Five months since the first COVID-19 case was reported in the Hubei province of China, we have witnessed the rise of a pandemic of a truly historic magnitude and scale. At the time of writing this, the disease has infected more than four million individuals globally, over 60,000 of whom live in India.
Most of the worlds’ nations are under strict lockdowns to halt the spread of the new coronavirus, with many closing borders and immigration, creating constraints for businesses across the globe. This is a surreal, uncharted and even terrifying territory for most of the populations in the world since the advent of air travel.
In the economic sense, The International Monetary Fund (IMF) predicts a shrink in the global economy while the Indian economy is expected to see the lowest growth since the economic crisis of 1991. While the growth rate of India is still positive, it will be a sudden halt to the steady growth predicted by analysts and researchers.
Startups, especially, face a critical time during the months ahead amid countries easing lockdown norms, as a lot of the burn rate and runway projections made by them no longer hold validity and would have to be revisited sometimes with a call to taking hard actions.
In this world which ground to a sudden halt, a recent interaction we had with women entrepreneurs across geographies, economies, sectors in a range of industries including technology, FMCG, retail, e-commerce, education, and sustainable architecture reflected several notable and known growth-related concerns along with a few new ones.
Risk exposure is a challenge most businesses plan for and few actually prepare for. Today, risk exposure is being exacerbated by several uncertainties. First, consider how most businesses now have to operate remotely since the pandemic spread. New technologies notwithstanding, this poses a challenge across sectors, industries and scale of operations.
But it has particularly affected startups in fields like manufacturing along with those in education, hardware, and healthcare that includes mental health startups using AI, where regular face-to-face interaction is vital to building trust with students and clients. Communication challenges also extend to teamwork in every organisation.
Second, mobility—which is integral to the operations of many businesses—has been severely hit. For instance, startups in the manufacturing sector needed to obtain raw materials from various sources. Workers had to travel to multiple locations at great risk. The lockdown has since restricted movement, leaving them without work.
Third, a sizeable number of those employed in manufacturing have jobs which cannot be transitioned to WFH roles and employees in many other industries are migrants who have now returned to their hometowns. Whether they choose to return to the cities remains uncertain.
Fourth, the pandemic and the lockdown have also hit revenue generation and company finances. Those in the business of non-essentials find it difficult to create demand for their products and services, even with technological intervention, making it difficult to pay employees. Founders of bootstrapped startups are now paying workers right out of their own pockets. Insufficient revenue has also burdened loan repayment for businesses.
While the Reserve Bank of India has eased this to an extent by issuing a three-month moratorium on all loans, this only means that the deferred amount will add to the principle three months later. Many have also had to ask their landlords to defer the rent on their office spaces.
Finally, there is also growing uncertainty about how the pandemic may affect funding. In March, startup funding in India fell by over 50 percent within just a month. With investors now wary, startups working in some sectors, such as livelihood empowerment, are unsure if they can attract funding under the circumstances. It’s a tough road to navigate, but not an impossible one.
With social distancing being the new norm, digitisation is no longer a choice but a necessity. Businesses that have so far resisted digital adoption must step up their game, while those that were quick to do so can take advantage of their lead.
Unlike in the past, where such a pandemic would have undoubtedly brought the world to a standstill because of limited technology, today startups can ensure that their work continues. In several industries, new tools have enabled individuals and organizations located across the world to work on a project simultaneously and collaboratively.
Likewise, while physically interacting with clients and teammates may be temporarily impossible, active collaboration can continue through videoconferencing. The pandemic has triggered a surge in video conferencing app downloads as professionals across the world began working from home. According to one report, video conferencing apps for businesses were downloaded 62 million times just between March 14 and March 21 this year.
On the other hand, many businesses today face inadequate demand, leaving staff unutilised. Since laying off these workers is not ideal, founders can find other ways to employ them. For instance, given low demand, many startups are pivoting their models. A recent survey by Indeed showed that 64 percent of Indian businesses are pivoting in response to the pandemic. In Europe, too, startups are pivoting to meet the demands of COVID-19.
Take the instance of Archangel Imaging, a British startup that originally worked on enabling large-scale monitoring of remote areas but now builds fever detection cameras to be supplied to hospitals, governments and businesses.
Startups that choose to pivot can use their current workers to gather data from the market, allowing founders to better understand customer demand. That this can now be done virtually makes it another encouraging sign. For startups that do not pivot, founders can use this time to consider how to expand to new markets instead.
There is opportunity in strength. If there was ever a time for entrepreneurs to come together, it is now. Currently, there are regulations that can be eased to make it easier for startups to carry on with business and boost revenue. There is a need and opportunity to create startup networks which transcend geographical, sectoral and operational capabilities.
These networks will not only be a resource of collaborations across continents and markets but also be a source of new market opportunities, faster translation from idea to product, human resource pool. The formation of a consortium of startup enablers would be able to enable policymakers governments to relax regulations and aid business on the basis of proven data.
We have already seen smaller networks confined to geographies creating funds to support startups in distress. Additionally, startups that are in the non-profit or livelihoods sector can perhaps seek the support of donors who have helped them in the past as they prepare for creating impact in the future.
The post-coronavirus world would be quite different from the one we inhabit today. Every crisis is an opportunity. It is imperative that we turn the challenges of an uncertain present into foundations for a better tomorrow.
(Edited by Apoorva Puranik)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)