Digital leapfrogging to the next normal in India!
Covid-19 impacted lives and livelihoods globally in a horrible way. It brought to the forefront the fragility of life and inevitability of tragedy to strike when least prepared. But there were some more ready to take it on than others. Info Edge, the company that owns a host of digital first companies such as Policybazaar, JeevanSathi and invests out of its venture arm, started an MIS on the disease when the first case was reported in early Jan 2020. Given its intel on the severity of the virus, it declared a lockdown 10 days prior to the national lockdown. Sanjeev Bikhchandani, at the helm of the Info Edge, believes that despite the havoc the virus still continues to wreak, the economic news for India is not that bad. Buying is back, the stock market is scaling new heights and even if we flatline at the worst case scenario of 7–8% growth, it gives us plenty of room to be cautiously optimistic. We have indeed bounced back!
Not all growth is equal, as Matrix Partners Tarun Davda notes. What Covid did for a few companies in his portfolio could not have been achieved by years of marketing effort. Dailyhunt which aggregates content and news in regional languages saw massive growth and fundraising. Ola, the ride hailing app, was one of the hardest hits but used the downturn to get its unit economics in order — and has emerged with a stronger balance sheet and P&L. B2B companies such as Bijnis which are digitizing factories and integrating them both to demand and backwards to their supply chain saw themselves become more valuable.
A large part of this growth was fueled by Tier 2 and 3 cities adopting digital. Ecommerce companies riding on the back of this wave saw a 50% y-o-y increase in revenue. Emboldened by their recent success in new markets, Amazon has a new goal — to take the first 100mm on Amazon Prime and the next 200mm to adopt Amazon (for ordering to begin with). Myntra and Meesho have also recorded excellent growth in the next billion market during this period. Since the base was low, it grew at a higher rate. Another cross section of companies that has achieved phenomenal metrics during this period is retail tech. A lot of it is because people suffer from FOMO — if my neighbouring store is using Dukaan’s app, so will I. As Ritu Verma, Ankur’s Managing Partner puts it — There is an arms race at retail stores in Tier 2 and 3 cities! Even when we have unlocked nationally, the supplemental income that these kirana stores are getting from digitizing is worth the shot for them to sell online.
The digital leapfrogging and democratization of tech is a very good thing in other areas as well. Especially if you take the examples of education and fitness — everyone no matter where they are from has access to world class teachers. But going by the dozen or so teachers and students we have been in touch with to refine our edtech thesis, we feel that once schools and universities open up, the tail winds this sector experienced will die out. School is about peer interaction and constitutes a rite of passage to adulthood. If you take away the campus from education, you are left with a very diluted proposition. Though, what might stand the test of time in edtech is self paced learning, skills training and such.
That said, some change is here to last forever. At Ankur Capital, we doubled our team in the last year to prepare for the next stage of our growth and while we sit out of 5 different locations, there is still a sense of Ubuntu. We are considering a model that picks the best of both the physical and digital worlds. Some of our brave ecosystem peers have actually opened up offices for all but there is a growing acceptance that certain functions can be done offline.
Naukri has seen a 7x increase in permanent WFH jobs in certain functions. Business teams of various Info Edge companies report a 3–4x increase in the productivity of their sales teams! A percolation of this WFH culture is actually good for the country and will foster economic growth. Professionals who choose to stay in their Tier 2 and 3 cities instead of moving to the metros will free up space in already crowded places and lead to their economic advancement as well. That this has been an expensive mindshift is an understatement!
While we can do a whole lot of crystal gazing into what will stay and what will not, there are some aspects that will remain unchanged. Success will always be built on deep customer insight, a product market fit and a passionate entrepreneur who is dedicated to solving the problem.
While none of the investors on this panel claim to have their finger on the next big idea, they all play a part in the paradox of funding. Good ideas and entrepreneurs will continue to face an abundance of capital and others will face a scarcity. It’s easy to get the first institutional check, only the identified winners get a Series A. Making a cut to Series B was and always will be the real deal.
For the full video of this interaction, click here.
(If you are a winner innovating in the large next billion market, reach out to us at info@ankurcapital.com)
