Start-ups see no respite in sight as Covid-19 makes survival a challengeWith cash inflow at its lowest, start-up owners worry Kathmandu’s burgeoning start-up community will collapse.
Manish Jung Thapa, founder of Antidote, a start-up that rents clothing items, has had zero sales since the lockdown was implemented back in March. Thapa, 26, had only just begun his business when the pandemic hit, he says.
To keep his business afloat, the first thing his team did was reduce office expenditure and get everyone on the team onboard on working on half their regular salaries. It is now August already and his business still sees no signs of picking up, he says.
To adapt to such turbulent times, Thapa and his team have now added two new services to their portfolio. The first service they have added is that they have started using Antidote’s platform and market presence to sell products of more than 100 other independent entrepreneurs—tailors, bag manufacturers, jewellery makers, among others. The second service they have started is online fitness classes.
With a sharp decline in business, entrepreneurs say they are having a hard time trying to sustain their businesses. And entrepreneurs like Thapa are being forced to alter their business model to survive in this increasingly uncertain Covid-19-influenced economic market, as the situation is worse for businesses that have just come into operation.
Kavi Raj Joshi, founder and managing director of Next Venture Corp, said that though there is no tentative data as such, many start-ups are on the verge of collapsing. “Entrepreneurs have poured their ideas, energy and money into their business and today their businesses are almost dying. We cannot let Kathmandu’s start-up community die but the situation is such that business owners are in no state to sustain their businesses,” he said.
Cash outflow for employee’s salary, taxes payment, paying bank loan and rent have put to test the survival of start-ups, he said, adding that in comparison to the cash outflow there is no cash inflow, especially for start-ups working on business to business model (B2B), intermediaries start-ups and start-ups producing product and services that sustain consumers’ ‘want’ rather than ‘need’. Other start-ups across the spectrum, such as ones working with software development, are also facing difficulty. “Except for products and services that are directly related to consumer needs, companies are on the verge of closing down,” he said.
This causes grave concern for the start-up community based in Kathmandu as most of the start-ups centred in the Capital produce goods and services that specially fulfil the demand of its urban populace. And such needs have now become optional from the perspective of the consumer because of the pandemic.
Roshan Shrestha, the co-founder of Daami Music app, an online Nepali music streaming app, said that with the economy sliding downwards, people will not make purchases unless absolutely necessary.
“All our promotional activities got halted and we have not been able to take the business forward as we had expected,” added Shrestha. He adds that before the lockdown, his subscribers were gradually growing, as a result of social media promotions, but all that has now stopped.
And while big businesses around the world are letting go of its staff, Joshi says that laying off team members in a close-knit team is not an option for start-ups, as without the presence of one everyday operation will become difficult. Thus, business owners are being forced to take personal loans to pay the staff and their rent, he said.
“Coronavirus and its uncertainty has put a question on our survival,” he said.
To aid start-ups, the government, back in May, had announced that it would provide subsidised loans for agriculture entrepreneurs, women entrepreneurs and start-ups but the policy has not been implemented as of yet. According to the policy, the government will charge only two percent interest on loans given to start-ups. The government has brought forward such programmes but there is no sense of urgency, said Joshi, adding, “Start-ups are facing difficulty in managing cash flow on a daily basis. And until the policy is implemented, we don’t know how to survive.”
Shrestha said that judging by how things look currently, the start-up community in Kathmandu, and across the nation, are looking at difficult times ahead. But he is hopeful that things will become better and that he can sustain the business. To do so, he too has added a new service to his app, to attract more consumers: viewers can now also watch movies featured in this online music streaming app. “But if the same scenario continues, things will be more challenging,” he said.