Experts advise that software startup should consider bootstrapping through this tough year, and rely on their savings and revenue. Startups should also consider “cutting costs—this may include a hiring freeze—and selling company assets or streamlining expenses,” said RS Maan, global chief revenue officer at New Delhi-based IT consulting company Codleo.

Firms could also request credit periods from vendors while reaching out to existing investors or family for support, said Prasad Sreeram, founder and CEO of intra-city logistics platform COGOS.

Then there are ways in which newer startups without an existing rooster of investors can make themselves more attractive.

“They can potentially go the angel investment route, make their offer better in terms of valuation they are asking for and the percentage of equity they are willing to dilute and let the investors own,” said Yugal Joshi, vice president of consultancy Everest Group. “They should also rework their pitch decks to layer in a colour of the pandemic and how it has not meaningfully impacted their business. If it has, they need to admit and be transparent to the investors and use that as an argument for revaluation.”

Fundraising is just one piece of the startup puzzle. The next question is, will investors get the chance to make lucrative exits?

Of mergers, acquisitions, and IPOs

Merging with a larger company should be an option that SaaS startups must explore right now when more funding is hard to come by, and existing investors may be looking at an exit strategy.

Take the case of the three-way merger of Indian hotel technology firms Repup, Hotelogix, and Axisroom in August. Hotelogix is a property management system specialist, AxisRooms is a distribution company, and RepUp handles guest experience. Together, the three can offer hotels a full-stack service.

The other option for raising funds could be an initial public offering (IPOs).

Last year was not a stellar year for IPOs in India as deal numbers and sizes shrunk significantly from a year ago. But a January 2020 survey by the Reserve Bank of India was optimistic that nearly six in 10 Indian startups were eyeing an IPO in the next five years. But Covid may have changed things.

“IPO activity slowed down amidst the pandemic. Companies with plans to go for IPOs are likely to adopt a wait and watch policy,” said Aurojyoti Bose, lead analyst at GlobalData.

In addition, several Indian startups consider IPOs cumbersome given their extensive paperwork and compliance requirements. And managing a company under the public gaze is no easy feat.

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