News of layoffs, furloughs, funding crunches, and shutdowns have wracked the Indian startup ecosystem in the past two months. As startups feel the full impact of the coronavirus-induced crisis, the majority of India’s 30,000-odd startups may be forced to shut shop as business activity comes to a standstill and funding dries up.
And yet, it’s not all gloom and doom in the startup world – at least for a nimble few.
Indeed, a growing number of startups are pivoting to seize new opportunities, transforming their business models and offerings to navigate the current crisis.
For some, this means diversifying into sectors like edtech and healthcare, which are bucking the trend in the current environment and seeing a significant uptick in demand as learning moves online and people become more health-conscious.
Yet others are reinventing themselves, with new or modified offerings to appeal to customers in the new normal where digital transformation and adoption has accelerated.
“Our advice to entrepreneurs is plain and simple. For startups in certain sectors to survive and sustain, a pivot is not one of the options, it is the only option,” says Deepthi Ravula, CEO of WE Hub, the Telangana state government’s initiative to promote women entrepreneurship.
According to a survey of over 250 startups by Nasscom, around 54 percent of Indian startups are looking to pivot to new business opportunities, diversify into growth verticals like healthcare, and enhance focus on emerging technologies such as artificial intelligence (AI), Internet of Things (IoT), and cloud computing.
Gurugram-based hospitality chain Zostel is one example of a startup that’s innovating for a post-COVID-19 world, where physical distancing has become the new norm. The startup is viewing this change as an opportunity to launch a new business stream – social-as-a-service – as it envisions a way to allow its community to socially engage with each other without leaving their homes.
Similarly, Chandigarh-based education startup Robochamps, which is focussed on infusing robotics-based learning in the Indian education curriculum by setting up robotics laboratories in schools across India, has now revamped its business model to a purely online platform. It has also started offering new courses in addition to those on robotics.
Further south in Telangana, manufacturing startup V.T. Enterprises, which makes cotton and foam pillows, is now stitching and selling face masks to hospitals to sustain itself as demand for its products came to a standstill once the lockdown started.
Building for the new normal
“Lot of businesses will need to reshape themselves in the new world and a lot of it is already happening,” says Sushanto Mitra, Founder and CEO, Lead Angels Group.
“Businesses will have to move online and have a greater digital presence. As consumption patterns change, distribution and transportation models will also change. In fact, every startup has to figure out how they can move from something which may have become discretionary to a staple,” he adds.
As spending preferences move from discretionary to essential, the sectors that offer the most opportunities for growth are healthtech, essential services, lean manufacturing including fast-moving consumer goods and textiles, edtech, content delivery startups including media and news, hyperlocal services, and fitness and mental health startups, says WE Hub’s Ravula.
To cater to this change in consumer spending behaviour, India’s tech startups are already leveraging their tech know-how to launch new products and services overnight.
For example, as demand for essential services such as groceries increased and people ordered out less, foodtech unicorn Zomato launched grocery and essentials delivery service Zomato Market, offering grocery delivery across 185 cities in India, and is now about to launch it in the UAE and Lebanon.
“Our business has been severely affected by the COVID-19 lockdowns… I expect the number of restaurants to shrink by 25-40 percent over the next 6-12 months… All of this uncertainty inevitably needed us to re-define our business strategy,” says Deepinder Goyal, Founder and CEO, Zomato.
“There’s no going back to the ‘normal’ – all we should focus on is building for the ‘new normal’. Considering what we know at this point, the idea is to make a complete shift towards being a transactions-first company, focussing heavily on a small number of large market opportunities in the food value chain,” adds Goyal.
Others such as health and fitness startup CureFit have launched a slew of online classes as its physical fitness centres and gyms had to be shut during the lockdown and are likely to remain closed for a prolonged period in the post-COVID-19 world. Earlier this week, the startup launched paid subscription packages for its live virtual classes.
“With physical gym operations being suspended at the moment, CureFit has adapted itself in the last few months and transferred most of its services to the digital space… So far, our digital verticals have been popularly received, and we want to continue to build on that momentum. Through monetisation, we hope that our popular live sessions can enable us to amplify the Curefit experience for our users,” Co-founder Ankit Nagori said.
With the lockdown putting a brake on economic activity, funding down in 2020, and cash runways of less than six months, Indian startups have been resorting to a slew of measures to stay afloat. These include making significant cuts to fixed costs such as employee salaries and real estate expenses, as well as switching to low-cost vendors.
The recent Nasscom report painted a dire picture for Indian startups. It showed that 92 percent of startups have less than three months of cash runway, 22 percent have around three to six months of runway, while just eight percent have more than nine months of runway.
The same survey also found that most startups are feeling the impact of the funding shortage, which, in turn, can affect their long-term sustainability.
“This is an unprecedented situation and obviously both big and small companies are affected, with the smaller businesses more impacted because of their limited resources. But smaller companies and startups are also nimbler and able to quickly transform themselves to tap new opportunities,” Mitra says.
Know your customer
The key to a successful business transformation, however, is knowing the customer, staying true to the company’s vision, and leveraging its core assets, say entrepreneurs and investors.
“It’s always important to understand what your customers are going through and how their attitudes are changing. Customer empathy has always been a core principle at StyleNook and this allowed us to diversify our content to include other lifestyle aspects that are more relevant to users right now,” says Kuntal Malia, Co-founder of StyleNook, an online personal styling service for urban working women.
In the pre-COVID-19 days, StyleNook focussed only on workwear. However, it is now expanding into new areas such as fitness wear, lounge-wear, and other categories.
Once the lockdown started, StyleNook also launched a new chat service Stylist Chat, where its stylists decode what works for the user’s body, provide work-from-home dressing hacks, and select pieces that make users feel positive and energetic. The company was able to do this quickly by leveraging its core assets – data tools that enabled stylists to work remotely.
Pune-based software-as-a-service startup Zestl, which enables end-to-end process automation for its customers, is another example of a startup that ensured its product evolved rapidly to suit changing customer needs.
“Focuses are changing for our customers and hence, our story is changing as a result of that,” says Hardik Gandhi, Co-founder of Zestl.
“The good thing is that for a company, which has a no-code platform that is key for digital process transformation, it is a great place and time to be. When there’s a lot of churn and new processes, companies have to evolve and improve their tools. And that’s a great opportunity for someone like us because this is our core proposition,” he adds.
Startups like Zestl in the SAAS space, along with those in sectors like fintech, edtech, and healthtech are tweaking their offerings to not only cater to changing consumer behaviour, but also tap new customers and markets.
“In the last two months, we’ve been busier than ever, launching seven to eight applications as compared to just one-to-two per month in pre-COVID-19 days. A lot of new business models have also come up. For example, we’re working with a new-age pharmacy distribution startup in Jaipur, where you just upload your prescription and the pharmacy nearest to you will deliver the medicines to your home. So, there are new delivery models; new ways of servicing customers,” Hardik says.
Indeed, the post-COVID-19 world appears set to be remarkably different from the world as we knew it, but Indian entrepreneurs — known for their resilience and ‘jugaad’, a Hindi term loosely translated to mean a quick, cheap invention or innovative solution — are staying true to their name, with many looking at the crisis of today to build the foundations for a new tomorrow.
“It is a known fact that historically such downturns also lead to business disruptions and transformations, which have opened up a plethora of opportunities to tenacious entrepreneurs. Rightly so, many Indian startups have joined forces to create solutions that would help people to survive and cope with the pandemic and its impact on day-to-day life,” says Debjani Ghosh, President, Nasscom.
(With inputs from Rashi Varshney; edited by Saheli Sen Gupta)
YourStory’s Pivot and Persist series spotlights Indian startups that are pivoting to seize new business opportunities, transforming their business models and offerings to navigate the current COVID-19 crisis.
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