Startups and Covid19: Tough days ahead.
(June 23, 2020)
The rules of the game are going to change. Expect anomalous practices in the startup sphere while the virus is on the loose.
To begin on a positive note, you(startups) are not alone in this. These are the testing times, not just for a particular group of people or community but for the whole human civilization. We are traumatized, fighting with all we have just to keep moving forward. All this, because our growth has been hindered. Economies all over the world are struggling to maintain the GDP at safer levels. I don’t want you to trust me when I say this is the beginning. If a single strand of your trust follows my word right here, you will lose hope of coming out of it. Its time like these that we test our endurance and that is the only quality startups need right now.
Venture capital funds are keeping themselves at the bay while a huge number of startups are undergoing severe liquidity crunch. Followed by the year 2019, which was rather a significant year for startups all over the world, 2020 just crushed the spirits of many. It’s not about furloughing the employees, what matters now is to stay as strong as it requires to raise funds in the next quarter. While everybody started predicting the downfall pretty early, the state of public markets started suggesting the same. Governments are trying to induce power boosters in the economy through monetary packages but it’s still uncertain how long is long enough.
A power mantra for startups would be to focus on funding called revenue. Your innovation game might have been strong and your investors would have been wooed by it but now is the time to put aside your safety shoes and get your ideas a little dirty. Everybody talks of 2019 as an important year because there was a record number of funding raised (around 14 billion USD) by startups. A majority of them forget to talk about the widening losses.
This is also one of the major reason which is affecting the cashflow right now. While in normal days, they were not able to decrease the gap, what plan could possibly save them in times as unexpected as these. Let’s not take the names but even the unicorns had to cut on employees in order to save them from the worst.
Ventures in the 21st century are born out of pure innovation, paving way for bright ideas. They are supposed to create solutions which find us well in the internet age. It is possible that they were overshadowed by the practices of the past which somehow masked their vision of tomorrow. There are multiple reasons but jotting them would mark the beginning of a never-ending list of the blame games. It’s good to follow someone’s legacy but it’s pretty bad for business if you’re not thinking ahead for ten years in a row.
The signs were everywhere. It didn’t strike overnight. The trade war between two major economies (US and China) started months ago. The economical crisis in India was mentioned all over. Even basic analytics would have suggested taking preventive measures to keep going for a longer run. Instead of focusing on ambitious growth, the idea of running for a longer time should have been preferable.
All I suggest right now is to re-define your target audience, re-structure your strategies, and re-design your product to make it valid for times to come. If you’re thinking of survival, focus on generating revenue even from meager ways. Re-engage your workforce into something you have never tried. Your venture was born out of risk-taking, act like that. Don’t become a corporate anytime soon.
Author: Shashi Pathak, Founder of two tech Startups