With more than 50% of startups in the Maldives have a runway of fewer than 2 months with many startups witnessing a decline in revenue due to the COVID-19 pandemic, it has now become a scenario of die or dont for the ecosystem
The survey was conducted by Sparkhub LLP to assess the impact of the COVID-19 pandemic on the Maldivian startup ecosystem, which was conducted from April 30th to 11th May 2020. Startups from different growth stages participated in the survey which reveals that the pandemic has had a huge impact on the local startup ecosystem and has now become a challenge for the survival of most startups in the Maldives.
The survey shows that nearly more than 80% of startups had witnessed a revenue decline, with 50% of startups having a runway of fewer than 2 months. 90% of startups have also recorded a drop of customers with 50% of startups reporting salary cuts within the company, according to the survey.
With the unavoidable lockdown & economic crisis due to the pandemic, along with the decline of tourism which contributes to two-thirds of the country’s GDP, the survey also records that it has had a significant impact on the purchasing power of the primary target markets of most startups. The disruption is also highly felt, due to the pandemic, across the value chain with many startups reporting difficulty and struggle in finding new project pipelines and also scaling their businesses.
Most of the startups who took the survey are seeking financial support from the government to overcome the situation caused by the pandemic for business growth and survival.
Under the SDFC “COVID-19 Viyafaari Ehee” program and through the income support programs, the government is currently supporting the startups to overcome the financial burdens. However, the survey highlights that many startups seek technical support on forecasting, cash flow management, revenue generation and new market penetrations.
The COVID-19 Pandemic and the subsequent lockdown during the survey period had resulted in a weaker response to the survey as most of the startups were pivoting or working on mechanisms to overcome the business shutdowns.
51 Startups participated in the web-based survey and Spark Hub LLP ensured that most of the notable startups established in the Maldives took part in the survey and also a representative startup from each sector was able to complete the survey.
The impact of COVID-19 has caused many startups to shut down or cease their operations. This has been a challenging time for startups globally as noted in the latest report by Startup Genome.
Sparkhub LLP is postponing the Startup Summit planned for this year and would be announcing the new date in the coming future.
Download the full report here.