Start-ups in all spaces, whether technology, hospitality or finance, are being forced to adapt to the business disruptions and climate of fear being spread by the coronavirus outbreak.
While many start-ups have faced challenges in the last few weeks, due to the sharp decline in business activity, most are confident that they will be able to ward off the trials posed by the virus.
Start-ups have been carefully evaluating the possible impact of the COVID-19 outbreak on their future business operations, including on burn-rate, fundraising opportunities, sales forecasts, marketing overheads, team headcount reduction, and optimizing capital spending. While the COVID-19 scare could throw up opportunities for some, for most it will prove a burden on business.
That said, as nations go into lockdown around the world, crippling economies and affecting governance, start-up communities in India are leaving no stone unturned to find a way to survive in these tough times.
“Problem-solving, resourcefulness, innovations, out of the box thinking, among other traits, the start-up communities are resilient, determined, creative, flexible, and hard-working. The start-up communities are bound to make the most out of what they have at their disposal in the current circumstances. There are many entrepreneurs at the moment who are working on technological innovations that could help in treating, testing, monitoring, and are trying to help the world to deal with the coronavirus outbreak,” remarked Kapil Jain, the founder of Graphitto Labs, a communication start-up company.
A few start-ups in the travel and hospitality space face the maximum brunt of the coronavirus onslaught. Take the case of Vista Rooms, a new-age hospitality start-up that is carefully evaluating the changing scenario and will act as per the changing business situation.
“The travel and tourism industry is always the first to be impacted in such scenarios. It is indeed testing times for us. Since the situation is changing so rapidly every week, we are constantly monitoring and evaluating steps to be taken to safeguard our guests and homeowners. We have already allowed our guests to reschedule their bookings, which they can do until September 30th. Although we had witnessed a surge, till the first week of March, for nearby getaways from cities, we are now receiving cancellations due to guest fears and local authority rulings to prevent travel in their locality. Post-March 15th, over 50 per cent of our bookings have been rescheduled for March and April,” Amit Damani, co-founder of Vista Rooms, told THE WEEK.
Similarly, advanced battery management and intelligence platform start-up ION Energy is also closely monitoring the situation and is hoping that the virus is contained and eventually subsides by the end of this month. At the same time, it has ensured that it is well stocked to deal with the situation.
“We are well stocked to service immediate orders and continue shipping. At the same time, we have maintained a steady flow of import orders to avoid any roadblocks in supply. I feel that on the positive side, the virus has strengthened our ability to proactively respond to such crises and also tested out our remote collaboration and work from home policies,” remarked Puneet Arora, Chief Operating Officer, ION Energy.
Start-ups in the financial field are also gearing up to deal with the situation. Many of them have devised a strategy where they can deal with the situation and stay in business even as the market shows volatility.
Investment advisor start-up Capital Quotient decided to device different strategies for their clients so that they could get good returns for their customers and stay in business. “The trends in Price-to-Earnings ratio reflected the overheating of the market, which prompted us to implement the equity underweight strategy, which basically entails, moving out 50 per cent of one’s portfolio into a basket of conservative debt securities delivering around 9 to 10 per cent returns per annum. And, then use the proceeds from the debt investments to buy equity on a systematic basis every month, mainly in Nifty, and depending on the predetermined degree of correction, move the principal investment back from debt to equity at a later point of time. As a result, our clients got 18 per cent more returns than the average investor, when the market fell by 30 per cent,” explained Sousthav Chakrabarty, co-founder and CEO of Capital Quotient.
Experts say that most start-ups leverage technology and currently most of their staff work from home and are stretching, as usual, to keep up the passion. In the long term, working from home can have some negative impact on their productivity as leadership plays an important role in keeping the panic at bay and getting the team to refocus on tasks at hand especially in these young new-age start-ups. Different challenges can be solved with the physical presence of their bosses and decision-makers.
“Virtual meetings have limited impact when strategic aspects are to be worked upon with all hands on-the-deck. Some start-ups have their field teams on the ground and hence the optics of senior people working from home does not go well in the organization. In such cases, the senior people are working from offices and showing solidarity with the folks on the ground. In any case, there are challenges in delivering the promised results and hence could impact the next rounds of funding for some start-ups,” explained Aditya Narayan Mishra, Director and CEO of CIEL HR Services.