How will the Covid-19 pandemic impact India’s startup industry? In particular, technology startup companies?
At present, there is a lot of uncertainty about how the coronavirus pandemic will impact India’s startup industry. Of course, startups in sectors such as aviation, travel and logistics have already taken a major hit due to the outbreak, but startups in some sectors are witnessing a sudden surge in growth. These include FMCG, pharma, healthcare, edtech, fintech and home-entertainment. Overall, we expect a decline in startup funding activities as investors will become more cautious towards their spending. While early-stage investments may not get severely affected, there wouldn’t be many large deals and the average ticket size of investments will decrease.
When it comes to technology startup companies, startups offering remote working solutions, productivity software and video conferencing services stand to benefit from the pandemic. Take the example of Zoom, which added more monthly active users (2.2 million) by February 2020 than the entire 2019. Apart from that, EdTech and FinTech companies have also been witnessing an increased demand since mid-February. The Covid-19 crisis will act as a growth catalyst for many technology startups.
As an incubator/venture fund organisation, are you in the process of working out a strategy?
We have set up a virtual networking system within our investor community to facilitate seamless connection. In fact, we recently conducted a virtual display – attended by 330+ investors and 4 startups presenting their pitch. We are also taking a proactive approach to close our commitment to investment deals.
What kind of support is needed by tech startups, from the Central and state governments, organisations like yours and other stakeholders?
Technology startups in India have shown astounding growth in recent years. Unfortunately, the coronavirus crisis and the nationwide lockdown have rendered many of these startups struggling to meet their liquidity needs. Against this backdrop, concerted efforts from the government authorities, VCs and other private players are necessary to provide funding support to the tech startup community. The Centre is already taking several measures to back startups during these difficult times. SIDBI’s ‘Covid-19 Startup Assistance Scheme’, for example, is an excellent initiative to ensure that startups with strong IPR receive the funding they need to continue their operations.
Which tech startup segments will be able to leverage these challenging times, to show growth and innovation?
As mentioned before, EdTech, FinTech, remote working solutions, productivity software – these tech startup segments will be able to leverage these challenging times. Other than that, Healthtech and cyber-security startups are also likely to experience an upsurge growth in the coming months.
Is there any other significant factor you would like to highlight, regarding the current situation?
We are in the midst of a global health emergency, and it’s only natural to be overwhelmed by the negativity. However, I believe the pandemic will create a new wave of innovative, tech-centric startups offering solutions to large-scale, real-life problems. The economic crisis caused by Covid-19 is, to some extent, similar to the global financial crisis of 2009. Although the economy was crashing, it was the birth year of startups like WhatsApp, Pinterest, Dropbox and Slack. India also saw the emergence of high-value tech startup companies including Zomato, Dream11, MobiKwik and PolicyBaazar, among others.