It would be an understatement to say that the pandemic has changed life. It has brought in disruptions—of the kind we had never thought of. Initially life came to a halt and then, before we knew, new models of conducting life emerged: be it how we led our daily lives, how we educated ourselves, consumed entertainment, socialised, et al.
The lockdown soon slid into businesses stalling, business owners and founders floundering with issues of revenue, cost reduction, team issues, etc. And many businesses, including startups, had to pause operations and finally shut down. Almost 70% of startups were impacted and about 12% had to shut down operations altogether.
The year 2020 was unprecedented, impacting every aspect of the economy. In fact, sectors like travel and hospitality, real estate, etc. suffered immensely. Startups with almost negligible reserves, were hardest hit, facing challenges such as layoffs, funding crunches, paused operations, etc.
A startup pivot
Entrepreneurs are, however, a resilient breed of people who invariably rise from the ashes to beat the odds. It was the quick and agile founder who saw the opportunities the pandemic and lockdown had thrown up. These entrepreneurs quickly leveraged the “new needs” to pivot their businesses and keep the revenues going. We soon saw offline models swivel to become online, bouquets of products get skewed towards essentials. These entrepreneurs understood that the customers had not gone away—it was just that their behaviour had changed.
Some founders saw new opportunities where they could leverage their competencies and build new lines of business. Phenomenal engineers built ventilators—the need of the hour in India—literally in 90 days, and of world class quality at extremely competitive prices. They not only built this successfully and went to market, but ensured their operations did not pause, built revenues and ultimately, a second line of business.
This pivoting is possible for startups as they can move nimbly and make quick agile changes. It is these entrepreneurs who see the opportunity in tough times to create valuable and resilient businesses. The pandemic therefore was a catalyst, a game changer for those who could change their game.
Technology took centre stage
With social distancing, lockdown, and restricted travel, technology took centre stage. Tech truly became critical infrastructure. With the pandemic, the world has entered the technology era. Apart from going digital, tech became pervasive across all sectors—be it manufacturing, agriculture, education, healthcare, retail, etc. And with technology, deep tech like IoT, A.I., data analytics, etc. came to the fore. This allowed companies across sectors to not only continue to operate their businesses in the changed environment post-pandemic, but also to access new markets, add new products, and quicken their business growth.
And new tech plays, driven by low capex software driven models, made it conducive for startups to adopt and build their ventures quickly. But that’s not all: We are now seeing some traditional offline businesses, being tech enabled, going for much quicker scale up across different market segments, geographies, and yet at efficient pricing.
A whole new ball game
The year 2020 was a cornerstone year for the startup ecosystem. While several companies struggled to keep going, this was also the year for entrepreneurship to flourish. Innovation, out of the box thinking, pivots, and capital efficiency became the buzzwords.
At the same time, India saw massive growth in sectors like healthcare, biotech, edtech, fintech, online gaming, OTT, etc. Just as an example, several ground-breaking innovations using cutting-edge technologies changed the traditional healthcare industry. The country not only saw the emergence of e-pharmacy, telemedicine, etc., but these instantly found widespread acceptance among consumers. Therefore, e-health and healthtech startups soon expanded their reach. In fact, in the years to come, the healthcare market is set to grow at a CAGR of 17% and reach a market valuation of $353 billion by 2025. With this potential, it is estimated that e-health currently has an addressable market of $11 billion, out of which only 11% is tapped.
Year 2020 was also the year of the unicorns. As many as 11 new unicorns, like Nykaa, Unacademy, Zerodha, Razorpay, Postman, etc. emerged during the year. And India is now well on its way to achieve 100 unicorns by 2025.
The startup ecosystem was extremely active—investments grew specially for seed and angel companies , and these investors saw exits and returns.
One year after the lockdown, we are seeing a variety of innovations across several sectors, high quality talent going entrepreneurial, and angel / early stage investors writing cheques.
Clearly, the Indian entrepreneurial ecosystem is at a cusp: It is well poised to grow dramatically and move from the third largest startup ecosystem to become the largest! And more importantly, startups are becoming the biggest job and value creators for India and helping India to become “Atmanirbhar.”
Views are personal. The author is Co-founder of Indian Angel Network & Founding Partner, IAN Fund.