Tech startups to remain an engine of economic growth
Srikanth Chintalapati, Partner at Mantra Capital, a global cross-border venture fund company, speaks about the focus on non-traditional approaches to investment
How will Covid-19 pandemic impact India’s startup industry ? In particular, technology startup companies
As Covid-19 slams the world, we live in uncertain times as the severity of downturn can lead to a wide range of potential outcomes. Tech startups will encounter difficult times and those who are in the early stage and in the fundraise cycle will face an uphill task and some may perish. Those tech startups who adapt by revisiting burn, product roll out strategy, hiring and customer acquisition cost can expect to survive by judicial allocation of available cash in their balance sheet.
As a venture fund organisation, are you in the process of working out a strategy ?
We, at Mantra Capital, stay committed to funding. Some of the best companies are created in a time of crisis. We would like to focus on non-traditional approaches to investment and seek opportunities that can create potential defining companies. Case in point are some of the best companies that were created between 2008 – 2009 during the financial crisis – Airbnb, Pinterest, Github, Slack, Square, Cloudfare, WhatsApp, etc. Tech startups would still remain the engine of economic growth and Mantra Capital will keep advising its existing portfolio companies to rejig their operating plan and also look out for opportunities in this downturn for startups that can withstand this storm.
What kind of support is needed by tech startups, from the Central and state governments, organisations like yours and other stakeholders ?
Central and state governments can examine deferment of taxes – GST & TDS, making available low cost working capital for human capital intensive startups such as food and staple delivery companies, grants in some specific technologies that can impact human life such as bio-sciences, providing wider cover of medicare for startups which rely on field force, etc., can go a long way in supporting tech startups in this hour of crisis. The intent is to support the startup ecosystem which enables them to cope up financially during this period and avoid raising funds as a firesale through equity.
Governments (Central and state) can involve VC fraternity to form think tanks to support with strategy and ideas that can help sustain the ecosystem and work together to support the community at large in solving basic fundamental issues that crop up during this period.
Which tech startup segments will be able to leverage these challenging times, to show growth and innovation ?
Tech startups which fall in the bucket of online education, remote work technologies, online entertainment, B2B2C tech startups in staples space are the ones that benefit during this downturn. They can take advantage of lower CAC and build strong balance sheets and cash reserves. They can even explore acquisition of weaker competitors. If these tech startups beef up their tech stack to absorb higher volume with increased security and roll out more products and services, they can stay ahead of the bell curve.
Is there any other significant factor you would like to highlight ?
Technology will exert more influence in the way we live, post this pandemic. We live in challenging times and mankind would be forced to build a better tomorrow with more technology absorption in the sphere of science and biotechnology than before, leading to a world of equality of opportunity and of plenty.
