Covid-19 has delivered to the world an unprecedented challenge—not foreseen by anyone nor can we foresee the end! It has the power to destroy the old and usher in a new world. It has led us to question the business norms we are all familiar with, brought the cycles of the economy to a grinding halt, and left us grappling with the unknown and the unpredictable.
This is a world-changing scenario that has become the new normal. But this presents us an opportunity—yes, an opportunity. Customers will continue to buy; only their needs and behaviour will change, and new markets will emerge. This has opened up an opportunity for start-ups that will drive disruption and innovation, building nimble and cost-effective businesses. It has demanded a need to build strong businesses: capital efficient, with a top line and bottom line, a focus on unit economics, cash-flow focused, etc. Start-ups that remain standing through such difficult times have a higher probability of success. Entrepreneurs who get through these tough times will surely have a longer runway.
More interesting is the opportunity for existing start-ups. It is even more critical that these businesses think how they can prevent “wind downs” in this lockdown. This needs some very agile and smart thinking to not only stay afloat, but more importantly grab the market need and ensure there is a going business. We are seeing that happen across the ecosystem—many start-ups have created Covid-related products by innovating for the emerging needs: ventilators, sanitisers, PPEs, etc. They have become front runners in the fight against Covid-19 and are also in the race to grab market share.
The pandemic has given a strong signal: entrepreneurs have to pivot or perish—there really is no third option. And this pivot could include a complete change: change the product/proposition, refocus on a different market, a different business model, and even build new delivery mechanisms. But the billion-dollar question is: How does one choose the direction of the pivot?
What the pandemic has again brought to the fore is the need to go back to fundamentals. We are seeing that in every walk of life and business is no different. The only way to think of a pivot is to ascertain competencies and skill sets. Entrepreneurs will need to step back and ascertain for themselves what their core competencies are—it is the assessment of these that will enable them to think what they could do differently. It truly is time to challenge one’s mind and reimagine oneself. Many start-ups have done that: They had a choice to sit at home with the lockdown, or to use the lockdown to reimagine themselves. And these have resulted in some state-of-the-art products emerging from India. Leveraging competencies is one pillar for a pivot.
The other pillar to not perish is the “pivot” itself. While products and business models may be changed, what is imperative is to pivot the mind. If the mind does not change, change cannot result. The mind is supremely powerful. It can not only change perspectives and behaviours, but can also bring a paradigm shift. How else can companies with offline businesses move online, create products completely different from the normal product line? This is not a simple change of moving the business model—it requires a complete change of culture, retraining teams, accessing and educating customers, changing pricing models, internal processes, delivery partners, etc. For all of this to work, the founder has to think “pivot” with a focus like Arjuna, on “survive”! The rest will then follow.
The lockdown and social distancing have shown that technology not only saved the day for many businesses during the Covid tunnel, it is also the driver of the future. The world has not only gone digital and virtual, it is fast enabling the new world. Tech has now become completely horizontal: It is enabling innovation across all sectors, be it manufacturing, textiles, agri, healthcare, retail, fashion, water or clean energy. And India, with its huge tech talent, is extremely well placed to grab the leadership spot and build not world-class products, but state-of-the-products of top quality, and at competitive prices. This is atmanirbhar at its best. And this positions ‘Made in India’ products extremely well for global markets.
Therefore, while many think Covid-19 has dealt a cruel hand, entrepreneurs see this as a new opportunity. There couldn’t be a better time to start a business for completely new products. And finally, for well thought through start-ups led by determined leaders with relevant experience, capital is available. After all, the opportunity for new products, of new customer bases and wealth creation that entrepreneurs can see, so can the investors. And investing is the business of investors for returns. Therefore, high-quality founders continue to raise money from experienced investors who have the risk appetite to not only invest in funds, but are also willing and able to mentor and guide these young “new normal” start-ups.
Padmaja Ruparel
Co-founder, Indian Angel Network,and Founding Partner, IAN Fund
(padmaja@indianangelnetwork.com)