HOW INDIAN STARTUPS WILL SURVIVE THE COVID-19 STORM

  • by Admin
  • 28th, Mar 2020

While most of India has recently started to realise the seriousness of the coronavirus pandemic and as the country goes into complete lockdown, the Indian startup atmosphere has been gearing up to survive the storm.

In every field of the business, from fundraising to clients to employees and suppliers, internet startups, like other companies, are struggling to cope with the impact of the corona virus. Some business startups are scrambling to save their businesses from a full collapse.

Chinese investors who have always been among the main backers of Indian startups in recent years, have put back their deals due to the outbreak. Domestic venture capitalists are postponing their making investments as well, as they had to cancel travel and meetings. Deal-making and breaking in the startup field includes a lot of travel as VCs housed in Mumbai, Bengaluru and the Delhi NCR, circulate among these cities, which contain the majority of the funded startups.

Big investment deals for companies involved in transportation, food, and grocery delivery are likely to be delayed or cancelled, because of the virus outbreak. Numerous small funding deals have already been postponed indefinitely.

Indian Startups that provide the services of flight and hotel bookings have been the worst-hit. The so-called gig-economy firms including Ola, Uber and Airbnb, too, have seen a drop in demand. Offices and other Co-working spaces in Bengaluru and Gurugram have already seen a fall in attendance since last week and now maybe complete zero attendance due to the lockdown. All these mentioned sectors will suffer more and more in the coming weeks and the travel sector is likely to see a huge fall for many months to come.

However, in some other sectors, startups are witnessing a sharp increase in business. Technology and Videoconferencing firms, for example, are adding more and more users as companies are conducting meetings online. Gaming apps, streaming apps and online education content provider applications are all reporting a good increase in users and the time spent by them on their platforms.

Demand for necessities, basic food and grocery is rising sharply as people are now in quarantine state, to the crisis. Orders at medicinal startups have increased hugely as customers are trying to stock up more drugs apart from hand sanitizers and masks. But, even these startups are facing serious challenges in their supply chains. Online pharma companies are likely to face a supply dip because of the lockdown in the Chinese city of Wuhan, the epicentre of the deadly crisis globally. Many Indian pharma firms depend on Wuhan city for the supply of active and main pharmaceutical ingredients , which are then in turn used to make finished drugs.

Grocery companies like Bigbasket and Grofers are facing a significant supply crunch as customers tend to stock up on essentials. Recently, Bigbasket’s app showed an “out of stock” tag on many essential items like atta, grains, milk, tea and other non-perishables. Customers of Dunzo and Bigbasket took to Twitter after most of their orders were delayed or actually cancelled even after they had been paid for. Lending startups have not yet experienced major disruption in their business. Soon, however, they will have to come to terms with a big irony: more and more people will now require loans even if the existing customers find it tough to make repayments.

Basically, Entrepreneurship is more of a big roller coaster ride. With the global pandemic we are facing, there have to have serious challenges to be faced by Indian startups. Snapdeal co-founder Kunal Bahl gives some exciting and worthy tips on sailing through the crisis:

  • Startups should conserve cash
  • They should become serious about customer acquisition spending. 
  • The companies should consider shortening the payback periods. 
  • They should avoid launching a new business then.
  • In this time, do pay attention to structural flaws in your organisational model. 
  • Solidify your startup culture. 
  • Start increasing capabilities. 

Coronavirus has challenged mankind on so many fronts. In the startup world, the championship cup will be between those who go for growth over profits.

The following things should definitely take place:

– The ‘owners’ of growth capital will slow down allocations. Everyone should save and preserve cash.

– Salaries, rental amounts, and committed costs cannot be left unpaid.