[The Outline By Inc42 Plus] #StartupsVsCovid19 — 2.0

[The Outline By Inc42 Plus] #StartupsVsCovid19 — 2.0


How another round of lockdowns and curbs will impact startups

Dear Reader,

The country has learnt to fear PM Narendra Modi’s 8-9 PM announcements. When he stood on the podium to share his message amid the second wave of Covid-19, citizens waited with bated breath for a signal that would kick-start another nationwide lockdown like last year. Already suffering from a shortage of medical supplies, people did not want to take any chance with household essentials.

Not unsurprisingly, grocery delivery startup Grofers saw 600,000 carts waiting to check out at the slightest hint of another lockdown. Fastest finger first is no longer a game — it has become part of our survival strategy. Incidentally, Grofers has introduced a change in its backend algorithm to prevent hoarding, while foodtech major Zomato has introduced a feature to prioritise deliveries related to Covid emergencies. 

#StartupsVsCovid19 — 2.0

The battle for survival is no different in startup land. When the Covid-19 pandemic hit the world in 2020, it was feared that many startups would shut shop, and a short-cash runway would see many unicorn dreams shattered and gone. 

Despite the unprecedented calamity, several sectors such as grocery and food delivery, ecommerce, edtech and fintech continued to flourish, raking in $7 Bn+ in funding from April 2020 to March 2021 as a new wave of adoption brought thousands of first-time users on to these digital platforms. Yet, that success did not come easily. Startups had to fight tooth and nail to overcome the first wave — a journey that we meticulously captured in our coverage #StartupsVsCovid19.   

Interestingly, startup funding in India revived to pre-Covid levels in the quarter ending March 31 as the ecosystem saw $4.1 Bn being pumped in across 311 deals compared to Q1 of CY2020 when the same amount was raised by 212 startups. Moreover, the current calendar year has seen a unicorn being minted every 11 days, and 10 new startups have already entered the coveted club.

But there is another side of the story. According to Ankur Pahwa, a partner at the consulting firm EY, a sizable portion of the new and digital users went off the startup platforms with the easing of curbs and a decline in Covid-19 cases in the last two quarters of FY2021. “While there is less headroom for a similar spike of first-time customers in these sectors, users who left earlier are likely to return to these platforms,” he adds.  

If the second sweep of the pandemic means a mass return of users to digital interfaces, it also means teams have to continue working remotely. Some of the startups that spoke to Inc42 said that of late, a few employees were coming back to the office on their own accord. But the second wave has put an end to that. “We had just begun to return to the office when the second wave hit. Now the premises only have computers at work,” tweeted Vikram Chandra, founder of the AI-based news platform Editorji

Of course, the world has learnt to assign, track and complete workplace tasks virtually. Meetings are now easier to attend, thanks to Google Meet, Zoom and similar platforms inspired by them. Even then, virtual working has its constraints in the startup world where elevator pitches, chance encounters at networking events and conversations over coffee or beer can yield valuable ideas and deals.

#StartupsVsCovid19 — 2.0

Founders Battle Covid-19 On Multiple Fronts

Be it work from home or office, what concerns founders most is battling resource crunches in their teams. As the second wave spreads like wildfire, it is only expected that each employee at every company is at the risk of contracting Covid-19. Already, Twitter is abuzz with founders calling for resources to help team members in need. That is why founders are trying to get their employees vaccinated at the earliest. 

Ashish Tulsian, cofounder and CEO of Delhi-based Posist, a restaurant automation startup, says that the company has already got its management-cadre senior employees vaccinated. It is now working on getting the jab for younger employees as soon as vaccination starts on May 1 for people aged 18 and above. 

Many founders are also trying to arrange medicines, oxygen cylinders and hospital beds for employees and their families in need. Running a startup with limited resources and high growth targets is challenging enough. Now Covid has added a whole new to-do list to a founder’s daily itinerary. So, how are they coping with these pressures?

“Uncertainty is part and parcel of a founder’s job. We have signed up for it, and there is no going back. But there is at least one bright spot this year — the unknown variables are fewer. When Covid struck last year, many of us were questioning whether life as we know it would continue after the pandemic. Would people still go out to dine? Those doubts have been put to rest,” observes Tulsian.

Although that is some measure of comfort for any entrepreneur, the pressure of juggling too many balls amid the pandemic is certainly taking its toll on both founders and their teams, says Amit Malik, owner of the Mumbai-based mental health startup InnerHour. 

“Founders are managing the fears and frustrations of a young workforce who is beginning to realise that people in their age group and similar state of health are losing their lives. Also, running an organisation has become tougher due to a constant change of plans. While the data from the current wave can only help us a few months from now, what we already know is that 60% of the business leaders were facing mental health issues at least once a week last year,” says Malik. Therefore, a more dangerous spread of the disease and the rising pressure are bound to result in a worse psychological toll on entrepreneurs this time around.

Making new hires is also worrying founders. When the pandemic struck last year, businesses across the startup ecosystem were forced to go for pay cuts and layoffs. Even a unicorn like OYO, with global businesses and a valuation of more than $9 Bn, was reportedly mulling 5,000 job cuts. But as infections eased late last year, stories abounded on social media about how startup hirings were picking up the pace, and the bidding war for talent was flourishing.

Although some companies may go ahead with their hiring plans, will it be a consistent phenomenon across the ecosystem? Sripad Vaidya, cofounder and COO of online train ticket booking startup ConfirmTkt, says he is not planning to hire new people. “I would rather make sure that everyone in our 30-member team continues to get paid at a time like this.”

#StartupsVsCovid19 — 2.0

A Few Sectors Will Bleed Again

Vaidya’s cautious approach makes sense as there is a 50% drop in train ticket bookings in April compared to March, and cancellations have risen 30%, he says. The travel tech industry was hit hard last year when nationwide lockdowns brought the sector to a standstill. Things are different now as the central and state governments have not issued a blanket ban on flights or train services yet. But they may be forced to do so amid rising infections.

Air travel companies are already feeling the heat. According to the Ministry of Civil Aviation, 170K domestic passengers flew on April 19 compared to roughly 280,000 passengers who flew on March 21. These numbers are well below the 400K+ domestic travellers whom Indian carriers regularly flew on a typical day before the pandemic.

This also means that the slow recovery witnessed by travel tech startups will again come to a screeching halt. For instance, listed online ticketing startup MakeMyTrip revealed in its quarterly report that its revenues from selling air tickets and hotel packages had risen from $5.2 Mn in April-June to $51.2 Mn in Oct-Dec last year. Its rival Yatra.com also saw a hike in business, from $2.5 Mn to $7.4 Mn in the same period.

So, what lies in store for travel tech startups? 

“We have to adjust to this new reality of Covid. Earlier also, there used to be high seasons and off-seasons for travel. The sector has to acclimatise to increasing activity when infections slow down and vice versa,” says Vaidya.

Rahul Khanna, founder and managing director of Trifecta Capital, a Delhi-based venture debt firm that has invested in travel and mobility startups such as Shuttl, Chalo, CarDekho and Cars24, thinks that early-stage startups in these sectors will face the brunt even though investors make long-term commitments to stay with companies that have achieved a certain scale. 

“In sectors like travel and mobility that have a large addressable market, there is huge headroom for growth. So, investors will see past Covid and look to take three-five-year long bets in companies that have sufficient scale and have shown unit-level profitability in the past,” he adds.

Of course, the second wave will make survival for young startups a lot more difficult. Founders will have to make tough choices. Investors will have to repose their faith in the strength of India’s economy, which may bounce back faster and stronger. And the unsung employees of startup land will have to cover for their peers when they fall ill. But one thing is for sure — everyone will hustle and put up the good fight.

#StartupsVsCovid19 — 2.0

Tech Ecosystem Lends A Helping Hand 

As new Covid cases rise, the healthcare system has come under severe pressure. Patients cannot find hospital beds; hospitals are running out of medicines, plasma and oxygen cylinders, and most worryingly, the surging Covid figures may still be less than the actual numbers as testing is failing to catch up.

Understandably, startups like 1mg, MFine, Healthians and Portea Medical, among others, have seen a huge spike in Covid testing demand. Dr Varun Gupta, senior vice-president of 1mg Technologies that recently raised funding from the Tata Group, told Inc42 that due to an unprecedented Covid surge, the demand for RT-PCR testing (the gold standard for Covid-19 testing) has increased manifold. People are seeking safe, home-based sample collections as most of them do not want to go out for fear of contracting the disease. Hence, such services are seeing a huge demand.

“Covid-19 testing labs in the country are swamped with samples. We are working double shifts to increase the capacity of Covid-19 sample collection and processing actively. No lab has stopped testing samples. But there is a backlog, and the issue is being solved by increasing the testing capacity,” said Dr Gupta.

Besides healthtech startups that are stepping in to help with medical aid in these trying times, IIT-Delhi alumni have stitched together an app called CovRelief for live tracking of hospital beds. SaaS startup Wingify’s founder Paras Chopra is also looking to set up a 10-bed Covid care facility, while mobility startup Bounce’s cofounder and CEO Vivekananda Hallekere is pooling funds to help Covid-affected families in need. Volunteers from the online product community Creators of Product are also verifying the medical resource information available on the internet so that patients do not lose critical time due to fake leads.

#StartupsVsCovid19 — 2.0

At a time when the healthcare system has collapsed under the weight of rising infections, it is gladdening to see the young mobilise forces to use the power of technology for making a real difference. Time and again, many have said that ‘apps’ are not real innovations and they do not move the needle on the ground. Perhaps, it is time to put such doubts to rest once and for all.

Until next time,




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