coronavirus impact on businesses: View: Revving to start up after lockdown

By Ganapathy Venugopal

As an early stage investor, my world is largely surrounded by startups. Many of these businesses serve as barometers for what is happening in the larger economy. In this unprecedented Covid-19 crisis, we are surrounded by frenetic WhatsApp forwards, never-ending streams of conference calls, scraps of epidemiological wisdom and geometric possibilities of recovery. Finding some hope and sanity in all of this has been hard.

For investors, the last few weeks have been quite predictable — make sure every portfolio company has an extended runway; get capital for those who don’t; support those with growth opportunities; and, in general, find ways to help founders. For founders, however, it has been far from predictable. From scaling businesses and preparing for fund-raises, to having to worrying about ‘Day Zero’ scenarios have been quite sudden.

Every crisis brings with it some unseen opportunities. Every crisis also tests the limits of our resilience. Amid mathematical models and economic projections, one powerful factor is often overlooked: the power of human optimism. While India’s startups are still only a small portion of the larger economy, if we are looking for hope, they may be a good place to start looking.


For most portfolio founders I have been in touch with, the first two weeks of lockdown resembled a dystopian reality — advanced term sheet conversations held up; startups stuck with cross-border fund raise; founders stuck abroad not able to return; several founders seeing their business grinding to a halt; spiralling receivables; new business conversations postponed. And almost all of them having to undertake painful cost-reduction measures.

In all this gloom, two things stand out: the sense of optimism among founders, and the speed with which they have adapted to the evolving ‘normal’. In every single case, the founder had some basic idea of what they needed to survive this crisis, and had put in place a plan to execute on that. Most of them had put together a plan to extend their ‘Day Zero’. Some of the larger ones had a business continuity plan in place.

They had worked out various demand scenarios. Business model changes, pivots, new ideas for distribution, automation — nothing was out of question. Most had put in place a daily or weekly communication cadence with all their team members. If they were anticipating a crisis in collections, they had reassured their vendors to expect delays. The tough decisions on reducing headcount was dealt with as humanely as possible.

Most conversations started with how the business had fallen to near-zero levels. But they ended with a note of optimism around how they will bounce back. Every venture capitalist (VC), across large and small funds, I spoke to endorsed the sense of optimism among their portfolio founders and how quickly they had adapted.

There are a number of unknowns on the business front. There is no line of sight on how long this shutdown will last. Views on the shape of recovery vary. When rebuilding will begin is uncertain. But one thing is clear: startup founders are prepared, optimistic and believe they have it in them to bide this crisis. That they want to do this while taking decisions as humanely as possible, and leading by example suggests that the Indian startup system is in safe hands.

The writer is CEO, Axilor Ventures.

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