The novel coronavirus has been spreading across like a wildfire leaving everyone dazed. With lockdowns and new social norms, companies are trying to handle the situation in the best possible way.
The first ones to take advantage of this situation were internet startups. As screen-time for most people has increased considerably irrespective of their age, they are now seeking to switch to digital services for almost everything, from banking to casual reading. The financial crunch is forcing the companies to adapt to the changing market requirements.
The startups in India are hoping for mergers & acquisitions due to the economic slowdown. The deals are mainly on;
- acqui-hiring for those enterprises with low liquidity but have the expertise,
- the classic consolidation cases for leveraging synergy and sharing the grip over the market,
- tech acquisitions where a company acquires another one for its technology hoping to bridge the digitization gap.
A recent survey by Nasscom had revealed that 70% of Indian startups had just about three months runway at the moment, 92% has seen revenue decline and over 52% are looking out to change their business model to adapt to the new trends.
CEO and Co-founder of IBC media, Mohan said “it’s a very good time to ‘go shopping’ because investors can play hardball on valuation right now”. The pandemic has in a way created opportunities for more investments, acquisitions, and mergers. Experts say there are better chances of getting good deals right now.
Many well-funded startups including Oyo, Swiggy, Zomato, Cure.fit and others have cut jobs and salaries to reduce cash burn. Some companies are moving into newer segments that could flourish post-covid19, but these efforts will not nearly meet the revenue shortfall in their core businesses as already-low margins will decline furthermore.
Even in these tough times PolicyBazaar – insurance retailer, Bigbasket, and Byju’s, is one of the few large internet startups that hasn’t been hurt by the COVID crisis. PolicyBazaar has increased its advertising spending to cash in on the increasing demand for health and life insurance and expand its market share. The pandemic has created opportunities for some to expand and establish a market position.
