins and/or by reassessing the working capital cycle in concern of the borrowers facing stress on account of the economic fallout of the pandemic,for their sanctioned working capital facilities.With respect to the economic fallout from COVID-19 further accounts will be provided relief under these instructions with subject to authorised analysis.Parameters for Businesses & MSMEâs  Rs 50,000 crore Equity infusion for MSMEs through Fund of Funds.Rs 3 lakh crore Emergency Working Capital Facility for Businesses, including MSMEs.Rs 20,000 crore Subordinate Debt for Stressed MSMEs.New definition of MSME: The financial structures are reshaped for  Micro manufacturing and services unit as Rs.