ETtechThe coronavirus pandemic has split the startup and tech world into have and have-nots.
While some segments saw a meteoric rise in consumption, user base and, consequently, investments, others were displaced from their upward trajectory in the aftermath of the pandemic-induced lockdown.
ETtech takes stock of the startup world in a pandemic-marred year.
THE HAVES
1. Video Conferencing
With work from home (WFH) becoming the new normal, meetings moved from boardrooms to bedrooms, and video-conferencing platforms became the means to connect for work—as well as personal life.
And a little-known video-calling app from the US made the most of this shift, even in India.
At $186 million, profits of Zoom Inc. doubled over the year ago in the July-September quarter of 2020, even as its user base more than quadrupled over the same period. Fledgling video-calling apps of Big Tech firms, such as Google Meet, Microsoft Teams and Cisco Webex, jumped on to the Zoom bandwagon and made the most of the boom. Even Facebook’s WhatsApp is testing a video- and voice-calling feature for its desktop app.
Closer home, virtual event-hosting platform Airmeet raised $12 million is a Series A funding round led by Sequoia Capital India.
Also Read: Buoyed by Video Success, Zoom Explores Email, Calendar Services
2. Streaming & Short Video
With cinemas shut and public spaces out of bounds (more on that later), we took to streaming to watch the latest shows and films from around the world—binge-watching entire seasons and movie franchises over a weekend locked up at home.
Netflix added over 25 million subscribers in the first half of 2020 but that growth has slowed now. Earlier this month, Disney+ Hotstar announced that at 26 million, it accounts for 30% of Disney’s streaming user base. In fact, the streaming service onboarded seven million users during the truncated and delayed Indian Premier League this year.
Production houses were quick to notice this trend and chose to release their films—from Mulan to Gulabo Sitabo—directly on streaming platforms.
And when that wasn’t enough, we took to TikTok—to either watch or make our own 15 seconds of fame. India banned TikTok in June, but a rash of home-grown alternatives quickly scaled to fill the void. The segment is already churning and attracting investments.
Also Read: TikTok watermark is wearing down rival short video apps
3. Online Gaming
At approximately $180 billion revenue, the online gaming industry turned out to be a bigger money-spinner than the global movie and North American sports industries combined in 2020, as per International Data Corporation. A Deloitte report said global spending on video games shot up by 17% to $10.5 billion between March and Apri. India’s online gaming industry grew at a compounded annual growth rate of 21% during the lockdown, the report stated.
4. E-commerce, Online D2C
India’s pandemic-induced lockdown, one of the world’s strictest, stalled all but essential goods and services, including deliveries by e-commerce firms. But as the restrictions eased, Amazon India announced that it had doubled its profits year-on-year in the April-June quarter.
The festive season lived up to its billing as well, with Flipkart, Myntra and Amazon clocking $8.3 billion worth of gross sales—a 65% growth over the previous year, as per a Redseer report.
Direct-to-consumer companies in categories from personal grooming to foods and beverages (F&B) also saw a revival after a sluggish initial few months of the lockdown.
5. Hyperlocal Services
Companies offering hyperlocal services—from Swiggy and BigBasket to Urban Company and Pharmeasy—gained during the pandemic, despite layoffs at some of these companies during the lockdown. Zomato announced it is likely to record its best-ever monthly sales in December. Online groceries clocked 1.7 times GMV in June compared to January. Urban Company said it crossed its pre-pandemic peak by more than 30% towards the second half of the year.
6. Edtech, Fintech, SaaS
A bunch of unicorns—startups with a billion-dollar valuation—emerged out of the pandemic in these three sectors: Unacademy in edtech; Razorpay, Pine Labs and Zerodha in fintech; and Postman in SaaS. What’s more, there was even a decacorn in edtech startup Byju’s. Clearly, it was raining investor monies at most of these startups. (Zerodha is bootstrapped, though).
THE HAVE-NOTS
1. Travel, Tourism & Hospitality
As people stayed at home due to fear of contagion and remote-working took off, companies in outdoor sectors took a severe hit.
Earlier in December, Uber announced the closure of its driverless cars division in the wake of battered revenues. Back home, Ola announced layoffs by the thousands amid a churn in top leadership. MakeMyTrip too laid off hundreds. Though domestic flights started in June, airlines are nowhere close to operating at optimum capacity and are staring at huge losses.
Restaurants perhaps were the worst-hit as they are still gingerly stepping out of the lockdown.
Airbnb, however, has been an outlier. The company, which laid off 25% of its staff in May, had a bumper listing in December, pegging its market value at $100 billion. While that left founder Brian Chesky pleasantly surprised, it gave other players in the sector hope for a better future.
2. Cinema & Outdoor Events
The coronavirus lockdown brought down the curtain on cinema, music gigs and food festivals for most of the year. And that threatened the survival of allied businesses, including online ticketing platforms such as BookMyShow.
The company laid off or furloughed 270 employees in the wake of the pandemic due to the "unfavourable environment", CEO Ashish Hemrajani said in an email to employees in May.
But even as he anticipated a bounce-back in the cinema business, BookMyShow is modelling itself to become a platform for hosting events virtually. During this pandemic and the economic slowdown, this has been a viable revenue stream for the company, according to a Quartz India report.
3. Shared Mobility
India’s shared mobility sector—from ride-hailing services to dockless bike-sharing, saw their business come to a standstill after the lockdown was announced in March.
While they did explore alternatives, such as providing rides for essential workers, enabling long-term rentals and even partnering with e-commerce firms for deliveries, these failed to provide scale to their operations.
Even six months after the lockdowns ended, recovery in the number of rides has remained at under 35% for cab rides, while other segments such as auto-rickshaws have performed slightly better. For ride-hailing, which is by far the largest segment in the shared mobility industry, new restrictive government rules that caps their commissions at 20% and limits surge pricing is another huge blow.
While some segments saw a meteoric rise in consumption, user base and, consequently, investments, others were displaced from their upward trajectory in the aftermath of the pandemic-induced lockdown.
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THE HAVES
1. Video Conferencing
With work from home (WFH) becoming the new normal, meetings moved from boardrooms to bedrooms, and video-conferencing platforms became the means to connect for work—as well as personal life.
And a little-known video-calling app from the US made the most of this shift, even in India.
Discover the stories of your interest
At $186 million, profits of Zoom Inc. doubled over the year ago in the July-September quarter of 2020, even as its user base more than quadrupled over the same period. Fledgling video-calling apps of Big Tech firms, such as Google Meet, Microsoft Teams and Cisco Webex, jumped on to the Zoom bandwagon and made the most of the boom. Even Facebook’s WhatsApp is testing a video- and voice-calling feature for its desktop app.
Closer home, virtual event-hosting platform Airmeet raised $12 million is a Series A funding round led by Sequoia Capital India.
Also Read: Buoyed by Video Success, Zoom Explores Email, Calendar Services
2. Streaming & Short Video
With cinemas shut and public spaces out of bounds (more on that later), we took to streaming to watch the latest shows and films from around the world—binge-watching entire seasons and movie franchises over a weekend locked up at home.
Netflix added over 25 million subscribers in the first half of 2020 but that growth has slowed now. Earlier this month, Disney+ Hotstar announced that at 26 million, it accounts for 30% of Disney’s streaming user base. In fact, the streaming service onboarded seven million users during the truncated and delayed Indian Premier League this year.
Production houses were quick to notice this trend and chose to release their films—from Mulan to Gulabo Sitabo—directly on streaming platforms.
And when that wasn’t enough, we took to TikTok—to either watch or make our own 15 seconds of fame. India banned TikTok in June, but a rash of home-grown alternatives quickly scaled to fill the void. The segment is already churning and attracting investments.
Also Read: TikTok watermark is wearing down rival short video apps
3. Online Gaming
At approximately $180 billion revenue, the online gaming industry turned out to be a bigger money-spinner than the global movie and North American sports industries combined in 2020, as per International Data Corporation. A Deloitte report said global spending on video games shot up by 17% to $10.5 billion between March and Apri. India’s online gaming industry grew at a compounded annual growth rate of 21% during the lockdown, the report stated.
4. E-commerce, Online D2C
India’s pandemic-induced lockdown, one of the world’s strictest, stalled all but essential goods and services, including deliveries by e-commerce firms. But as the restrictions eased, Amazon India announced that it had doubled its profits year-on-year in the April-June quarter.
The festive season lived up to its billing as well, with Flipkart, Myntra and Amazon clocking $8.3 billion worth of gross sales—a 65% growth over the previous year, as per a Redseer report.
Direct-to-consumer companies in categories from personal grooming to foods and beverages (F&B) also saw a revival after a sluggish initial few months of the lockdown.
5. Hyperlocal Services
Companies offering hyperlocal services—from Swiggy and BigBasket to Urban Company and Pharmeasy—gained during the pandemic, despite layoffs at some of these companies during the lockdown. Zomato announced it is likely to record its best-ever monthly sales in December. Online groceries clocked 1.7 times GMV in June compared to January. Urban Company said it crossed its pre-pandemic peak by more than 30% towards the second half of the year.
6. Edtech, Fintech, SaaS
A bunch of unicorns—startups with a billion-dollar valuation—emerged out of the pandemic in these three sectors: Unacademy in edtech; Razorpay, Pine Labs and Zerodha in fintech; and Postman in SaaS. What’s more, there was even a decacorn in edtech startup Byju’s. Clearly, it was raining investor monies at most of these startups. (Zerodha is bootstrapped, though).
THE HAVE-NOTS
1. Travel, Tourism & Hospitality
As people stayed at home due to fear of contagion and remote-working took off, companies in outdoor sectors took a severe hit.
Earlier in December, Uber announced the closure of its driverless cars division in the wake of battered revenues. Back home, Ola announced layoffs by the thousands amid a churn in top leadership. MakeMyTrip too laid off hundreds. Though domestic flights started in June, airlines are nowhere close to operating at optimum capacity and are staring at huge losses.
Restaurants perhaps were the worst-hit as they are still gingerly stepping out of the lockdown.
Airbnb, however, has been an outlier. The company, which laid off 25% of its staff in May, had a bumper listing in December, pegging its market value at $100 billion. While that left founder Brian Chesky pleasantly surprised, it gave other players in the sector hope for a better future.
2. Cinema & Outdoor Events
The coronavirus lockdown brought down the curtain on cinema, music gigs and food festivals for most of the year. And that threatened the survival of allied businesses, including online ticketing platforms such as BookMyShow.
The company laid off or furloughed 270 employees in the wake of the pandemic due to the "unfavourable environment", CEO Ashish Hemrajani said in an email to employees in May.
But even as he anticipated a bounce-back in the cinema business, BookMyShow is modelling itself to become a platform for hosting events virtually. During this pandemic and the economic slowdown, this has been a viable revenue stream for the company, according to a Quartz India report.
3. Shared Mobility
India’s shared mobility sector—from ride-hailing services to dockless bike-sharing, saw their business come to a standstill after the lockdown was announced in March.
While they did explore alternatives, such as providing rides for essential workers, enabling long-term rentals and even partnering with e-commerce firms for deliveries, these failed to provide scale to their operations.
Even six months after the lockdowns ended, recovery in the number of rides has remained at under 35% for cab rides, while other segments such as auto-rickshaws have performed slightly better. For ride-hailing, which is by far the largest segment in the shared mobility industry, new restrictive government rules that caps their commissions at 20% and limits surge pricing is another huge blow.
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