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“Omicron” variant a Threat to the Startup Ecosystem

While the global business is yet to recover fully and people are still healing from the first two waves of the Covid 19 pandemic, it has again resurfaced with a third new strain. Omicron, the recently discovered coronavirus variant, has now become a new reason to worry worldwide. 

The World Health Organisation, classified a new variant of SARS-CoV-2, is currently spreading up in South Africa as a variant of concern. It is also claimed to be more powerful and probably can bypass the vaccine.

According to news reports, the new variant was first discovered in South Africa and was first reported to (WHO) from South Africa on November 24. The first known confirmed infection was from a specimen collected on November 9. Besides South Africa, several other countries like Germany, Israel, Australia, and others have detected cases of the Omicron variant in travelers. India, too, has started tightening its travel rules to prevent the transmission of the new variant as it had two clusters under – one in Maharashtra and another one in Karnataka.

Prime Minister Narendra Modi on Monday has urged people to exercise caution in the wake of the new strain. The PM also highlighted the need for monitoring all international arrivals, their testing as per guidelines, with a specific focus on countries identified as ’at risk’ to mitigate the spread of Omicron.

If this new variant leads to lockdown or restrictions, Indian startups having a great run in 2021 can be hit badly. In that case, India’s economy and businesses, in particular, should brace themselves for another round of slow down, job losses, and a drop in the country’s GDP.

Indian Startup journey 2021

India amid an unprecedented funding spree for Indian startups across sectors. 38 Indian startups have already made it to the unicorn club. Over $32 Bn has been raised until September this year, with several rounds producing Indian unicorns in 2021.

The unicorn story of 2021 is the one with many firsts, as the ecosystem witnessed the first health-tech, Social Commerce, e-pharmacy unicorns. The total count of Indian Tech Startups that have entered the unicorn club to date stands at 80.

Even this year, India’s startup sector has witnessed a flurry of IPOs, including One97 Communications (Paytm), which just completed its offering with an issue size of Rs 18,300 crore, making it the largest-ever IPO. Food aggregator Zomato, online insurance broker Policy Bazaar, online pharmacy PharmEasy, and fashion retailer Nykaa are also among the other notable IPOs set to take place in 2021.

According to Jayesh Ranjan, Telangana IT & Industries Principal, “Telangana has emerged as a top destination for startups, with approximately 400 startups currently operational in the state.”

Impact of restriction on Indian startups

Any restrictions imposed due to the new variant will have an adverse impact on the investor enthusiasm. Startups that have raised funds may not scale their business as planned and projected in the coming weeks and months. Further, businesses got back to normal office routine and may be forced to switch to Work From Home. The emerging situation could adversely impact startups that were looking to raise funding. They will now be hard-pressed or might also stall mid-flight due to a lack of support from the ecosystem or enablers.

Another round of restrictions will dry up the startup supply pipeline emerging from education institutions. Students and aspiring entrepreneurs may either pause their work or fail to collaborate on their ideas. 

“Omicron” the new COVID-19 variant, will adversely impact not just the entrepreneurs but the whole startup ecosystem. Thus, there is an urgent need among enablers to put in places measures that can come in handy for entrepreneurs.