Startups: The storm riders: Covid entrepreneurs hope to scale up as pandemic subsides

As Covid-19 saw people rush to their homes, vehicles grind to a halt and shops and offices close, there were some who found aha moments in the century chaos. You started companies in the middle of the pandemic. Like Delhi-based Arham Partap Jain, 31, who saw the truck and founded Trucknetic. He calls it “Uber for Trucks,” an online logistics platform that connects shippers with carriers. “We want to be one of the largest truck companies by 2025 without owning a single truck,” he says.

Jain looks forward to fundraising and expanding even as the pandemic appears to be abating. With over 200,000 fleet owners and 1,000 shippers, Trucknetic has a network of more than 1 million trucks. Jain is now planning to launch transport insurance for truck drivers, who are often the sole breadwinners of their families.

He also intends to raise $10 million in a Series A funding round. “We have been Bootstrap so far, having received grants from Microsoft and Facebook. We are talking to institutional investors and family offices and will complete the round by December,” he says.

Jain is one of thousands who have started businesses during the pandemic, prompting a tidal wave of entrepreneurial activity in logistics, education, network services, online conferencing, fitness and beauty. The combination of new, easily accessible technology, finance and the work-from-home format proved to be a catalyst for new businesses. And they found more and more customers online – be it for education or shopping. Around 1,55,300 new companies were registered in India in 2020-21 compared to 1,22,700 companies in 2019-20.

Indian startups raised over US$42 billion in 1,583 deals in 2021, compared to US$11.5 billion in funding in 924 deals in 2020. Funding from venture capitalists into direct-to-consumer aggregators transitioned 30 times. According to the latest Bain and Company report, VC investments grew from $40 million in 2020 to $1.18 billion in 2021, helping to create four new unicorns in the segment.

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Rajani Sinha, chief economist at CareEdge Group, warns that traction is slowing for many pandemic-born online companies transitioning to hybrid. “We cannot paint all companies with the same brush. Businesses are moving to a hybrid format to adapt to the current circumstances,” he says.

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Rajat Singhal, 35, made the transition from running City Public School in Gurgaon to co-founding an online school called Cyboard during Covid. “Challenging times are the best to start a business as there is less competition for resources. It also sees new customer needs,” he says. “Cyboard is a school without walls. We have classes up to VI. We are trying to get CBSE affiliation for Class X and XII. We have taught about 1,000 students online and will expand to 5,000 students from Ladakh to Dubai.” It aims to raise $4 million. As the pandemic subsided, Singhal has also reopened the offline school.

With the economy in shambles and business sluggish, many young entrepreneurs realized they could borrow capital at low interest rates and get premises at cheaper rents. While the commercial rental rate rose 3.8% year-on-year across India in 2019, it slowed by 1.4% in 2020 and a further 0.3% in 2021. But rental rates have started to recover, up 1.2% in the first half of 2022, yoy, says JLL India.

For Jaspreet Dhingra, 42, the pandemic proved the right time to start a networking club for small and medium-sized businesses. Dhingra left his investment banking job at HSBC to found the BANC (Business and Networking Club) in July 2020. It is a platform where companies with an annual turnover between 50,000 and 500,000 euros can make contacts and grow their business through networking. “The challenge for SMBs is to increase the topline,” says Dhingra. The company’s mantra is that if you do business by harnessing the power of your network, you win, and if you help someone do business, you get a referral fee. BANC earns 10-15% commission on each transaction and has managed nearly $8 million in transactions. His goal is to reach $50 million in two years. It has customers in India, Canada, USA, Singapore, Australia, New Zealand and Oman.

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Even entrepreneurs are connected online. The Builders Club, a community of investors and startup founders, has proved a blessing during Covid-19. Launched by Sohail Khan in November 2020, it saw entrepreneurs from different parts of the world helping each other build products and businesses. “Without Covid, we would never have gotten people to get involved online and spend time in our community,” says Khan, 36. The club has about 25,000 members. “It’s a one-stop shop for growing your startup,” he says.

The pandemic has accelerated the growth of online groceries. According to the Internet and Mobile Association of India and data analytics firm Kantar, there are 692 million active internet users in India – 351 million (51%) in rural India and 341 million (49%) in urban India. The report estimates that there will be 900 million internet users in India by 2025, led by rural growth. About 346 million Indians are involved in online transactions such as e-commerce and digital payments. From 230 million in 2019, digital transactions grew 51% in two years. Meanwhile, 762 million have not yet adopted the internet, 63% of whom are from rural India.

With rural and semi-urban areas largely left undeveloped, Rozana, an e-commerce startup serving rural India, aims to connect villagers to online shopping through a network of micro-entrepreneurs. Rozana has over 10,000 village partners or “Saarthis” who help customers place online orders and make last-mile delivery efficient. The startup serves 4,000 to 5,000 grams of panchayats and is working on a roadmap that will target 300 million customers in the next two to three years. “This platform will unlock the potential of the rural market, which contributes half of India’s GDP,” says Ankur Dahiya, co-founder of Rozana. A funding round led by 3one4 Capital and European IEG Investment Banking Group raised $2.5 million.

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Dipanjan Basu, partner at Fireside Ventures, says consumer-led companies have been given a “gold mining opportunity” from Tier 2 and Tier 3 cities during Covid.

The pandemic has allowed the online space for beauty to grow. Ritika Sharma was one of those who rushed to grab it. In 2020 she founded her company House of Beauty and launched the multi-retail format for beauty products, Boddess. “Because customers were reluctant to go to the stores, we brought them the in-store experience through Boddess. Crises always bring hidden opportunities,” says Sharma, 35.

Beauty is a resilient industry with generations of loyal customers. “We’ve seen a visible post-Covid shift towards high quality products, natural ingredients and brands with strong values,” she says. Boddess aims to make premium brands more accessible. “We will soon be revolutionizing beauty retail with experiential stores in select cities,” says Sharma.

Covid disrupted Shivangi Lahoty’s plans to move to Canada in March 2020. But it couldn’t stop the 29-year-old. One designer, Lahoty, saw students who wanted to join fashion and design institutes like the National Institute of Design (NID) and the National Institute of Fashion Technology (NIFT) struggle to find the right mentorship. In mid-2020 she founded DesignerShala. “We prepare students for design entrance exams,” she says. They have been working remotely for the past 18 months and have just opened an office in Mumbai.

As they weather the storm, entrepreneurs hope funds will follow and businesses will grow.