At the start of the covid lockdown, there were many who expected that the startups might come to a grinding halt or even that they might wither out completely. Many were concerned about the unwinding of companies that was due to happen. A few months in, many of those people changed their tune. The pandemic had an unexpected impact on the business and the working culture, in ways no one thought possible.
Many firms did not have policies in place for such an event and many didn’t prepare well. All work and operations came to a screeching halt at the start of the year and by mid-summer they did not have enough money to proceed. Whereas the workforce was forced into their homes and remote operations commenced. There was a lot of disruption in communication and in the sudden changes of firm processes. Employees were not trained to work remotely and the workload increased as there was not enough online expertise to go around.
According to a survey conducted by FICCI and the Indian Angel Network called ‘Impact of Covid-19 on Indian Startups’,
- 22% had cash reserves to meet expenses for 3-6 months
- 12% had to shut operation
- 60% operated with disruptions
- 68% cut down on expenses
- Almost 30% stated that they might have to lay off employees if the lockdown was extend
There were huge losses in investment and profits. Many had to close certain departments as they could not meet the monetary needs. Most work was out-sourced to companies that specialized in remote work. While many have laid off employees, there are a few who have taken things in stride and slashed their own income to make up for adjustments in their monetary investment instead of letting people off, like Dan Price who is a maverick CEO of Gravity Payments.
However there was a small percentage of startups that profited heavily due to the pandemic by moving and expanding services online. Industries like ecommerce, cybersecurity, SaaS (software as a service), video conferencing platforms and gaming companies saw hikes in their potential projections. Most of these industries had enjoyed growing revenue and loyal customers like the healthcare sector, stood to benefit a stronger balance sheet.
This pandemic is proving to be a strong push in the direction towards the cloud services. The sudden shift in dynamics has proven to be invaluable to many who are learning and preparing for a future in remote work and for those who are tweaking their operations to better suit the current situation.
Sectors like real estate, transportation, physical retail and travel are taking a huge hit both in terms of revenue and growth. Many opting to go virtual, few museums and theatres are putting their service online in hopes of retaining customers and increasing revenue streams from international customers.
This pandemic has closed off a lot of things for new entrepreneurs and budding startups, but it has also opened up so many opportunities for them too. The key is to look for gaps in the trees in a forest and not the trees itself. Profiting in the current situation is very difficult – as is keeping things afloat, but it is not completely impossible as shown by some firms and their workforce.