Startups have been among the worst hit by the coronavirus-induced lockdown and the subsequent economic slowdown. At a time when over 70% of startups have said that their business was impacted due to the pandemic, Kalaari Capital’s Vani Kola, one of the most renowned venture capitalists in India has one important advice for entrepreneurs and startups – Make those difficult discussions.
In a chat with Deep Kalra, founder and group CEO of MakeMyTrip at the Global Fintech Fest on Thursday, Vani said that entrepreneurs are faced with tough decisions due to the pandemic.
She says that those already running a startup must make the hard decisions, so they have enough runway to be able to create new opportunities for themselves. “Whether that's a pivot, or whether it's waiting for customers to come back, whatever that is, make those hard decisions,” Vani said in response to Deep’s question on her advice to startups on weathering the pandemic.
And if neither of these options seem viable, Vani’s advice to startups is to look at consolidation. “Make the decisions that are emotionally difficult because I'm seeing that more than a third, if not half of the companies are not going to survive. And what I don't want any entrepreneur to go through in this country is a bankruptcy process, which is very personally difficult and painful. So, look for a way that you can at least sell your business. Sometimes the emotion stops you from making hard decision, but they have to be made here and now,” she added.
If you're starting a new company, Vani wants entrepreneurs to look at what can be category creators in the next 5-10 years. She says, be thoughtful about it and start the right way, find right co-founders and build it as a frugal company. “Till such a time where you can skip those rounds and get that large capital in, look to create companies that can thrive, sustain, and build from strength to strength for next 2-3 decades to come. That's what we need to create also for economy enablement of this country,” she adds.
Vani also said that it is important for entrepreneurs to do their research, think about where the tail winds are and where trends are headed and then build great products.
Entrepreneurs need to create a longer runway because markets will turn around, and you have to sustain today so that you can thrive tomorrow, she added.
MakeMyTrip’s Deep also agreed with Vani and advised startups to hunker down, slash away all costs as much as possible.
He also said that while employees are the most valuable assets of a business, there are many skills that are fungible and that entrepreneurs need to have these conversations frankly with employees.
“If they can't join you for this tough ride, I think it'll be it'll be hard for you to keep paying top salaries. Right now, people should be willing to swap salary into stock, which is delayed gratification, which ironically, for us turned out to be the biggest blessing in disguise. So, you never know the opportunities that come but you've got to fundamentally believe yourself. And of course, lead by example. If you're not leading by example, then how can you expect others to follow?” he adds.
In terms of the sectors that are likely to do well in the light of the pandemic that has changed the world as we see it, Vani said that work from home throws up a whole set of enterprise opportunities.
“In this situation, a whole slew of products will emerge that make this hybrid work from home possible at many levels - at the system level, at the software level, at the collaboration level and HR,” she added.
Vani is also betting on vernacular market, which can build tools and technologies for the next 300-400 million to come online. Deep tech is another sector that Vani said where there is opportunity to grow and scale.
From a venture capitalist point of view, Vani added that when she is funding a startup, she would want to see the thought process of the entrepreneur and support that vision.
“It's not like I am the visionary, it's always the entrepreneur who's the visionary. We are trying to understand what that vision is and see if we can kind of hitch the wagon, to their vision and support them.”
“I feel that if we look back to this period, in five, six years, we will have seen the birth of some great companies, we don't know who they are today… But I think we'll see some great companies that are going to be born in the next 12-24 months,” she added.