Impacts of COVID-19 on startups and business in Nepal | A downfall of economy

Impacts of COVID-19 on startups and business in Nepal | A downfall of economy

May 09, 2020

Lockdown proves to affect major businesses throughout the world. And the situation has been even worse in the developing country like Nepal.

Most of the startups globally are threatened in what we call “red zone”: they have few months left for survival. Many very young startups live with only a few months in cash. The situation already before the crisis—but the crisis put 40% more of them in that precarious position.

Nepal is starting to endure the most abrupt and extensive cessation of economic activity due to outbreak of this virus. As per the study and analysis by the Asian Development Bank, the outbreak of this deadly disease will strike almost every sector of the Nepali economy, shredding up to 0.13 per cent off the gross domestic manufactured goods and rendering up to 15,880 people jobless while the startups remain another subject of concern.

The impact has by now started to surface in number of sectors like tourism, trade and manufacture linkages, supply and health. Especially the entire service industry: tourism, aviation and hospitality sector have been hit hardly by the epidemic.

The situation is disturbing. Although we are yet to experience full impact and aftermath of the COVID-19, this worldwide threat has already created economic insecurity among all of us. People are concerned as still we don’t know much about this deadly virus and how deep and pervasive the economic fallout will be.

The impact and the growth are not evenly distributed. On the positive side, B2C startups are about three times further likely to be in industries experiencing growth in the face of the COVID-19 crisis when compared to B2B startups. On the negative side, B2B startups serving great venture clients are more likely to be in industries adversely affected by the crisis than both B2B startups serving Small and Medium Enterprises and B2C startups; and are the least likely to be experiencing an increase in sales.

The startups have been affected severely with uncertainty of lockdown. The government planned on operating the industries with urgent necessities while other businesses remain shut down. This has created an inconsistency among businesses. From the startups perspective, the operating cost that incurred with setting up a working environment to the investment in assets and requisites are hard to overcome within a short relay even after the lockdown.

Nonetheless, tech startups are distinctively situated to continue operating even in lockdown scenarios. Unlike many traditional businesses, most of the startups responded that they have continued working during the crisis, even if there is significant disruption. If we also look at the startups that boosted themselves during this lockdown, most of them were found outlining their presence on Social Medias.

Although, this lockdown proved to be devastating for the businesses and economy, most of them have taken their time to re-organize their business module.


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