[TechSparks 2020] Why COVID-19 has accelerated innovation and is bringing out the best in startup founders
COVID-19 has thrown down the gauntlet to businesses across the world, but the Indian startup ecosystem has risen to the challenge admirably. Founders and entrepreneurs are thinking ahead, ideating, and innovating to remain alive and thrive.
This was the narrative at TechSparks 2020, the annual flagship event of YourStory, during a panel discussion on “How to build great companies from anywhere”. Hans Tung, Managing Partner, GGV Capital, and Sujeet Kumar, Co-founder, Udaan, discussed the impact of COVID-19 on Indian startups, why it had accelerated innovation, and how Indian founders were handling the crisis well.
“In India, you see amazing founders…best wishes and gratitude to them for being alive in this crisis and thriving,” Hans said.
(Clockwise from top left) Udaan Co-founder Sujeet Kumar, YourStory Founder and CEO Shradha Sharma, and GGV Capital Managing Partner Hans Tung
The pandemic may be bad news, but it has actually fast-tracked many things for startups, the panellists agreed.
Sujeet said, “There is a lot of innovation happening, which in normal times would have been impossible to even think of.”
He cited an example of how Udaan has witnessed the fastest pace of real estate absorption amidst the time of pandemic; all this happened without compromising on quality.
The pandemic and the consequent lockdown led to a surge in several digital segments. Online gaming, education, and communication soared as an increasing number of homebound people accessed these services. However, this also necessitated innovation from startups operating in these fields.
Sujeet said, “People (startups) are focused on how to innovate; utilisation of time is also much better.”
Focus on digitisation
A B2B ecommerce startup like Udaan needs a lot of feet on the street to get their work done, but this has changed as many things have taken the digital route.
The biggest push from COVID-19 has been towards digitisation, with the small and medium enterprises (SMEs) segment witnessing the highest traction.
Sujeet said SMEs were clueless to deal with the situation after the pandemic broke out but they have adapted: they are now adopting more technology and going online. “They are exploring how to sell online. They understand the depth in this opportunity,” he said.
Hans said a lot of mom-and-pop stores were leveraging technology to better themselves, including adding a higher degree of automation. Earlier, technology was used by SMEs for operations, but it is now being leveraged for product innovation, both speakers said, adding that this “had led to higher efficiency”.
The present environment also led to an important question regarding the business model: could they continue to function as revenue rose with accompanying losses?
Hans said: “Startups need to work towards positive unit economics where there is a balance between growth and profitability.”
He added that their VC firm had been encouraging portfolio companies to focus on achieving breakeven.
A large talent pool
India is one of the leading startup hubs globally, with most founders aiming to build in India, for the world. But the groundwork and foundation laid over the last few years has played an important role.
Sujeet said: “A lot has been done in the last five years in terms of infrastructure and policy. A lot more new businesses can be built now.”
He added that that a lot of startup business models from India had been adopted in the neighbouring regions.
Hans said India had all the ingredients in terms of the talent pool and consumer base to make an impact globally and build several new iconic companies.
He added that it was a good idea for investors to put themselves in the shoes of founders to get a better understanding and succeed.
“It is always amazing to see how Indian founders are willing to learn and thinking about how to innovate. The grit and intelligence displayed is extremely impressive,” Hans said.
For more information on TechSparks 2020, check out our TechSparks 2020 website.
TechSparks - YourStory's annual flagship event - has been India's largest and most important technology, innovation, and entrepreneurship summit for over a decade, bringing together entrepreneurs, policymakers, technologists, investors, mentors, and business leaders for stories, conversations, collaborations, and connections that matter. As TechSparks 2020 goes all virtual and global in its 11th edition, we want to thank you for the tremendous support we've received from all of you throughout our journey and give a huge shoutout to our sponsors of TechSparks 2020.