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How Start-ups Are Dealing with the Impact of Covid-19 on their Businesses
Covid-19 virus pandemic and the ensuing countrywide lockdown has pushed most businesses to a grinding halt. Start-ups are no less impacted.
While some of the sectors like logistics, EdTech, dark kitchens and consumer goods have either largely remained untouched or are in fact thriving, most others need to prepare well to deal with the long-term economic impact coronavirus will leave on their businesses.
'How are Start-ups Gearing up for the Post-COVID World'- Insights from industry experts
Mix Bag of Gains and Losses
For Mobikwik, online payments, and digital wallet companies, the lockdown has meant a mixed bag of gains and losses. On one hand the platform has seen a surge in new users but on the other hand transaction values have taken a hit.
"Because of the lockdown, payment for a lot of essential services, like mobile, DTH services and broadband connections and gas and electricity bills cannot be made over the counter with cash. So, the lockdown has essentially forced a lot of people to enter the digital payments ecosystem, which benefits fintech start-ups like us," said Bipin Preet Singh, founder, and CEO of Mobikwik.
Opportunity in Adversity
A lot of start-ups are seeing new opportunities emerge in this crisis. For those who are not, they are innovating to reengineer their business models or are collaborating with other businesses to help the latter cater to the current demand.
For instance, zoom car, a self-drive car rental start-up, is working around B2B use cases to diversify. "We are collaborating with all the emergency essential services providers such as large food tech, logistics, and health tech players and government services to branch out our business," said Greg Morgan, CEO, and co-founder, Zoom Car.
Tandon of 1MG sees the current crisis as a demonetization moment for health tech. "I think this is the time when all the value proposition of digitally delivered healthcare is appreciated. And it's not on the way only on the consumer side but the behavioural change actually is of the rest of the ecosystem, be it institutions, doctors, hospitals, insurance companies, and pharma companies. Even more profoundly for the government or the regulator. So, all of them are now waking up to the fact that this is how consumers are going to engage with health care, and how quickly they need to adapt to this kind of a new reality," he said.
"It's a very significant structural shift in favour of digital health and a lot of healthcare businesses will have to move very fast and figure out their digital strategy."
Qualitative Growth over Quantitative
Many experts have time and again criticized growth in terms of numbers that start-ups focus on these days. A COVID-19 crisis may change that, believes Tandon. "This is a phase where people will look at fundamental economics and where the primary optimization lever will move from growth to sustainability and stronger economics across the board," he said.
This shift will be driven by the fact that the capital markets will demand this move, Tandon said. "Everyone now needs to be aware of where the next stage of financial support or capital will come from."
Morgan too believes the focus will shift to ensuring quality and overall stellar unit economics. "Now, the focus will have to go towards quality because especially in the mobility space, quality directly translates into better unit economics," he said.
Boosting Employee's Morale
Raghav Joshi, CEO, Rebel Foods believes that for most start-ups across industries one of the biggest challenges right now is how to handle employee morale at this point. "Its important start-ups ensure that their employees are duly motivated at a time when hikes and bonuses may or may not happen in the short term," he said.
Companies should figure out ways to not only keep their teams engaged and motivated but also to step up their efforts as there is no additional hiring happening, Joshi added.
These Indian Start-ups Have Raised Funds Despite the Hardships of The Pandemic
The last few months have seen a visible dip in the investments, and start-ups have been struggling with their residual cash flow. However, there are a few start-ups who have managed to raise funds in such unprecedented times .
Here are a few start-ups that have raised capital to keep their businesses afloat.
Bira91, the craft beer start-up, raised $30 million in April from Sequoia India and Belgium-based investment firm Safina as part of its ongoing Series C round.
Further, Sixth Sense Ventures – a Mumbai-based consumer-focused venture capital fund, Neoplux – a Korean private equity fund, and several high reputation family offices also participated in the ongoing funding round. The capital raised will be utilized to expand Bira91's India footprint, and consolidate its leadership position in the premium beer market in the country .
Earlier in April, Pune-based fitness start-up Fittr (formerly known as SQUATS Fitness) raised $2 million in Pre-Series A funding from Surge. The fittr was founded in January 2016 by Software Engineer Jitendra Chouksey.
The start-up claims to have been bootstrapped and profitable since inception. Last month, Fittr announced that it has crossed Rs 100 crore in gross revenue, on the back of an increase in paid clients in the financial year 2019 – 2020 .
Mumbai-based online beauty-turned-omnichannel lifestyle retailer Nykaa, in May, raised Rs 66.64 crore from its existing primary investor Stead view Capital. With the said investment, Nykaa is now valued at $1.2 billion, thus entering the start-up unicorn club.
Earlier on March 31, Nykaa had announced that it raised Rs 100 crore form Stead view. The funding came after the start-up had raised an additional Rs 100 crore from Singapore-based TPG Growth IV SF. Before that, it had also acquired fashion styling and e-commerce platform 20Dresses and raised Rs 113 crore from Lighthouse India Fund III, and another Rs 160 crore through primary and secondary share sales.
In May, a tech-enabled logistics aggregator for D2C sellers Shiprocket announced its Series C funding round of $13 million (Rs 100 crore). The round was led by Tribe Capital – a Silicon Valley-based investment firm, Innoven Capital, and existing investor Bertelsmann India Investments.
The latest capital infusion brings Shiprocket's total funding to $26 million. The investment made will be used by the Delhi-based start-up to fuel its aggressive product development roadmap, which includes hiring top talent across the data science and engineering domains. According to Shiprocket, the funds will also be focussed on its new initiatives, including international expansion .
Yoga and wellness start-up SARVA announced that it had raised an undisclosed amount of funding from US-based VC Fund Mantra Capital, and its strategic partner Patni Family in the last week of April. According to the start-up, the freshly raised funds will be used to accelerate its digital footprint.
Founded by yogi-turned-entrepreneur Sarvesh in 2016, the start-up is a growing yoga and wellness ecosystem built on the authentic foundations of yoga that focusses on mental, physical, and emotional well-being .
Meet the unicorn still hiring despite industry-wide layoffs and salary cuts
"The start-up ecosystem in India is going through a challenging period, resulting in some difficult organizational decisions. To play its part to support start-up talent, the talent acquisition team at Hike is mapping and prioritizing the candidates facing job and salary cuts for its current hiring needs," says Anshuman Misran, Hike's VP, Operations.
The start-up is also working on launching a social recruitment campaign to reach out to those facing "job crunches" in the coming weeks.
The hike is looking to hire for over 20 open positions across roles in product, design, marketing, AI, and ML (Artificial Intelligence and Machine Learning), engineering, partner functions, and user research; as it works towards the launch of its upcoming offering Hike Land.
According to Founder and CEO Kevin Bharti Mittal, with Hike Land, the company is looking to create a new online social experience in 2020, where your online avatar can "hang out" with close friends and significant others.
"We believe that human capital—that is our people—is greater than financial capital, which is why there are no salary cuts and no layoffs. We're probably one of the only start-ups that pay salaries as early as the 24th of every month," says Karan.