In order to survive in an economy ravaged by the pandemic, startups have turned to innovative strategies.
--BY NIKEETA GAUTAM
The spread of COVID-19 has caused economic despair all over the world. Startups are struggling with health and economic uncertainty, their sales have stagnated, their investment approach has gone in vain, but yet they are working and learning. The nature of startups is such that they keep dealing with adversities frequently. So, many of them have figured out new ways to deliver their products, shifted their focus to more relevant products during this health crisis, and also have experimented with their strengths.
Over the last few months, online platforms which have been delivering essential items like vegetables and groceries are experiencing a new wave of growth. Education-related startups are experiencing benefits as well as limitations of a virtual platform in a developing economy. Medical startups have realised their potential and have been working to create innovative health solutions.
Adoption of Technology
Before COVID-19, adoption of technology was limited and the progress was gradual. Many founders would talk about their plans to use technology to reach more customers, but only a few took the leap. The spread of COVID-19 has challenged entrepreneurs. The pandemic has forced everyone to make changes and utilise available technologies.
Surakchya Adhikari, co-founder and Chief Operating Officer (COO) of Thulo.com, says many Nepali food brands are changing the way they sell and are collaborating with e-commerce players to reach their customers. “Many domestic brands have collaborated with us for online sales after the lockdown,” said Adhikari, adding, “This makes us feel that we should have more Nepali brands so that people can get enough local options.” Adhikari observes that recently, customer awareness has also increased. “Earlier people used to call us for order instead of using the app. But now, many of them use the app to order their deliveries,” she mentioned.
According to Narottam Aryal, president of King’s College, which runs an incubation centre for startups, technology has been creating a new and effective experience, especially in education and payment. Some e-commerce entrepreneurs say that they haven’t provided an option of cash on delivery to their customers recently. “We have been only accepting digital payment to prevent the contagion. And it is good that our customers have increased by almost three times after COVID-19,” informed Adhikari.
Pavitra Gautam, co-founder and CEO of Karkhana, an education sector startup focusing on experiential learning for children says that they have been seeing exponential growth in the educational sector after the lockdown. They have been producing regular educational content and have given free access to their website and Facebook. “After tracking we found that our content reached to almost 1000 teachers all over the country,” said Gautam. Karkhana has also been facilitating the communication between schools and students by helping them understand remote tools, task management and other technicalities needed for virtual learning. Also, they have been designing various virtual competitions among children who are interested to create innovative solutions for various challenges in the environment.
“The revenue has gone down by 90 percent. It is because we used to focus on experiential learning for which face to face interaction is mandatory. We also used to facilitate learning by providing various tools and skilled human resources for practical learning,” said Gautam. Karkhana has been focusing on innovative ways to help children learn about science and technology since 2012. Karkhana has been collaborating with 120 schools among which more than 80 percent schools are privately owned and rest of them are government-owned. “Though we are not gaining financially, the learning experience has been amazing for Karkhana,” shared Gautam.
The virus contagion also allowed many startups to shift their production and develop their capabilities to help during the pandemic. One of them is Arabinda Subedi, director at Himalayan Accessories, which produces ‘Kawach’ safety gears for bike riders. After the lockdown, the startup has been producing PPEs (Personal Protective Equipment). The startup, established in late 2017, collaborated with National Innovation Center almost within a week after the lockdown. “Till now we have produced around 5000+ pieces of PPE coverall gowns and aprons. We have already sent these PPEs to hospitals in Doti, Rajbiraj, Sannkhuwasabha, Baglung and a few other districts,” commented Subedi.
“Being a safety gear company, we thought this will be an opportunity for us to use our expertise and knowledge in this critical time. Also, we got a chance to get engaged in work when the sales of our mainline product are stagnating,” remarked Subedi.
While the market is gradually seeing the growth of telemedicine, Mahesh Dahal, backend developer at Kipuwex Oy Ltd is working to create health equipment which functions as ECG machine. “The device is equitable to an ECG machine. And the price is around 1/10th of the machine,” said Dahal. Kipuwex Oy Ltd is headquartered in Oulu, and it has opened its R&D office in Nepal. There are Finnish investors in the venture. Dahal got in touch with the company when he went to Finland in an exchange program for six months.
“The idea came in 2019 and we have been working to create a pain assessment tool. Through the device, we can assess the pain of small children, mentally ill patients and critically ill patients who can’t communicate,” informed Dahal. With this service, they are targeting the international market, but for Nepal, the features are different.
“The machine connects to the mobile and gives heart reading, temperature, respiratory rate, detected movements and various other measurements of the body. We haven’t yet decided on the name of the machine but it will be launched in around one and half months from now. We aim to reach health posts in each remote area,” said Dahal. The cost of the machine will range from Rs 5,000 to 10,000.
One of the principles of corporate leadership is that when you cross your comfort zone, challenge your status quo, only then your business begins to transform. Many enterprises are designing new policies and procedures.
Prakash Tiwari, chief investment manager at Hathaway Investment Nepal opines says that rather than expecting support from the government, entrepreneurs need to be smart. “Whatever support the government is trying to extend through the ‘seed capital for innovative businesses’ will also be politicised. This has happened with every government fund, and this won’t be any different,” said Tiwari.
The government has made a working procedure for Seed Capital for Innovative Businesses and has announced that it would provide seed capital of Rs 5 million for selected innovative businesses, startup or entrepreneurs.
He says that it is time for startups in Nepal to admit that they need to merge to survive. “Even renowned players in the market are surviving because of the investment they are receiving from big business houses and foreign investors,” said Tiwari.
Insufficient bandwidth, poor internet literacy and expensive mobile data have been creating limitations in virtual learning. Apart from that, parents, teachers and other enablers for education sector believe that virtual teaching will never replace face to face learning. “We get emotional support when we learn face to face. Learning by engaging is wonderful,” adds Gautam from Karkhana. “Virtual learning can never replace experiential learning. So, this online strategy is just a rescue model for us. So, Nepal needs to create more offline resources for student-centred learning process,” opined Gautam.
Using an online shopping platform is directly linked to the convenience of the customers. It does not make sense when the delivery person has to call their customers 5-6 times to find their location. “The street numbers and house numbers must be clear so that product delivery is smooth,” said Adhikari of Thulo.com.
Another challenge is the difficult FDI policies. In 2019, the Nepal government introduced the Foreign Investment and Technology Transfer Act with the provision that the minimum threshold for foreign investment has to be Rs 50 million. This decision of the government is negatively impacting the growth of many startups. “We have been taking the investment but in the form of office rent, logistics cost and other office expenses. It is like taking payment from clients,” Dahal of Kipuwex said, adding, “Most of the startups have been doing the same as we can’t bring the money in the form of proper investment.”