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Post COVID Startup opportunities-a big picture view

Introduction

Quite a few big names like Airbnb, Microsoft, Disney, General Motors and General Electric were born during economic crises but they are in rarities (The Economist). The reality is more than eighty percent of fortune 500 companies were born in good times. That said, the silver lining is that following a slump, a burst of entrepreneurial activity eventually emerges and we may safely assume that it will be the case in the post covid recovery phase as well. According to Nasscom 40% of Indian tech startups were forced to stop operations during the pandemic in 2020. We will see opportunities are aplenty but the journey is not easy. At the beginning of 2021 we see enough vibration in the startup domain. Ecommerce players have taken a large recruitment drive. Several IIMs have seen jump in offers from ecommerce from 80% to 40% over the last year. Not only ecommerce, there are other players too out there in the recruitment drive such as digital media, logistics, deep-tech, fintech sectors.

Government initiatives

 Government of India has created INR 945 crore as seed fund to back 3600 registered entrepreneurs through several incubators. The preferred areas are: waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas, textiles and sectors aiming to have social impacts. These priority sectors must have potential opportunities to grow. Therefore, the entrepreneurs who are not registered may also target such sectors. One way of doing it is to collaborate with the registered entrepreneurs.

Several startups are working in the area of advanced textile. The site: https://tracxn.com/d/trending-themes/Startups-in-Advanced-Textile gives the details of such startups. New startups, particularly smaller ones having knowledge and expertise in this area may explore working with them. Similarly, Nasscom initiative ‘10,000 startups’ present the list of innovative startups working in the area of water management.

Local tourism sector is reviving after the lockdown and huge infrastructure is being developed in the coastal belt, north east and mountain areas, startups should work on developing innovative local tourism products.

To give impetus to innovation that resulted in social impact, Action Covid-19 Team was formed by various founders, leaders and venture capitalists from India's startup ecosystem in March 2020 with a grant of INR 100 crore to support innovators to come out solutions to reduce the impact of covid -19. It has given positive results. Now in phase II, the team is aiming for raising INR 500 crore fund to back solutions for societal problems across education, healthcare, environment and women's participation in the workforce.

The startup founders have to keep constant watch on such developments and work with them to get funds and ideas.

 

 

Blue economy

 Another big area is seaweed farming, which India has identified as a thrust area. Both the areas have been  stressed by the prime minister at the launch of India's first full-fledged international cruise terminal in Kochi, Kerala. In fact, blue economy* has huge potential for the innovative startups with India having 7,516.6 km of coastline touching nine states of India. Andrew Outhwaite has highlighted eight reasons to work in this area of which, reason 3 is very relevant from the start up point of view: “Purposeful innovation – Doing things that are good for the environment and serving neighbouring nations less fortunate than us, are meaningful, purposeful and socially beneficial. As well as you feeling good, doing things like this is attractive to talent – a major ingredient necessary for any successful venture.” FICCI has published a detailed report on the opportunities to work in the Blue economy. India and Norway have signed a MoU on India-Norway Ocean Dialogue and the establishment of the Joint Task Force on 'Blue Economy' in 2019 January. Enthusiastic entrepreneurs must explore what this MOU means to them in terms of opportunities to work in this area.

Considering the size of India, in terms of geographical area and population, there will be a huge number of potential stratup entrepreneurs who will always be out of reach from institutional backup. But we have to make this startup movement inclusive and the small startups must collaborate with relevant bigger ones. A startup may be thought of with a mandate to help connect smaller potential entrepreneurs with the relevant larger ones. One  good  platform is already existing.

Post COVID consumer behaviour

The COVID-19 pandemic is changing how we work, travel, communicate, shop and more, but some of the new habits are likely to stick permanently. Startup entrepreneurs must take note of it to identify opportunities to develop innovative products and services. Swiss Re Institute identified, based on research, five key behavioural changes that will remain even after pandemic is over because of higher perceived convenience, time savings and wider choice.

Five key trends in the behavioural changes emerging from the impact of COVID-19 as identified by the institute:

1. Increased digital adoption: people shifting to digital platforms for day-to-day needs.
2. Change in mobility patterns: less use of public transport, more remote working etc.
3. Change in purchasing behaviour: move to value-based purchasing and online shopping including telemedicine, though demand of telehealth has dropped drastically because of bad customer experience.
4. Increased awareness of health: wearing masks, increased hygiene, healthy eating etc.
5. Changes in interpersonal behaviour: increased divorce, increased pet adoption etc.

Startup entrepreneurs have to ponder what these changes mean to them. As for example, in the health care sector value - based purchasing means giving more importance to the clinical outputs and quality of care rather than on the luxury provided during the hospital stay. In other words, the functional aspect of product and services will be the priority of the customers.

What is the take away

The job of startup founders is even more challenging now compared to the pre covid era. The low hanging fruits are over. The entrepreneurs have to work smart, read a lot, research, identify multiple stakeholders and have constant dialogue with them. Improve the ability to acquire relevant skills quickly and develop capability to work together with multiple organisations.

 

 

Note: * World Bank, the blue economy is the "sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem." 

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