A Venture Capitalist's Outlook On the World Beyond COVID-19
Any new ideas will face a tough germination ground with lower valuations and more stringent terms. Consolidation rather than growth will be the mantra.
It has been just over four months since the world started feeling the Covid-19 tremors and while we are nowhere close to the end of this great shake-up, experts of various fields are trying to predict what a post Covid-19 world will look like.
A New Paradigm
We are looking at a less global world with more ‘activist government’ in business decisions. Foreign trade policies will increase protectionism and countries will prefer to go for their own manufacturing and agriculture to be self-sufficient in food and to reduce dependency on other nations for base level survival. Additionally, there will be far reaching changes in the way humans interact including but not limited to lesser travel, public events and face to face interactions.
Start-ups will also do well to remember that the post Covid-19 world will depend more on local supply chains. Japan has already set up a $200 billion dollar fund to attract companies to set up manufacturing and factories in the country. It will be fair to assume that Indian policies too will aim at ramping up manufacturing within our shores. Start-ups should be ready to take advantage of this situation.
The jury is still out on how long it will take the world economy to recover but without a doubt, we are looking at several cash strapped quarters. As a direct result of this, VCs are going to prefer businesses with low CAC (Customer Acquisition Cost) for growth. Any new ideas will face a tough germination ground with lower valuations and more stringent terms. Consolidation rather than growth will be the mantra. Early stage start-up with lower fixed costs and scalable tech will have the potential to succeed in the post COVID-19 world.
Bright Future For Digital Tech
Covid-19 has had an unprecedented impact on any and all human interactions. As we move towards a more digital world, social distancing tech will be the next driver for growth and businesses that enable digitisation of existing business models or different processes and aspects of the value chain will receive a big impetus. These are the businesses that will receive all the attention and therefore the funding:
- Telemedicine and remote monitoring of patients
- Healthtech wearables and fitness apps
- Medical devices and new drugs
- Remote learning and testing tools
- Corporate training tools
- Gaming and e-sports as sports addicts move to online sports
Other than these, businesses dealing with cyber security, home delivery and digital content consumption are expected to prosper. Investments in health and medical technology will increase. Start-ups that have a substantial survival runway will succeed. But one thing is for sure, 10 years from now, Covid-19 will be seen as the inflexion point for digitisation solutions globally.
The New Vowels
Our Prime Minister, Shri Narendra Modi, in a blog post talks about redefining business and work culture on the five vowels of the English language: Adaptability, Efficiency, Inclusivity, Opportunity and Universality. In the coming days, many if not most VCs are likely to adopt these as their investment touchstones.For existing business, those that can adapt (move to digital payments) will survive and those that are solving genuine problems (digital tools to keep commerce connected) will thrive.
As efficiency will be more about getting a task done rather than time spent in office, government policies may encourage businesses that combat climate change, reduce the gap between the haves and the have nots and promote inclusivity. Businesses will benefit from predicting and being ready for new opportunities. Successful business ideas of the future will have global relevance and applications and ability to drive positive change for humankind.
Bhaskar Majumdar, Managing Partner at Unicorn India Ventures, is a seasoned media and technology executive and entrepreneur. In the past decade, Bhaskar has established himself as a well-regarded early-stage investor and adviser, especially in the UK and India. He has held senior corporate positions with Times of India, Zee Telefilms and Altavista UK.
In 2000, he started his first entrepreneurial venture, Recreate Solutions, a company within the digital media realm and backed by Insight Partners. After scaling the business, he sold the business to a US Systems Integrator. He has since been an investor in a number of technology and media early stage business through his proprietary fund, Heath Ventures, and has invested his proprietary funds in more than half a dozen start-ups in UK and India across media technologies, PaaS and social segments. He has exited businesses as an entrepreneur and as an investor and brings a strong sense of positioning businesses for exit.
An Alumni of IIT-Kharagpur and an AMP from Harvard, Bhaskar is very active in the angel community network in UK and in India. He brings an international flavor to Unicorn India Ventures and would enable early stage business in their international roll-out strategy as well as being potential targets for international business looking at strategic entry into India