5 Ways Startups Are Dealing With Impact of Covid-19 on Their Businesses
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Covid-19 virus pandemic and the ensuing countrywide lockdown has pushed most businesses to a grinding halt. Startups are no less impacted.
While some of the sectors like logistics, edtech, dark kitchens and consumer goods have either largely remain 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. During an online conference, 'How are Startups Gearing up for the Post-covid World’, organised by Entrepreneur India, four seasoned entrepreneurs share how are they trudging through the crisis and preparing for the post-covid world.
Mix Bag of Gains and Losses
For Mobikwik, an online payments and digital wallet company, 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 obviously benefits fintech startups like us,” said Bipin Preet Singh, founder and CEO of Mobikwik.
“But at the same time, big ticket purchases like for travel—from flight to train to cab bookings—everything has come to a halt. Similarly, e-commerce purchases barring groceries and medicines has also stopped. So, this has impacted digital payments substantially,” he added.
For Prashant Tandon, co-founder and CEO of 1MG, an online pharmacy, this crisis has turned out to be a structural positive disruption from a business perspective. “We are seeing unprecedented demand right now,” he said. But, fulfillment of orders is a major challenge. “Logistics is greatly hampered due to unavailability of workforce as a lot of people have gone back to the villages,” he added.
Opportunity in Adversity
A lot of startups 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, Zoomcar, a self-drive car rental startup, 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, ZoomCar.
Tandon of 1MG sees the current crisis as demonetisation moment for healthtech. “I think this is the time when all the value proposition of digitally delivered healthcare is clearly appreciated. And it's not on the way only in 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 own digital strategy.”
Qualitative Growth over Quantitative
Many experts have time and again criticized growth in terms of numbers that startups focus on these days. 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 focus will shift to ensuring quality and overall stellar unit economics. “Now, focus will have to go towards quality because especially in the mobility space, quality directly translates into better unit economics,” he said.
“Companies can take advantage in these times to ensure quality. For zoomcar, we've always had a very intense focus on IoT in terms of vehicle monitoring, driver behaviour monitoring. So, coming out of this type of crisis when people start to come back onto the road, we will focus on doubling down on this,” he explained.
Gearing up For Post-Covid World
Tandon said that for 1MG the biggest challenge for the next few months amidst the Covid-19 crisis will be cost rationalisation and fundraise. “The big challenge will be making sure that we keep our burn under control, economic strong and runways clear,” he said.
With transaction values going down despite increase in volumes, fintech companies as well as other financial institutions will face a big challenge of spurring consumption of users. “FinTech, especially digital credit, also benefits from the aspirational consumption of companies as well as of consumers. The aspiration to spend more by traveling, upgrading your phone etc will be low among consumers as they will be focused on saving, at least in the short term,” said Singh.
However, he still sees gain for fintech industry from the Covid-19 crisis. “Overall, digitization will lead to huge growth of fintech players.”
Boosting Employee’s Morale
Raghav Joshi, CEO, Rebel Foods believes that for most startups across industries one of the biggest challenges right now is how to handle employee morale at this point in time. “It's important startups 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.