Over the past 7 years, our fund has invested in some 30 early-stage startups in India, and through our global partners, another 30+ in other emerging markets. Many are thriving, some are challenged but still growing, and some are just hanging on. None have Softbank-level funding, yet — meaning that the impending shock to the business climate of India caused by COVID-19 is going to put some of our startups, and I expect many thousands more across the country, into severe distress.
In early March we concluded that there is a big disconnect between what we were seeing in planning and actions from different CEOs. We sent guidance on COVID Readiness Planning to all of our investees. It’s been fascinating, and concerning, to see the different reactions across our portfolio.
Some CEOs realize the risks and are rapidly making plans, evaluating contingencies, and thinking things through carefully. A few are cutting expenses and taking other immediate and preventive actions. Others are peering around corners as they determine if/when to take any actions, with a wait-and-see attitude. Others appear to have their head fully in the sand.
Having managed both small startups and large global businesses directly and in board roles through multiple downturns (1991, 2000, 2008), I’ve learned a few things.
The most important is simple: business leaders must continually evaluate an adverse situation and make decisions early and often. Waiting leads to disaster.
For several weeks now, shrewd business leaders have understood that COVID-19 is going to impact the entire world. At the same time, more obstinate leaders have denied the issue outright; and others have said “it’s their problem, it’s not coming here.” Science tells us otherwise. The Harvard professor of epidemiology Marc Lipsitch predicts that some 40 to 70 percent of all people around the entire world will be infected with the COVID-19 virus. And if you look into the comparisons of COVID-19 with other infectious viral diseases, you can see why he says this.
My advice to all who have business interests, friends, and family in India is this: COVID-19 is there, and the cascading effects of it are starting to be seen. Delhi closing schools for 20 lakh students for the rest of March is only the beginning. Now is the time to take in the information available, make clear plans, and execute on them. Here are the high level recommendations we sent to our global CEOs:
- Get members of your team focused NOW on preventative measures one would take against *any* virus, especially an ultra-contagious one like COVID-19. There are plenty of websites offering specifics. Here’s one that we liked. Send this or any similar article to your team and ensure everyone reads it.
- Build a COVID Readiness Plan for your business, and ensure that your critical business partners have the same.
- Start having everyone work from home very soon, if not immediately. “Social distancing” is known to slow the spread of disease.
Those who move their companies rapidly into a defensive posture and take decisive action will have a good chance of coming out OK.
Those with their heads in the sand, or who delay, may not make it.