Startups working on interdisciplinary convergence of biology, digitalisation and medication will be leaders of future
Zone Startups India is a startup accelerator accredited by NSTEDB, under the Department of Science & Technology, Government of India. Hemant Gupta, Managing Director, Zone Startups India explains how COVID-19 has accentuated the dire need for health innovation and the role of health and pharma startups in the battle against the pandemic. He also outlines how startups need to adapt and transform to not only tide over these tough times but also emerge stronger, in an exclusive interview with Lakshmipriya Nair
What have been the most significant impacts of the COVID-19 pandemic on India’s startup ecosystem?
I believe that in order to understand the impact of the pandemic on India’s startup ecosystem, you actually need to separate the pandemic and the lockdown. While the two are interlinked in many ways, the pandemic is a long-term phenomenon, the lockdown is a short-term one.
Let us look at the lockdown first – amongst the wide-ranging impacts has been the sledgehammer blow that has been dealt with the revenues and growth trajectories of startups in sectors as diverse as travel and tourism, hospitality, manufacturing, logistics, food etc. etc.. An estimated 60 per cent of startups in the B2C space are facing the threat of closure. Amidst the doom and gloom, there are startups that have benefitted also, such as two of our portfolio startups – Dozee (contactless patient monitoring) and Sagar Defence (surveillance drones and smart face shields).
The pandemic is a completely different kettle of fish, it is changing the way we live, interact, travel, work, celebrate, relax – the list goes on and on. It is forcing everyone in the ecosystem to relook at the way they operate. Startups are relooking at their business models and ways to pivot to stay relevant and grow. Incubators like us are moving to online incubation, which is actually helping us increase our reach. Investors are going back to their investment theses and reviewing it in light of the “new normal”.
Due to the overall uncertainty, there are far fewer transactions also happening, and the ones that are happening are smaller in size, March saw 34 deals valued at $354 million, compared to 46 deals valued at $714 million in February.
A recent NASSCOM report highlights that 90 per cent tech start-ups in India are facing a decline in revenues. But, haven’t pharma and healthcare startups or those which are closely allied with these sectors bucked this outcome? How have they fared?
You are absolutely right. Not just in India, but globally there are several sectors that have done well, either as a direct consequence of the pandemic or as indirect consequences.
The direct beneficiaries are, as you say, pharma and healthcare and the ones that are allied to these two sectors. A lot of credit goes to the founders of the startups in these sectors who have risen to the challenges of the pandemic and morphed their products and services to suit the new environment. Apart for Dozee and Sagar Defence, there are dozens of other examples – Ethereal Machines and Big Bang Boom have been trying to fix the shortage of ventilators; Helyxon and MedloTek Health have developed innovative solutions to increase the number of hospital beds; Staqu, Adverto, Pulse Active Stations and Intugine are offering monitoring solutions and of course Mylab, a molecular diagnostics startup is working on low-cost PCR kits that speed up the detection process.
As a result, the startups in these sectors are seeing a significant increase in the deal flow, in addition to special-purpose funds like ACT Grants Initiative where investors contributed $13 million to fight the pandemic.
As a start-up accelerator, what is your advice for startups to tide over these tough times? What are the immediate measures they should take to survive and thrive?
The pandemic period is unsure and unpredictable, and if anything, the role of an accelerator becomes even more important to ensure that their startups are provided with the right guidance and mentoring.
Our advice to our family of startups has been that first and foremost they need to adopt risk mitigation measures to ensure continued business operations, protect employees and support their client base and partners in the ecosystem. Additionally, some immediate steps that the startups can implement are:
- Encourage partners and team members to adopt remote work and use freely available business and communication tools;
- Reduce their O&M costs to maintain a requisite set of cash flows only;
- Communicate and communicate and communicate, become pro-active to connect with partners, funders, customers, etc;
- Connect within the Indian startup ecosystem, join hands with each other to support and grow business together;
- Plan for the long term, startups should develop a resilient and sustainable business plan, seek the advice of mentors and venture capitalists; and
- Collaborate with local, national and international funding agencies, investors, accelerators.
In the end, startups should not get bogged down with the challenges of revenue and funding; but keep on trying and going ahead; failure is one step closer to success.
The coronavirus pandemic has made it clear that we need to reboot healthcare to beef up our defence against the current and emerging diseases. What kind of new opportunities will it open up for the start-ups in the life sciences sector? Which will be the major areas to focus on?
Oh, there are opportunities galore for startups in health tech, including life sciences. To an extent, the current pandemic has exposed the vulnerabilities and weakness of the healthcare sector, a lot of the focus had been on small incremental improvements or very niche solutions.
As they say, necessity is the mother of invention!! The opportunities for Indian startups include sub-sectors like drug development, disease identification and surveillance system, single-use manufacturing, filtration, pharma raw materials, medical equipment, safety kits, sanitisers, masks, optical surgery, elective surgeries, telemedicine and telecommunications. In addition to this, the biotech sector including microbiology and monitoring, test assays, analyst and instruments are the upcoming major areas to be focused upon.
We are also recommending that startups collaborate with technical universities/institutes to undertake research and development (R&D) in the entire gamut of life sciences, including disease portfolio, inhibitors, antibodies, instruments and software, productive chemicals and molecule development. Going forward, startups can significantly contribute and bridge the gap between research and development of product/services and their commercialisation as a business model, benefiting millions globally.
COVID-19 has also given a real push to digitalisation. How will we see its increased influence play out in the healthcare and pharma startup ecosystems?
Digitalisation has always been a key foundation for tech startups, in light of the current pandemic, the importance of digitalisation has been reinforced manifold. The term ‘digital healthcare’ has been around for some time, but it has gained momentum and patients and doctors are using digital networks to communicate and share reports; get access to laboratories; and keep a visual check on key health indicators like blood pressure, heart rate, etc., through electronic health record (EHR) systems.
I believe startups can innovate and create technological products and solutions that ensure access, affordability, quality care to patients thus enabling universal access to quality healthcare services in India and eliminate regional imbalances. To my mind, the startups that can successfully work on the interdisciplinary convergence of biology, digitalisation and medication are going to be the leaders of the future and revolutionise the future of the healthcare delivery services.
How will your role as a start-up accelerator change in the post-COVID-19 world?
We feel strongly that our role and responsibilities towards our startups have increased significantly. At the same time, the way we operate itself is undergoing a tectonic shift. Let me elaborate with a few examples.
From a physical incubator, we have moved to a phygital environment. We are commencing virtual incubation and acceleration programmes and have already moved to an online model with our existing incubatees.
As a consequence, to an extent, geographical boundaries are also collapsing, and we are actually looking forward to doing more cross-border collaborative programmes with a variety of players, especially our partners in Canada. This will also benefit our startups as we will be able to leverage global best practices more actively than before.
We anticipate that the duration of our programmes will increase and there will be a lot more handholding. We are working with our current incubatees as well as some that had moved out along with our mentor pool to guide them given the new environment.
What are the best practices for startups in a post-COVID-19 world?
As I had mentioned before, we are advising our startups to commute less, collaborate more and communicate and communicate. Strategically, given the future uncertainties, I feel that the founders should not be wedded to the product or service they are producing, but understand the power and capability of the underlying innovation/technology that they are using. That will enable them to be more flexible and respond more pro-actively to the upcoming trends.
More than ever before, I believe flexibility and responsiveness are the two key traits that will be required for success in the future.