India as a nation is going through a difficult time due to CoronaVirus. Many of the Indian businesses are struggling with blind uncertainty about their future economy due to a severe hit on several sectors such as hospitality, MSME, civil aviation, agriculture, and the allied sector.
So we as a news portal, find it our primary duty to keep the morale high of our Indian start-ups and entrepreneurs by reporting on how some people are working round the clock so our health and jobs are secured. We hope our series will help the entrepreneurs struggling during lockdown and SME's who are trying to beat the pandemic and do best for their business. So read on to spot the opportunities, mistakes, and overall how to correct your actions so that the business heads in the right direction.
Pranav Sharma, a mechanical engineer from VIT, Pune, is an expert in identifying, understanding, and contributing to structuring and executing the business side of startups. He is the co-founder and Director at Woodstock fund, which helps SMEs with debt fundraising.
Pranav has a decade and a half in a leadership role in financial services across the spectrum Private Equity, Asset Management (both Offshore & domestic), Distribution (Broking, Retail & wealth management), Structured finance, and SME insurance. Prior to that over 3 years of experience in manufacturing and technical sales. MBA (Finance & Strategy) and engineer. Angel and equity markets investor.
“All our portfolio companies have an 18 month to the 5-year runway,” he says, on managing the expenses during this lockdown due to the CoronaVirus. They have cut down on the monthly burn rate and variability of their expenses. Amidst these cost cuts, they have struck a fine balance to actively engage with productive and critical team members and third parties. Their focus has been to keep the cultural fabric of the startup intact.
While doing all of this they have accelerated building and crunched time to reach their milestones. Since customer acquisition is not easy, they are focusing a lot more on partnerships and joint outreach. “We think this is good enough for now unless there is a massive second wave of COVID-19 that needs further deeper cuts and more hands-on-deck,” he says.
On coping with the economic slowdown
Pranav explains how entrepreneurs can cope with the slowdown of the economy due to the pandemic spread, “Just continue to build and capture low hanging fruits - customers that can pay, customers that can be easily acquired, products or features that can be easily monetized. Always remember that everyone is in the hole right now and everyone wants to come out of it. If the startup can contribute materially to the topline and bottom-line of their target market at a reasonable cost then they will get traction which will snowball into momentum when economic activity jumps,” he says.
Measures to take during uncertainty
Entrepreneurship is about courting risk, executing diligently, and then reaping rewards. Most entrepreneurs are die-hard optimists and management-risk is rarely their focus. So, Pranav suggests the following points to help the entrepreneurs navigate most of the crisis and thus prioritize things in the organization:
- Identifying the top 3 risks in your startup and finding a maximum of 3 sub-risks under each of these risks
- Rate them on their probability and impact as high or low (omit medium as it doesn't make you decisive)
- Identify risk mitigants for each of these sub-risks
- Review these risks and mitigants on a quarterly basis. Particularly those that are high probability and high impact and need constant focus
Due to the lockdown, a lot of people got to experience life around their homes with their family which they couldn’t all these years due to their busy schedules, travel, and 24x7 work profile. “Personally, lockdown gave me a lot of space to focus on my inner wellbeing through eating right and yoga. Professionally since everyone is available on video and phone calls these days, it has helped me execute things much faster. COVID-19 is contagious, but not as fatal as Spanish flu or any other disease. We just need to be more responsible towards ourselves and those around us and it shall pass-by,” Pranav says.
He applauds the first-of-its-kind initiative taken by Top Venture Capitalists and entrepreneurs with an INR 100 CR grant, Action COVID-19 Team (ACT), launched to provide resources and guidance to startup founders and employees, “It is an outstanding initiative. In general VCs and entrepreneurs should be more nurturing and kinder to the startup ecosystem. Eventually, it's not all about money, fame, or glory. A journey of a VC or entrepreneur is also about being contributive to individuals and society. One thing that COVID-19 has taught us is that we are only as strong as our weakest link. We should support each other beyond boundaries,” he says.
Best buying opportunity for investors
“Most are denying the possibility of a second wave and a new normal that can re-architect practically every industry that we know of. Right now what we are seeing is a relief rally,” he says. The year 2020 in general will be a washout, as demand might not return back to what they were and hence the enterprise balance sheets will contract massively.
Pranav says, “We still have to see the pain in the market because this lockdown will lead to almost a quarter of no revenues and continued payroll and other costs. One bad quarter for corporate leads to another quarter being washout and then another quarter to cover the losses.” Pranav adds that “I am a lot more bullish on startups in the digital asset space. For those startups that are available at a reasonable valuation, our fund is very well poised to capture this upside potential multi-bagger,” he says.
(Edited By Rabia Mistry)