Ben Mathias
Mathias is speaking on Leadership through Crisis: Advice for startup pivot and restructuring in the new normal at e27’s webinar on September 15. For more details, click here.
COVID-19 has affected many a startup around the world, especially those in the tourism and hospitality sectors. However, the impact has not been even — while some like Sorabel and Blanja were forced to close shop, some others like YouTrip were prompted to pivot their core product/business model to stay afloat.
“Different sectors have been affected differently. Companies selling essential consumer goods have benefited from consumers shifting their purchases online,” says Ben Mathias, Managing Partner of Vertex Ventures (Southeast Asia and India).
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“Examples are HappyFresh, Licious and FirstCry. In line with this increased e-commerce spending came the need to strengthen supply chains and so companies such as Tjetak, Janio, Tanihub and Ace Turtle have seen increased demand,” he said.
According to Mathias, enterprise startups also suffered initially since their customers were in the lockdown. However, corporates realised that they had to rapidly digitally enable their operations in order to operate in the new normal. This has benefited companies such as Storehub and Active AI that help their customers with digital enablement.
“There is always an opportunity to be found within a crisis,” he believes. “Most nimble startups quickly adapted to the pandemic by upgrading their operations to be able to handle the new normal. Others used the slowdown as an opportunity to focus on their product.”
For example, Hotelogix (Vertex’s portfolio company), which sells software to the hospitality sector, took the opportunity of the downtime to merge with AxisRooms and RepUp which provide complimentary solutions.
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“When the hospitality industry rebounds, which it inevitably will, it will have the world’s most comprehensive hospitality SaaS solution with features like contactless check-in that are required in the ‘new normal’”, he adds.
For others, the pandemic provided opportunities to use their product offerings in ways they had not earlier contemplated. For instance, StoreHub — which sells a PoS solution to small retailers, restaurants and cafes — saw a drop in footfalls after the pandemic broke out.
But StoreHub started getting requests for home delivery and it quickly updated its solution to enable home delivery. So the crisis gave it an opportunity to dramatically increase the scope of their offering.
Similarly, soCash expanded its service to help SMEs within its network submit applications to banks.
“However, pivots are good only if they make longer term strategic sense. For example, a lot of players getting into groceries during the lockdown but it’s a tough business with limited margins. We evaluated this for one of our companies but decided not do pivot but instead strengthen the existing offering so that when demand comes back, the company will be ready with newer and more variety of products,” he explained.
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Mathias is also of a view that overall, this crisis is good for the VC industry for several reasons. Firstly, startups have been forced to be more efficient and have realised that they can still hit their business plans with far less expense. So path to profitability is quicker.
“Secondly, the pandemic has accelerated digitisation plans for corporates by at least two years. This will create new opportunities for startups. Finally, the shift to video conferencing has made it possible for us to meet a lot more companies. VCs are now more accessible to startups and vice versa,” he said.
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Image Credit: Vertex Ventures
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