The Covid-19 crisis has severely affected the indian start-up ecosystem; but many start-ups are using it as an opportunity to grow their businesses.
By Dhanendra Kumar
According to the legendary boxer Mike Tyson, “Everyone has a plan, till they get punched in the mouth”. And, punched most of start-ups have been by Covid-19. Though badly bruised, many refuse to be knocked down.
Globally, India has the third-largest ecosystem for successful start-ups, behind China and the US. In 2019, Indian start-ups had raised over $11 billion. This was 55% higher than 2018 in value and 30% higher in deal volume.
According to the US-India Strategic and Partnership Forum, in the next five years, they could attract investment of over $21 billion, creating 550,000 direct and 1,400,000 indirect jobs. In February, some had planned to go for public issue over the succeeding months. Then came the Covid-19 pandemic, bringing with it global lockdowns, closed borders and stuck funds. This was reminiscent of Future Shock as described by Alvin Toffler, “a certain psychological state of individuals and entire societies” resulting from “too much change in too short a period of time”.
According to a recent NASSCOM study, out of 9,300 tech start-ups, most suffered severe impact, with the bigger impact being felt by early- to mid-stage start-ups. It was reported that “90% plus was facing a decline in revenues, 30-40% temporarily drew shutters on their operations or in the process of closing down and 70% had runway of less than 3 months”. This has a serious bearing on the emerging start-up ecosystem in India—both because of the highly intertwined nature of the businesses, and also because of the job losses. But then, entrepreneurship is all about taking risks and being nimble-footed to change course.
E-commerce and online service platforms have a quintessential role in enabling the new norm of greater distancing, and providing vital services in retail, health, education, finance, agriculture and marketing. As Covid-19 is likely to stay, work from home is becoming the new normal, as also the delivery of goods and services.
In these hard times, while some start-ups have temporarily wound up and either retrenched staff or kept them on hold with reduced salaries, others are working very hard, trying to reinvent themselves with existing staff and clients.
For instance, Zomato saw a decline in business since people were concerned about food safety. While it put in place measures to comfort clients about the safety of its food, it also saw a vast opportunity.
They expanded their business offering by focusing “heavily on a small number of large market opportunities in the food value chain”. Zomato launched grocery and essential delivery service, Zomato Market, across 185 cities in India. They are now about to launch it in the UAE and Lebanon. Additionally, Zomato is also entering into the home delivery of alcohol.
The travel unicorn MakeMyTrip (MMT) is introducing “Short Stays”, an innovative concept that enables travellers to stay in hotels for durations as short as a few hours. MMT, with Goibibo and Redbus under its fold, has also piloted a project in Tirupati where it offered this short stay for pilgrims. MMT is also coming up with co-branded cards with ICICI bank to make global travel a more rewarding experience.
While coronavirus has badly affected most sectors of the economy, it has decimated the travel and tourism industry for the present. With most airlines and hotels shut, even the biggest home rental company Airbnb has been busy redesigning its products. These include innovative products like lodging for medical professionals needing to quarantine themselves from their families, and similarly others needing quarantine or longer stays for medical recuperation as well as other localisation experiences.
The wipe-off of travel and tourism industry, which has come as a result of large scale closures of borders, ban on flights and even local flights requiring quarantine on arrival has completely disrupted travel plans of families. This has caused a big setback to hotels and taxis. Within the travel segment, particularly badly hit are the millions of tour guides around the world.
Interestingly, tourhq.com, which connects travellers with guides all over, saw its guides’ income freeze. To meet the challenge, they quickly pivoted and introduced “tourHQ Online Experiences”.
These are live, interactive experiences that can be enjoyed online. These experiences allow clients to feel the buzz of travelling and live experiences of safari with the guides, while, at the same time, providing those guides with much-needed sources of income. They have introduced several online and real time interactive experiences like “Harry Potter Travelogues” popular with kids, and live online interactive experiences in the local culture, music, dances, cuisine, handicrafts, etc.
Zostel, a Gurugram based hospitality chain has innovated by offering redeemable, credit-based travel packages for new-age travel seekers at nominal prices, anytime and anywhere, where Zostel partners (cafe owners, adventure companies, etc) are available.
Curefit, a health and fitness start-up, has launched online classes as its physical fitness centres and gyms had to be closed during the lockdown. This start-up has now launched paid subscription packages for its live virtual classes.
StyleNook, an online personal styling service for urban working women, was earlier focused only on their work wear. In the new normal of “work from home” they are expanding into newer areas such as loungewear, fitness wear and other categories.
Indian entrepreneurs are known for their resilience, “never-say-die” spirit and technological and managerial innovations. Taking their team along with empathy and supportive participation, dynamically tweaking their offerings and systems to cater to the needs of consumers and emerging markets.
It is no wonder that some of the best-known names in the investor circles like Steadview Capital, has aggressively invested in Indian enterprises despite the current stressful conditions. Steadview, in May, invested Rs 67 crores in Mumbai-based beauty-turned-omnichannel lifestyle retailer Nykaa, catapulting them into the start-up unicorn club.
As Ratan Tata said, “Ups and downs in life are very important to keep us going, because a straight line even in an ECG means we are not alive”.
IndiaTech, a professional association of Indian tech-enterprises has been active in articulating regulatory issues impacting them. The government has been supportive with measures on the anvil-like Startup India seed fund and a credit guarantee scheme. This crisis will also pass, as in the Amitabh Bachchan song “guzar jayega”.
Former chairman, CCI, & former ED, World Bank. Views are personal