[Matrix Moments] From business models to revenue and resilience, how 2020 taught us more than survival
The year 2020 proved to be a time for learning and reckoning for everyone, with the nationwide lockdown imposed to curb the spread of coronavirus forcing everyone to change their plans and going back to the drawing board with their roadmaps. While there was a lot of uncertainty initially as the economy slowed down, after June 2020, things started to turn around.
In a conversation, Rajat Agarwal, Managing Director, Matrix Partners India; Avnish Bajaj, Founder and Managing Partner, Matrix Partners India; Tarun Davda, Managing Director, Matrix Partners India; Vikram Vaidyanathan, Managing Director, Matrix Partners India; and Rajinder Balaraman, Director, Matrix Partners India touched upon the key insights of 2020, and what to look forward to in 2021.
Rajat said, “Initially, there was a very strong focus on building the portfolio; then there was a lot of momentum around new deals. We ended up closing the year with 15 odd deals, and that was keeping in pace with our investments since 2019. There are two new unicorns in the portfolio of more than 15 odd follow-on financings. Frankly, the year has been much busier and somewhat better than initially feared.”
He added while some themes played out well in 2020, others didn’t. Rajat said that the year 2020 saw the arrival of the experienced founders’ cohort. “We’ve been speaking of this for a while. Many founders who’ve been through successful company building journeys at some of the leading startups had begun spinning out and starting their companies in 2018-2019, and that trend only accelerated in 2020,” he added.
Apart from this, the team also saw that there was market depth with companies focusing on revenue, business models, and profitability. There also was an accelerated adoption of tech across SMBs, increasing capture by tech on the GDP.
However, some aspects stood out. Tarun says, “I think, for me, the most heartwarming part was when all VCs and lot of portfolio founders and other startup founders got together to set up ACT. I remember how quickly it was done; it was this one phone call on a weekend, and some of us somehow took the initiative to organise and it was done very quickly, taking a life of its own.”
The portfolio triages that the team did early on also stood out. Tarun explains it helped people get clarity in terms of what they’re doing. Adding to this, Rajat said,
"All sets of founders had to take very different actions; someone had to almost figure out how to survive for another day while the other guy was facing a once-in-a-lifetime opportunity to really grow, and it was just remarkable how founders navigated through all that. Some people navigated it better than others.”
But overall, Vikram explained that 2020 was a year of gratitude. Apart from that, he added that hitting the crisis button early on helped. It helped generate a lot of options and scenarios.
“I would say the companies have discovered their true character through 2020 and discovered that the company has grit as everybody had to make the hardest choices,” said Vikram.
Summing it up, Avnish explains while there were many lows, and many were happy to see the end of 2020, he believes we will look back at it as a big positive inflection point in professional relationships.
"I think one learning we should all take away from that is how poor forecasting is. And by the way, you will never hear people going back and looking at this and saying how wrong everybody was because forecast changed dynamically and organically, and people just adjusted to it,” said Avnish.
Listen to the podcast here.