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Covid-19 has had a big impact on India’s startup ecosystem. While some have sailed through and witnessing huge growth, a lot of them are struggling to survive. Business models are being revamped to adapt to the consumer needs of what they would want in the ‘new normal’.
According to Yashish Dahiya, Co-Founder and Group CEO, Policybazaar, startups should focus on delivering results rather than chasing fundings. He spoke this at a webinar organized by Mint titled ‘Pivot or Perish A playbook for growth in the new normal for start-ups.’ He believes that there should be different time frames for planning a business strategy. Here are the edited excerpts from the Q&A session:
Q1. How are you approaching fund-raising? You have mentioned that you are looking at an IPO. Could you take us through what exactly you are looking at in terms of the last pre-IPO round of financing?
Most companies that are operating well focus on the future but also deliver in the short term. All of us have to be long-term in nature and need to always focus on the next 10-20 years but we also have to deliver something in the next two years. But then you have companies who don't deliver at all for 5-7 years and still be able to raise a huge amount of capital and that bothers people including me. Don't think that's going to stop because of the amount of capital available.
At some point, we have to do an IPO but we are at least a year away. A pre IPO will be there but it would probably be 3-6 months before. We are fairly well-capitalized. We have raised $300 million and still have $210 million dollars in the bank
Unfortunately from media, consumer, and country perspective, the focus is on companies that are capital efficient.
Sanjeev Bikhchandani always tells me that Infoedge never raised more than Rs 7.5 crores, instead built a multi-million dollar business. But today, the passion is for how much capital you can raise. Sometimes, as a founder, I feel inadequate that I haven't raised half a billion-dollar round. There's always an urge to raise a big round despite the fact that you may not need the capital. That’s the only way you will be counted as a great story. We have got it a little lopsided. We celebrate fundraisers.
I must share an incident with you. There’s a company which is valued at $150 million and they raised about $30-40 million. The team is saying what share of this should we take out of the company because they believe that the objective was to raise money. Their business is massively loss-making, most likely they will lose all their money but the management thinks that they achieved a lot by raising $30-40 million.
Q2. Apart from the general push towards digitization that everyone is talking about which has been triggered due to the pandemic. What are some of the changes you think that this will leave on businesses which will outlast the pandemic?
No physical meetings are an obvious one. Many people haven’t even shaken hands for three months. That will stay. I am in the UK and Covid-19 is pretty much over here but physical distancing is there. It is not just digital customers coming in but all your processes have to be digital and non-physical which is going to be a major challenge. People will trust automation and non-people than dealing with people in every industry be it billing, education, medicals. In our industry, we have to do physical medicals. You will have some mechanism of medical kits going to customers and them kind of doing medical themselves.
In the financial industry, there has been a huge trust in wet signatures. Sometimes, my wife, mother, or I have a few people in the office who sign for me on my behalf. So, what’s so big about wet signatures? Digital is far more traceable, trackable, and trustworthy.
Q3. How business has been for you? Are sales back to pre-Covid levels for the group overall?
A startup by definition, if it’s not agile and quick to changes, it cannot survive. We had 17 business units of which 2-3 contribute a large part of the revenue. Those have thankfully done well. We can take part in the credit from operations, clairvoyance, and preparations perspective but a lot of it was because Covid-19 happened and people were very much worried about life and health insurance. We were fairly well-capitalized, primary operations kept going, we could handle the little market variations without being very short term in our approach.
07 May, 2021
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