Since it started operating in 2015, The Daftar in Baner has never known a quiet day. A vast co-working space that is frequented by entrepreneurs trying to build the next big startup, Daftar has now closed its gates for the lockdown. Painted inspirational sayings from its walls now look down at empty conference tables and swivel chairs — a fitting metaphor for the mood of many startups in the city.
“These times are extra vulnerable for startups as, mostly, we work on a shoestring and have funds for a short period of time, which is usually a few months. Even a tiny imbalance is enough to make or break a startup. A few startups have already started questioning their survival in this period,” says Sunanda Verma, who founded Daftar with Vandita Purohit.
The 21-day lockdown was preceded by weeks of social distancing and work from home, leaving startups with a feeling of uncertainty. Pune is one of the major startup hubs of the country. Micro-enterprises here work in sectors ranging from home-cooked food to wedding photography to e-vehicles to edutech. In an environment of social and financial chaos, several firms are unable to identify the steps to take to stay afloat. Revenues are falling and the fixed overheads are accumulating. “We have no way to predict how long it is going to continue like this and, hence, have nothing to hold on to plan for the near future,” adds Verma.
Normally, at this time of the year, Teresa’s Learning Center (TLC), a training and consultancy services company for communication, language and behavioural skills, would have been spending its Learning and Development Department budget on training employees for skill enhancement to be in tandem with the business plans for Q1 onwards. “Rumours about the virus and the possibility of the curfew being extended really makes all the project plans invalid. It is like everything has gone into reset mode,” says Bhinoy Japher. Founder, TLC. He adds that the company had two clients in full mode of operations and three very warm leads. “They all have been suspended indefinitely for the time being. The sales efforts for the warm leads is now redundant as we will need to break the ice again depending on the dynamics of the market post the pandemic and crisis, says Bhinoy.
For startups such as Lydnow Edutech, which trains children and young adults in robotics and future technologies, the period between April 15 and June 10 is devoted to foundation courses through which students further enroll for the year-long training programmes. “About 75 per cent of our business revenue depends on this intake season going right. The way things are unfolding, we might miss the entire season. Our business cycle is up for some major financial hits. The funds that we reserve for advertisements and publicity would now be utilised to see through these months. For our business, this could take away a substantial part of the growth that we achieved in the last two or three years,” says founder Arijit Malllick.
Some startups may not even see the light of day any time soon. tcha.co, whose plan was to make freshly brewed tea and coffee available through micro-entrepreneurs, had spent the past six months on research, of which the last two was on beta testing the concept. Their big day was in the first week of April. “At this time, we would have been on our high, running around to fix everything for the day we have been preparing. Today, we are stuck with no clarity of how things would move forward. We have deployed capital but all our vendors have shut shop and our development work is on a stand still. It takes a lot of time to build things. COVID-19 has delivered a blow that has sent us back a few steps,” says Amit Bhatta, one of the founders.
Abhishek Ballabh, Co-Founder at ExtraaEdge, a marketing-tech startup that operating in the education industry, says that the impact of the lockdown on startups can be calculated by understanding how the crisis affects consumers.“A travel business, an e-commerce business or a discretionary hyperlocal supplier for e-commerce are getting hit. There is no discretionary spending happening today, largely because people are more in a survival mode. Also, with logistics are shut down, if somebody buys a product, it won’t get delivered to them. Any business, where there is a discretionary spend from the consumer’s side, is terribly impacted and some are shutting shop for three to four months when they hope things will be better,” he says.
On the other hand, businesses such as his own have seen increased activity. ExtraaEdge works on the sales and marketing of education institutes, That business is looking up because students and their parents are at home. “Our customer’s i.e. Institutes outreach teams are at home, making calls, sending outbound campaigns, running Google adverts & spending time building their digital brand stronger than ever,” says Ballabh.
While the future looks bleak and companies are contemplating difficult decisions to sustain themselves, such as heavy borrowing, the spirit of residence that marks startups has come into play. Several founders say that this is the time to introspect and think out of the box. “For everything that you were delaying in the past it is best to bring it in the forefront to plan and execute. Did you think your sales strategy needed a revamp; did you want to create new content; did you want to sit with your team to listen to ideas and innovate, then this is the best time. It is the adversity that looks us in our faces that will force us to reinvent ourselves,“ says Bhinoy.
An interview with Mohit Nagaria, Founder of Logout.World
One of the industries that is facing the brunt of the coronavirus pandemic is travel. Mohit Nagaria, Founder of Logout.World, a marketplace platform to discover and book activities in travel, adventure, hobbies and social events, tells Dipanita Nath about the ground situation and the path ahead.
1) What would you have been doing at present under normal circumstances?
LogoutWorld provides experiences that range from three hours to 10 days. Currently, we have a sizeable number of activity operators, who provide experiences under different categories. Our normal operations involve promotion of all those events via different online channels, building tools for our host to help them sell fast, and seeking out new partnerships for promotion as well as bookings. In the recent past, we started to see a sizeable traction from corporates, who were looking for some offbeat or unconventional experiences as part of their employee engagement programmes. After getting initial queries about it, we realised that there was a gap that we were best positioned to capture. We started an active reachout with our offerings to multiple corporate groups, schools, and colleges.
2) What is the situation now?
Being a marketplace platform, we have a lot of partners who sell different kinds of experiences from LogoutWorld. Due to restrictions around travel and movement, we have seen a slump in the bookings and it has impacted the business immensely. However, we have been in constant touch with our activity providers to gather feedback on improving the product functionality and features to deliver better services whenever the market sees a rebound.
We have also been working on a lot of strategies to leverage online mode for the delivery of experiences as we understand that the customers are trying to look for new avenues to make the best use of this stay at home period. The podcast, live online interactions, video lessons and other social media interaction tools are becoming a hit as they enable social with the distance and we are also trying to make use of them. We are also planning to extend our services to the consumer to make them ready to travel in the post-corona world by partnering with Travel Insurance, Travel Loans and other allied services that protect them in case of a sudden emergency.
3) Do you think startups are especially vulnerable?
We believe startups are better placed in times of crisis like the one we are experiencing right now. Their small team size and early growth stage makes them faster to respond to the changes in the market. As start-ups, we are always experimenting and pivoting to hit the right note with the customer which is an asset for us still. However, the economic implications are hard to ignore. As we look towards a period of recession worldwide, it will become hard to raise investments in the near future. But we believe the best way to deal with this externality is to make our business stronger so that it’s hard to ignore the impact we are making and we always try to strive towards it.
4) What are the challenges you foresee?
One of the first casualties of this epidemic is the travel and hospitality industry, which happens to be the sector LogoutWorld operates in. Some of the challenges we foresee are-
i. We feel that while inbound travel may resume in a couple of months; outbound travel will not recover till the threat is minimal and the drug development is completed.
ii. Even with a pessimistic timeline, we feel that the coming 2 months are going to be hard for us and our partner suppliers due to slump in revenues. We are trying a lot of things to give a boost to the business by going online to stay afloat till this passes.
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