In 2017, when Rohin Parkar was building an IoT (Internet of Things) enabled locks for residences, offices, and hotels, he said he knew “people in the future, wouldn’t want to carry access cards or keys with them.” What he didn’t know was that the reason for its adoption would be people trying to avoid catching a deadly virus.
“In general, the world was moving towards mobile-based solutions. But our solution has become more relevant at this point in time because it is a contactless technique of opening doors and gates,” Parkar, co-founder and CEO of Spintly, told KrASIA. The company makes locks that don’t require any physical key. Instead, its mobile-based app can be used to lock and unlock doors, and even call for elevators. “We are seeing a lot of interest and demand from the industry right now.”
The two-and-a-half-year-old startup recently finished installing smart locks in several government offices in Goa and is in talks with a couple of co-working spaces in Bengaluru. It is also in discussions with three US-based smart lock manufacturers to provide them its tech platform.
Last month, the company managed to raise USD 250,000 pre-Series A round from a bunch of angel investors. Initially, Spintly was looking to raise Series A round, but when it got the proposal from six US-based angels and local Goa-based accelerator Saltwater Venture Sparks for a pre-Series A round, Parkar decided to take it. Soon after, a few VC firms, including those it had earlier reached out to, started to show interest.
Parkar has turned this healthcare crisis into an opportunity for Spintly. “Right now we are in talks with a few more VCs as they are more receptive now,” he said.
While the novel coronavirus has slowed down growth plans, fundraising efforts, and brought the majority of companies down to their knees, a slew of early-stage companies are realizing their products might just be apt for this new post-COVID-19 world.
Solving for the new normal
Spintly isn’t the only startup working on solutions that are relevant in the post-COVID-19 world.
“We are seeing a lot of discussions happening around businesses [in the startup ecosystem] that are solving problems for the post-COVID-19 world,” Parkar said.
Apoorva Ranjan Sharma, co-founder and president at Venture Catalysts, a Mumbai-based incubator that has a huge startup and investor network in tier-2 and tier-3 cities, believes recession and bad timing forces startups to come up with capital-light and innovative ideas. In fact, he said he has already started to see that happen.
For instance, a lot of companies are building tools to enable work from home, remote training, ed-tech, and anything which eliminates the need for people to assemble at one place or travel. Going by the current situation, where work from home and online education have picked up more than ever before, this trend is expected to further grow in the coming days.
“An Indore-based company reached out to us with a complete work from home solution. The platform lets managers remotely supervise the work, gauge the quantum of work done by his team, along with teleconferencing function. All this happens on a single platform,” Apoorva from Venture Catalysts said.
There are startups working on digital conferencing solutions that can be used for remote training of new hires, and even for online sessions with clients, he said, adding Venture Catalysts-backed AI-enabled gaming company Norah AI is one among them.
Delivery and logistics is also an area of interest for startups and investors alike.
“A startup from Udaipur has come up with a solution that can be integrated with delivery companies’ apps to let users see the body temperature of the delivery person and ascertain whether he has been infected or not,” Apoorva explained.
Moreover, now FMCG companies are exploring the idea of directly selling their products to consumers. “For example, most of the time, customers do casual purchases like biscuits or chocolates from nearby shops, which is not happening anymore. Some of these [FMCG] companies are trying to become more proactive at doorstep delivery,” Apoorva said.
A few technology firms have taken cognizance of this new development. They are in talks with these FMCG companies to work out a tech-led solution that could help them deliver products directly at consumers’ doorstep. Aproova believes this would lead supply chain startups to come forward with some technological innovation.
Similarly, as small and medium enterprises (SMEs) begin to realize they need to cut their offline exposure, there is likely to be a demand surge for services that can digitize their operations.
“SMEs are the backbone of the economy in both India and Southeast Asia, and we believe the time has come to drive innovation for this segment. Products and services which help to digitize SMEs have massive potential,” Rajan Anandan, managing director, Sequoia Capital India, told KrASIA. He believes that despite the near term challenges posed by this pandemic, innovation will accelerate in a post-COVID-19 world.
Surge in health-tech ideas
As India has partially lifted the two months long lockdown and people have started venturing out, a few startups are working on solutions that might be required to protect people from the virus.
“There are startups which are looking at the kind of wearable solutions people would need as they start going back to offices after the lockdown,” Apoorva said. “Ideas to provide sanitization solutions for cars and taxis, covering up drivers’ side of the seat completely, and creating a partition in the cabs to make rides risk-free are also coming to us.”
Healthcare and biotech solutions are also seeing an increased interest from investors.
Apoorva said in the coming time VCs would look at investing in biotech, medicine, and research in India. He expects healthcare to attract increased investments over the next couple of years.
“You will need something much more systematic because your gyms will be outdated,” he said. “You would need some healthcare solutions and products at home which can keep you more rejuvenated. We are seeing these things since we evaluate them to invest.”
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“I’m surprised by the kind of innovation, the new startups are bringing to the table. And people are vying for it because we don’t have any solution for such things,” Apoorva added.
Sequoia’ Anandan believes COVID-19 will give birth to a lot of economic and social challenges over the next several months.
“Surge is keen to partner with startups that are using technology to disrupt the world, founders who are looking to solve problems at a national or global scale, and ideas and products that can have a massive impact on the lives of people or businesses,” he said.
Anandan said Surge is always “looking for daring founders who are building solutions for real-world problems. Even if it’s at the idea stage.” In Surge’s second cohort, he said, there were six companies that were at the idea or pre-launch stage, when they partnered with them.
Ashish Sharma, CEO of Temasek-backed InnoVen Capital, said, investors are keenly evaluating startups, including enterprise companies that can innovate and build new models for their clients to adapt to the post-COVID-19 world—the new normal.
Treading between opportunity and caution
Although, investors are open to listening to ideas that could be the next big thing, they remain cautious, probably more than ever before. The advent of new funds such as 9Unicorns and iSeed, hasn’t made it easy for entrepreneurs at the idea stage to raise money.
“Even before COVID-19, it was tough to raise institutional capital for pre-revenue, concept stage startups. While some startups did get funded at concept stage but these were largely successful second-time entrepreneurs or experienced executives with a proven track record – this would be a lot tougher in this environment,” Ashish, said.
Moreover, as the majority of startups are in dire need to raise money to stay afloat, founders are ready to accept VC money even if the valuations don’t match their expectations, investors who KrASIA spoke to said.
Spintly’s Parkar agrees. “As a founder, I can always say it is an undervaluation. But as a business, we need the money at the right time to grow.”
However, Anandan believes, with new ideas and businesses being built every day, not only has the demand for early-stage capital gone up, it’s also provided the investors the opportunity to build up a richer, more varied portfolio than what was possible a decade back.
“It may take some time – but it will pass,” believes Anandan. “And when we arrive on the other side of this crisis, the set of opportunities we will have, will be unprecedented.”