Startups in the time of corona crisis

Gilbert Akham *

As we all know StartUps represent the next stage of growth economies in this very nascent “Fourth Industrial Revolution” brought by Third-Wave Technology.

Now is the time we see the ‘Crisis As An Opportunity’ as the old Chinese saying goes. In the past we had experienced the two most fundamental crisis, i.e, the Internet bubble crash of 2001 and the global financial meltdown of 2008.

Many analogies have put forward that this Corona impact on startups and small businesss has much more similarity with the Internet bubble crash of 2001. So this is the real time for companies, especially most of the startups and small businesses, to test the sustainability of the business.

JC2 Ventures one of the leading global investment firm predicted that almost 30-40% of the startups will die as an impact of the long days of lockdown , halting business travels, suspended finance and commerce.

With all these problems we cannot wait and see the wave of disasters. Now is the time to start over new ventures, to take calculated-risks so that we could find light at the end of the tunnel.

Many of the prominent companies from Cisco System, Uber, Stripe, Airbnb and some of the household name brands and business all started duirng the time of crisis. ”So why waste these opportuinites to show our real strength?”.

Are you one of those innovative and creative companies with a great abiltiy to get the most out of limited resources? Then you must be a startup, and like many others in the field-you will use technology, you care about the society and without a doubt you are ready to adapt to the changes very quickly!

If the spread of the Corona virus is not conatined chances are that lot of early-stage startups will have to risk cash burn or even pause operations. The threat of losing jobs, with the current situation coinciding with the financial year-end is higher than ever. COVID-19 ripple effect is felt across the industries, corporates, venture capital firm, founders and shareholders.

Despite the challanges , the collaboration among the Indian startups formed a group tentatively called ‘StartUp Against Coronavirus’ or ‘StartUp versus Coronavirus’. The group had already launched a telemedicine service as they wanted to ensure that anybody across India should be able to call up to get the best access to health service.

We see BigBasket, Grofers, Swiggy and many others delivery startups like FoodWifi, Soultification, HummingBird, Taret Agri in Manipur coming together to deliver food items.

Healthcare startups Practo, Mfine, Docs App and IMG have joined hands to form a group where they are collaborating and working with different hospitals. Another initiative Action COVID-19 Team(ACT) is a move to back firms working on service and products.

The ACT grants, which is possibily a first-of-its kind initiative globally, Rs 100 crore and aims to seed over 50 initiatives through grants to combat the economic fallout of COVID-19. The idea is to have capital efficient and scalable solutions that need seed grant.

We also learn from Chinses startup ecosystem.Many Chinese startup survives this pandemic one reason could be because of local-based venure capital firm supporting the businesses without those formidable foreign portfolio investors.

There is enough cash in the hands of the people that’s been made possible by the policy of financing the State Own Enterprises by Public Banks and the Foreign Direct Investment(FDI) directly funding the Joint Ventures-this startegy has led to the accumulation of wealth among the people and many local venture capital firm spring up.

This model maybe one of a kind, it might take a long time for India to reach that stage. For Indian businesses and starups ecosystem we need to strengthen ‘Impact Investing’ and building proper financial infrastructure to enhance the local Venture Capital firm is the need for startups as they cannot go alone with the ideas.

So for India, right now, as much as 60% of the StartUps are in serious trouble. The need of the hour is capital investment so that the companies could maintian the cash flow of business as the impact of COVID-19 pandemic on the StartUps and the small business for the remainig months is uncertain.