Covid-19 — Unsettling Times, What Next in Startup World — TIE session
On 28th March 2020, The Indus Entrepreneurs (TIE) Mumbai organized a panel discussion with the heads of Chiratae Ventures, Inventus Capital, Jungle Ventures & Nexus Venture Partners moderated by Sanjay Mehta of 100x VC. I am sharing my notes from the very insightful meeting that contained great lessons for all entrepreneurs not just startups.
What happened ? This is a huge macro systemic shock. A multi-axis, long term global downturn. Certain business model changes are permanent. Certain sectors like transportation are hit very hard. The flight of capital to safe harbor has accelerated. Trillions of Dollars of market value has been lost. Every business is in a churn. New investments will pause for a few months though a few major investors and private equity players will open new credit lines. However, there is enough dry powder capital available.
Here is some wide-ranging advice offered in tidbit size under some broad categories:
Survival : Stay in the game. Move from a growth plan to a survival one. Take thoughtful decisions. Do a quick stress test for your business — now is the time to dispassionately focus on fundamentals. Triage your actionable strategies. You may need to pivot much faster. Roll up your sleeves. Help your customers.
Cash Management : Cash is king. Cut out all non essential expenses. Plan to manage your cash runaway for the next 18 to 24 months. Be the best sales person you can.The only priority is to get cash in the bank.
Tips for founders : Founders to be the epitome of positivity. Your entire team is looking at you for guidance. Do not hesitate to ask for outside help — consult with grey-haired veterans who have survived earlier financial crises. There is so much one can learn from them. Remember to take care of yourself both physically and mentally. Learn to manage your emotions.
Valuation : Entrepreneurs have to provide value before valuation. A tough question founders must address ‘ Why raise money at this time ? ’ An equally tough question to ask prospective investors that must be answered ‘ Why do you want to invest in my company now ?’ Sanjay Mehta mentioned that perhaps the definition of the new unicorn would be a USD 100 Million $ valuation.
Opportunities : Future business opportunities will be those with technology in the middle wrapped by business and revenue models. Not vice versa. Entrepreneurs will have to adopt a product-first mindset, concentrating on product-led growth and innovative self-serve digital models.
Go Digital : A key message for existing entrepreneurs is to urgently digitize your business. Digital transformation of millions of small & medium sized enterprises (SME) would be the next huge opportunity. One of the panelists mentioned an explosion in business inquiries for operational digitization from Indian small-town kirana (Mom & Pop) stores.
Looking ahead : Every downturn has historically helped clear the existing mess. All past crises have been shown to provide major opportunities. Google was founded in the middle of the dot com bust. Covid-19 was just perhaps the long needed reality check for the ongoing market craziness. China’s great example of strong recoil and rebound shows us that there is a light at the end of the tunnel.
Final Thoughts : Remember that this is just a business cycle, not a circle we are trapped in. Every business cycle has an eventual upturn and return of growth. Retain your core team, don’t cut to the bone.
Thanks to TIE, Sanjay Mehta and all the speakers for a great session.
My take : Unfortunately for Indian businesses, the Covid-19 crises with it’s multi-level health, economic and societal impacts comes on top of several lower layers of technology & business landscape changes that have happened in quick succession, both locally in India and globally, over the past few years. Time permitting, I will cover these issues in the future. Till this crisis plays out, we all need to hang in there, stay positive and keep our focus.