Coronavirus Pandemic Testing Startups By Disrupting Supply-Demand

When the news about Coronavirus slowly broke on to the world, countries were totally unaware about what was about to happen. The virus which originated in the Wuhan province of China, spread so rapidly that China had to lockdown the entire province in order to combat the virus.  However,the virus,which was later classified as a pandemic, quickly spread across the world at an exponential rate bringing countries to a standstill. Many countries had to declare national emergencies in order to cope up with the rising number of positive cases and in some places,  high fatality rates. The impact of the virus was not restricted to just the quality of life, rather the economies all over the world were affected. Stock exchanges plummeted so low that it is being compared to the great American economic depression.

Needless to say, once the economy was impacted by the virus, investors started pulling out of  the stock markets and startups along with small businesses were the worst hit. India is home to the third largest number of startups in the world ranking behind America and China.  When the stock market was taking a tumble and news of the lockdown reached the public, startups in aviation, hospitality, events and transportation took a big hit. The lockdown completely disrupted the supply and demand with people staying at home on government orders.  Companies like Uber, Ola, Rapido and Bounce in transportation, airlines along with hospitality startups like Oyo and Treebo, did not see any business during the last month. Sales teams which rely on travelling on ground are now grounded and many startups are being forced to let go of employees or withhold salaries.

However, this time of crisis has been a boon to startups in the healthcare, food, logistics and digital marketing/news sectors that are seeing heavy growth.  Startups like Swiggy, Zomato, BigBasket, 1mg, Practo and Dunzo are able to operate even during the lockdown as the government orders allow them to do so.

Most often startups work on a lean organizational structure which means, employees have to often take up cross functional roles.  At stressful times like these, work productivity will take a hit. Logistics supply chains across the world are unable to keep up with the demands of the population.  This is leading to large delays in deliverables and with vendors unable to operate there is an obvious reduction in revenues.Venture capital firm Sequoia warned of an impending recession following on the backdrop of the pandemic and has asked startups in its portfolio to dig in. Because they see this impending recession may only be contained after several quarters and it may take even longer for economies to recover and become stable.  Sequoia even urged companies to rethink their business models and consider cutting jobs.

However the startup ecosystem is coming together to help their stakeholders in this time of need.  Zomato raised more than 10 crore rupees in a crowd sourcing funding round to support its driver partners.  Ola group and its employees will contribute 20 crore rupees to support its driver partners. This entire phase would be a litmus test for startups to see how they can adapt and boost their immunity to the economic aftereffects of the Coronavirus.  Many startups will struggle but if they make it to the end of the tunnel, there is no doubt there would be a wealth of learning and opportunities gained.