Episode 8 The Impact of COVID-19 On Businesses and Technology Adoption

Devang: Hi everyone, I hope everybody is safe, thanks for joining us.

So, today’s topic that we are going to discuss is the Impact of COVID-19 on businesses and how it is going to impact technology adoption, and we have some really great content and discussions for everybody who’s joined us today.

We have Mr Anirudh Damani, managing partner at Artha Venture Fund
Previously, Anirudh led the alternative investment for his family office, Artha India Ventures. He invested in high yielding renewable energy projects and also into early-stage startups with high growth potential. At Artha India Ventures, Anirudh invested in category-defining startups like OYO rooms, Purplle, Tala, NowFloats, Hootloot, Mobilewalla, Rapido and many others. He was an entrepreneur in the energy space in the U.S. during which he worked with some of the largest energy companies in the world like Swiss Energy, Direct Energy, Constellation, etc. He is an alumnus of Austin College and Cathedral and John Connon School in Mumbai. Being an avid scuba diver with 40 plus logged dives, he also writes a popular blog on ShowMeDamani.

40 plus…! I think we’ll have to take another webinar on what are the good hotspots for diving.

Anirudh: Absolutely, it’s an amazing world, in fact, this year’s target was to do 50 dives till COVID-19 came along and put a stop to those ambitions, but I thankfully got to do some dives in Andaman during a short trip before the whole crisis started.

Devang: So, 

We also have Jinesh Shah, who co-founded Omnivore with Mark Kahn in 2010. previously he was Vice President and CFO at Nexus venture partners, one of India’s leading venture capital funds. 

Earlier in his career, Jinesh worked in corporate finance roles for Datamatics (leading Treasury/M&A), Patni Computers (initiating the IPO process), and HCL Technologies (founding the BPO business). Jinesh is a member of the World Economic Forum’s Global Future Council for systems innovations and a member of the IMC Chamber of Commerce and Industry’s Agriculture & Food Processing Committee. He is a chartered accountant with a BCom from R.A. Poddar College and MMS in finance at JBIMS.

Devang: Thank you, Anirudh and Jinesh for joining us for this webinar. 

I am Devang, the Chief Technology & Product Officer at KredX, a fintech company.

Devang: So, Jinesh I just wanted to start with you on what you have seen since COVID-19 situation came out. Omnivore’s focus is a lot on agriculture, agri supply chain and food products, and these are essential commodities, and whatever happens, these things will definitely be needed. I wanted to hear your thoughts on how did you see the situation about COVID-19 and how did the companies involved in the agri supply chain adapt to the rapidly changing situation?

Jinesh: COVID-19 for most of the industries has been a shock which probably most of us have not seen something like this in their lifetime, right, so for Omnivore this was something which was unexpected. Still, I think what really helped us out is that our focus remains in the agriculture sector, and most of my companies have been part of the ecosystem. None of the companies really had a situation where we were completely shut. The first 2-3 days when the lockdown started, I think most of us were shell shocked trying to understand what was happening around it, but in the next 2-3 days, once you realise that the agriculture sector and the essential commodities sector are open, I think most of the portfolio started figuring out what is to be done. Broadly what you have seen is that the government has not stopped any of our portfolios needs to stop on the functioning of it except one or two companies with the factory locations where they’re in areas which were under total lockdown because of the health scare there, but most of the portfolios were allowed to do the business.

So, what really the challenge the company faced was, not from the government but the bureaucratic levels or the bureaucracies in terms of getting the passes required for the workers to come in off or the employer should deliver the produce to the customers that was one challenging phase the second one was the supply chain right I mean even if the goods were ready at the factory gates or the processing centers it was difficult to find trucks and workers to load and unload stuff but that was the second challenge but over the next 3-4 days, I mean the first eight ten days of lockdown you could figure out what is to be done and things were getting streamlined in a much better manner what in some of the cases the COVID-19 probably is going to bring a significant change in how the business for agriculture is going to work. We are seeing a trend where farmers are now directly reaching out to consumers. We all have been saying that middleman has been taking the maximum chunk of profits from the Agri value chain but in the COVID-19 what you’re seen is that farmers are now reaching out to consumers using technology which is really helping the business to probably maximise profits for the producers and also for the people who are adding value. On the whole, COVID-19 probably from an agriculture sector perspective is a short-term shock, but on a medium-term horizon we think it is going to be flip to use of technology and optimisation of supply chain and this would really help this sector on the midterm basis that is what broadly we are feeling around.

Devang: Thanks for that and we will come back to some of the points that you mentioned around how technology will change supply things and will get impacted by technology and how farmers will, as you mentioned, farmers are reaching directly to the consumers and internet and technology, in general, has been a great platform for getting two ends of a marketplace meet.

So we will come to that point in a bit, but before that, I just wanted to get Anirudh’s thoughts on how he has seen you know companies in his portfolio and so Anirudh you’ve been involved in a lot of fintech companies but also a lot of countries that work with small businesses so how you know how have you seen you know these companies adapt to the changing situation in the past couple of months

Anirudh: So, you know the best part about entrepreneurship is that we’re all eternal optimists at the end of the day. We always find a way to come back, and we always find a way to make things happen. I think that’s what happened with our portfolio for the first couple of weeks. We will know, just like everybody else you know you have to go back two or three generations before you can find a similar event that happened on a global scale. Therefore you know there isn’t really a comparison, there isn’t really much memory to go upon and say you know that this is what’s going to happen. It was really an evolving situation, to tell you the truth actually our team and I were in an off-site in Goa the weekend before the shutdown happened and it was only when we got to go and saw the number of travellers who had cancelled their bookings and most places were empty. That is when we realised okay, there is something serious that’s about to happen, but thankfully once we came back, we took the bull by the horns. We immediately started making changes to the annual budgets. 

We worked with our entrepreneurs, within a week most of them were prepared with three scenarios one of which was, 

imagine if you had no revenues from March 15th onwards all the way to June 30th and July 2020 the revenues would be 25% of what you had on Feb 20, 2020. 

If that is the scenario, how long will the cash in your bank account last and obviously by the time we got done with this exercise the market was moving five or ten per cent up or down every day like you know you don’t see that kind of movement in the stock you see that in the index so very unprecedented situations I think it is a couple of weeks we just paid it by the year you know we had a plan in the morning we were adapting it to by the afternoon and then we were again re-planning for the next day, but I think within two weeks when things started to stabilise a lot of our portfolio companies actually adapted new business models most of them got used to the work from home situation many of them actually streamlined operations you know found ways to increase productivity many of them opened up new business lines.

We’ve Everest who is now operating a taxi for essential services within Mumbai and so they’re actually operating 150 taxis along with the Mumbai police. We’ve got Daalchini who is currently operating 50 vending machines in essential services IT operations across Noida and Gurgaon. 

In fact, to Jinesh’s point, actually, I have a personal company that I invested in called FarmersFZ which has seen its best revenues ever because they directly take produce from the farmers and deliver it directly to consumers. 

Even on the fintech side we’ve seen companies that have found ways to still lend but do it innovatively reducing the ticket size and figuring out which people are still going to be working from home so they might be able to still take loans and I think overall after a month of being through this entire exercise if things look much better we’re a lot more comfortable with where we are right now obviously we’re not out of the woods yet you know there is still a lot to be done you know let’s see how the government restarts the economy, what kind of incentives are going to come our way, what kind of liquidity is going to come our way but I do believe that the crisis has forced us in a way to adopt technology it was long enough that you could see a permanent shift in habits and that once we come out of this you might see a population that is much more acceptable and much more equipped with to you know accept the digital ways than it was maybe earlier and therefore I think anybody any business that has any digital aspect is definitely going to see some incremental revenue some incremental growth as we come out of this crisis.

Devang: Thanks for that and so Jinesh coming back to you know the point that you have mentioned earlier about you know how consumers are connecting directly to the producers are you seeing that more in terms of the producers adopting technology in terms of whether it’s like some e-commerce platform or some digital tools or is it more in terms of consumers getting more aware about how to get in touch with producers or is it something else so basically I’m trying to understand how these two markets are combining.

Jinesh: I’ll tell you where the two things I’m looking at the technology, especially from a producer’s perspective and we will talk about the consumer in the second part. From the producers perspective I think they were using technology but they were generally using for like whatsapp or something for the entertainment they were not using for the business purposes for the first time they felt there the mundis are not working they did not know how to sell and the crops were in the field I’d say they were forced to work with companies which were in a consumer facing role like could be a Udaan, AgroStar kind of companies and they started downloading those apps from those companies giving the information of what is being produced when is it ready for harvest they were trying to figure out where warehouses using technology figuring out where warehousing is available can be stored so Producers are started using technology the first time and without which was without any push or any kind of incentives given the produces it was a survival need and they started working on the same so that’s and I think this is going to help them in a long-term because what the realize for the first time is that they can now directly talk to the consumers or maybe a level just about the consumer directly and it saves them the money it makes them more profits because they were dependent on the middlemen or the APMC markets which have been running on a la carte basis so that is where producers have started using technology they are now using Whatsapp or even telegram or speech ads just you do you get the information about what is being available to be sold in fact one of my portfolio companies they were doing a zoom called with the founder of my portfolio company every day to figure out when is the company going to buy the produce from the field or when their company’s employees will come to the field to pick up the produce so that he can start doing the business so that’s something which is a shift and producers are going to walk away from that they only going to adopt more from the consumers perspective I think with this health scare happening out and I think with the discretionary spend of people going to come down because we think with this crisis you think India will bounce back but we will see lot of discretionary spending from the consumers getting reduced they would focus on essentials but you also want to focus on improving the health quotient right they will want to eat as the food we want to understand what is being produced how is it produced what are they consuming around it and they will be looking for traceability looking for complete transparency so the consumers are going to start demanding this because they will now be able to slightly a premium for getting this information because they are now worried about their own health I do want to get a better food for their family and better consumption habits and this in turn is going to enforce the producers chart doing what the consumers say because farmers in India have been reacting to the consumer demand right they generally will react to what the consumers ask so the consumer starts demanding and change in the eating habits in terms of transparency and farmers reacting to the same and this trend is going to remain a long-term basis we see more farmers using technology to get the data on the field and the same technology platform is going to use to connect to consumers on a direct basis I think this is a trend which we think is not going to reverse for some time.

Devang: Thanks for that Jinesh. So, Anirudh in terms of trends and continuing the trend in the past couple of years, we have seen a lot of events happening in India that have forced businesses and small businesses to start adopting the technology. We had the demonetization in which there was a big drive to adopt digital payments then we had GST for which people had to get used to a JSON. I remember people from my hometown asking what JSON is? So but things have changed a little bit, people have adopted it to a certain extent but again like the peak that had happened in a lot of these adoptions have come down so wanted to understand from you like in terms of when in the past you have experienced with us that you’ve seen working with your some companies and you know the customers of those companies how do you think you know as the ratio is mentioning if there is this digital adoption happening across the different sectors so what do you think will stick what do you think and why would you think some aspects will stick and why it won’t?

Anirudh: I think Jinesh brought up a very important point about farmers who were not using these digital tools and they would come to us for funding because I didn’t really see that they were forced to use them, there wasn’t only a need for them there was always a good to have kind of a situation and not need to have. What this crisis has done is taken those good to have and put them right in the centre while you know like a large part of the population, like farmers coming back into the digital fold is a huge fill up to the Agri tech sector right.

On the fintech side, we believe most banks in India were lagging far behind the fintech revolution. Or you had all these fintech companies and if I look at it as a fund for myself you know dealing with the bank was the biggest pain point in itself right so while we were trying to bring in the best technologies and we’re supporting all these amazing tech companies. If you tried working with a bank itself it would be so difficult, I mean they were still working on archaic systems. I can still remember that HDFC required me to have some sort of a digital cookie that had to be downloaded only to my laptop and if I changed my laptop I could not access my corporate bank accounts which were their way of calling it security but now even HDFC today is willing to take a verified email to make transactions happen. This was unheard of in the past right, and I think this is a direct impact of this digital thing on the population. Even if I go back to the ed-tech sector and I was on a webinar about a week ago and we’re discussing that earlier, all these tools that entrepreneurs were creating for teachers to get better at teaching they never wanted to use them again for them, and they were almost scared to use those tools and many times the teachers would look foolish trying to use these digital tools because they weren’t actually born and brought up on this kind of technology. However, if you look at what this crisis has done, it’s forced them to utilise those tools and become more digital-friendly. You’re looking at some of this stuff happening in Wuhan now schools, colleges even principals and teachers are much more willing to use digital tools because they’ve been using it for sixty days to do their job and I see that those kinds of things are going to stick around. Yes, there’s going to be temporary things like people getting used to digital newspapers versus physical newspapers whether that’s going to stick around in the real world after that are you going to go back to continue to use a PDF newspaper versus cutting snippets out of physical newspapers. I think I don’t see that sticking on very long unless of course, this is like a six to nine-month kind of a short shutdown I don’t see that happening but yes I do believe there are lot of sectors where things weren’t that good to have these little tools to have to make you more productive and to make you better the job. These are going to change, and those are the sectors that are going to do very well I mean they sort of took what was going to happen four years or five years later, and it certainly is bang right here, and if anybody was an investor in one of these things, it’s going to be a great time to be on that cap table.

Devang: Jinesh you also mentioned about a lot of things in the Agri supply chain is changing so agriculture the way it has been working with all the middlemen and money that has been kind of ingrained in the mindset and the business model for decades if not centuries so do you think dual adoption is one aspect but do you also think that the fundamental business models are going to change in agriculture or is it the same business model that will kind of get a layer of technology?

Jinesh: I think in this situation, the event has made people change their way of doing the business of agriculture. I never used to speak to anyone beyond Arathyas, who sell the produce, today the Arathyas are not functioning. The small startups or companies like Udaan, Ninjacart are reaching out to end consumers. Companies are now supplying to Kirana stores directly just to get things moving because the markets were not working because the APMC market was not functioning the way it should be done right and what has really happened is that this is a time where the startups have been able to create positive feedback with the farmers because they are helping the farmers at the time when their crisis was the highest. These startups are also well connected with technology, so if the farmers are now looking for some credit appraisals I mean the Arathyas used to squeeze them out they used to offer them interest and loans with far option rates right. Now with the startups working with other started being able to manage somehow to give the farmers a credit to farmers maybe three four days time frame I mean and that is where the farmers of Got or use positive understanding of what the standards are functioning they are they now realize it started from not running away so and for the full strength farmers you really get paid much more than what they used to get from the traders who think the farmers have produced on the field and they go to a trader who knows the plight of the farmers where he’s going to demand at a much lower price and what a company which is funded by start a fund funded started they would pay the farmers a right price what they you should be given he will help farmers they will connect to farmers than what the Arathyas were doing in the past so I don’t think this is going to change and this business model is going to remain because for the first time farmers are directly talking to consumers which never happened in the history of farming in the last few centuries which is a fundamental change and I think this will continue. It’s almost the farmers making more money than they made in the past. I don’t see a reason why they will go back to the old ways and start making less money and get exploited. I mean that’s my submission right now.

Anirudh: I think Jinesh it’s also a great time for FinTech companies who reach out to farmers and start offering more solutions.

Jinesh: I think that’s the way right I’ve been reaching but the farmers need money there is no dearth of capital Anirudh right now with the formal the dearth of capitals at the right interest rate so the FinTech are able to provide farmers at fourteen fifteen percent kind of interest rates rather than thirty five or twenty eight twenty nine percent interest rates then you are in the long game I’m given the long haul because farmers would love to work with you because one you give them more ability to connect to consumers you give more options because tech startups are much more smarter than an Arathya right so and if you are able to give it the right price phone the farmer starts making more money than he had ever made in the past so who continued doing it I think someone has money today I think they should go to farmers today and say I will give loans to you.

Anirudh: It makes a lot of sense. I completely agree.

Devang: It’s also said you know that there was this interview by the head of IHMR Dr. Aman he mentioned that you know the COVID will come in waves right so there’ll be a peak and then you kind of go down then we’ll come back up and then go down so what are you suggesting your founders and the leaders that you’re working with to focus on how are you asking them to think about and deal with this?

Jinesh: One thing I told my founder is to stop going over the financial planning right now because I don’t think anyone has enough data for financial planning but what we are asking them is to focus on operational supply chain because rightly mentioned by you that COVID will come in waves and it is possible that India would not go for 100% of lockdown places where their businesses or your customers are might be in a lockdown because of the containment issues so we asking all our portfolio companies to figure out if they can decentralised a supply chain in terms of from the areas that are giving the produce and in terms of the number of customers where they are located if they can diversify everything and keep their trucks and everything scattered across locations rather than centralised locations that would be the best hedge for them because we don’t know which part of the country would get into lockdown because of the COVID scare so I mean that’s what we’ve been suggesting at the same time we have been asking our businesses to empathise with the employees by saying that guys you don’t have to fire people every time because there’s a crisis. Figuring out a way that if the business was supposed to be done at 100 and if you are doing at 60 can we pay them 60 per cent of salary the business is 120 per cent can he pay them 120 per cent and whatever the gap is can we give you them in terms of ESOP’s so that whenever the company’s business improves they can be compensated in the future so we’re trying to work both ways because without an empowered and passionate team no amount of supply chain preparedness would help you have a great supply chain preparedness, but the team is not motivated I think it will falter in execution, so we’ve been trying to work on ways on how do we make the supply chain more decentralised at the same time work with employees because I mean that employee is nothing works.

Devang: And Anirudh how about you, what are you asking, anything else?

Anirudh: Yeah, I think on the cross trend I think most VCs are all aligned right we’re all on the same page that we don’t really know how this is going to end when this is going to end so the most important thing is that you survive right and so we’ve told most of our companies to cut any kind of unnecessary expenditures right one of our companies actually just did what Jinesh was talking about which is they cut their salary bill by 60 percent right so they become 40 percent of the original salary bill and they’ve given esop’s and returns too far with it to the employees saying that you guys are partners now you guys are now investors in our company it’s just that you’ve given us your salary instead of actual cash and then now they’re runways extended for almost another 15 months 21 months runway all of a sudden and I think those are the kind of innovative ideas are going to come out and on the revenue side you know we’ve been cautiously optimistic I think there will be see demand I believe there’s going to be some destruction but it also gonna be a lot of delayed demand right there’s still gonna be some people are getting paid and and they’ve not made any discretionary spend in the last two three months right and therefore they’ve not gone out the people have received refunds for their travel expenses people that book vacations for the summer certainly have that money in their bank account they’re not going to go out you will see a lot of domestic travel going to happen I see a lot of changes there the people may not want to travel to an Italy or Spain or to China for the fear of you know the kind of spread that have happened over there but you might see a boost and domestic travel right so you gotta be prepared for that and I think that’s what we’re telling our companies that just make sure that you’re there when this thing turns around because it will turn around right but you cannot be in a situation where you know things turn around you have no capital left you cannot make any expenditures you cannot go out there and capture business and when you are ready to fundraise you don’t even have enough timeline to let an incoming investor do two divisions and then you’re doing you know you’re sort of doing rounds that are heavy discount rate and you’re giving up too much equity you look desperate right so for most of the companies you settle this in 15 to 18 months of money required on the bank account you start fundraising if you need to probably in Jan of next year and then you give it a circle June to September of next year to close the round and whatever money you need for that it doesn’t matter what valuation you get if you get a flat round consider that to be 3X of valuation but take the money and make sure you survive if you die within this process no one’s going to come and save your business I don’t think even think many companies will even see like an acquihire situation happening if they die in the next 18 months so they have to stay alive they have to stick it out and I think once this thing turns around then you know when the Sun finally comes out if you’re alive you will definitely prosper.


Devang: So we take up a couple of questions that have streamed down from the audience and so audience who anybody who’s listening please ask your questions in the Q&A so that we can kind of group them together and ask it ask similar theme questions in one go so there are some questions around so there are some questions which are very sector specific which you know we can get into a little but there is one question around the impact on rural India it’s a lot of the news that is coming up like that is Bombay Delhi you know all the hotspots there they’re very focused on the you know in the on the urban India but do you see or do you have sense about what is the impact happening in the rural area and how are they addressing this?

Jinesh: I’ll take a stab at that I think let’s look at rural India the agri sector for all is going to make profits this way they’re going to throw significantly and I think with the way the liquidity is going to come in the AG sector in the rural markets I think I would see a spurt in demand in the rural India one because there’s less incidence of COVID there because of the natural social distance in the rural India and second I think it’s with the agri sector hopefully reviving and probably you know I think in the rural India I see the demand to be coming up back I mean I don’t see a dip in the demand so also rural India is mainly about the essentials right I mean urban India people do lot of spending on lifestyle rural India is mainly about essentials and focusing on solving the basic needs ending and that is going to continue so I think there should be okay you’ll have some supply chain issues but overall are they in the market should be fine.

Anirudh: Do you think that there could be a situation where some people in rural India could start doing discretionary spends probably go up a little bit a couple of categories in terms of spending.

Jinesh: Generally, it happens if the harvest remains good you would see people do discretionary spending like buying a motorbike or buying something for them. I don’t see them spending like urban India on travel or staying in a five-star hotel. I think might see a two wheelers spurt in demand and an increase in the spend for the online education happening the rural India because kids who travel to urban cities for studying will now try to figure out if they can use online education is a possibility but not the tertiary kind of spending on travelling to exotic places, that’s not going to happen.

Anirudh: Thank you.

Devang: So the other question is some sectors which are winning a lot for example ed tech and gaming in terms of where people can use while working from home whereas there are some other sectors like you know hotels, hospitality and travels which are stressed out and there’s not a lot of bookings happening but whatever there are a lot of sectors in the middle from food and deliveries to fashion do you think even manufacturing there are reports that a lot of some of the manufacturing companies have already started doing manufacturing again so any specific takes on sectors which are not that obvious?

Jinesh: I think lots of these sectors like food, whenever there’s a high amount of discretionary spending required would take some time to revive but I don’t think it’s going to be like a complete starved darkness in the Indian context right India would see some amount of like what Anirudh just mentioned that you might see an increase of domestic travel rather than the international travel because people would still want to take some vacations people who want to do it maybe they all got a lower cost maybe that’s how India going to react this anything that is luxury we might take a longer term but anything which is good to have it people would start using it next three to six month it’s not the country’s is economically shattered it’s probably induced just to ensure that our health quotient doesn’t go below the normal points you know.

Anirudh: I think neo banking could be a very big sector that will take off in this situation because crowding at banks and going to a bank to transact I think that adoption is going to go down and because we’re getting more use of digital you might see people much more to opening up a bank account without actually visiting a center. Even the banks from their part may also be open to working with new banks and ensuring that they can easily service a customer without actually having them come inside the branch. That could be another sector I believe could do very well.

Devang: There are a lot of questions which are coming in from lending, financing fintech perspectives so where do you think farmers can get lower rates or how fintech is going to adapt or change their risk model underwriting practices based on these situations. I know you’ve worked with fintech companies and credit companies as well so how are they thinking about this especially for small businesses if they will work with the agriculture sector?

Anirudh: For example one of our lending companies stopped lending to delivery riders and to people working inside malls about 15 days before the lockdown right because they saw that this could be a stressed-out sector but when it comes businesses and even your daily wage worker requiring some liquidity or Kirana stores things like that I think the government will have to step in and sort of backstop some of these loans. There is risk capital but the question really is that if this crisis, supposing we have a w-shaped recovery we open up and things sort of recover and then it spreads again we have you know a fall a lot of these companies may not be able to survive this kind of a double drop in that situation that is where the government come in and provide some sort of a credit assurance guarantee fund or some sort of an insurance against these kind of crisis and unless we see that happening I don’t see the return of lending in a big way I think there obviously should be some opportunistic lending. Interests rates are going to go up because the risk is so high but if we want that to taper down if the government wants lending to return in a big way and get sort of the economy restarted they’ll have to pump in some liquidity without that I don’t see how lending companies are going to write with the same assurance over the same confidence that they did before the crisis started I mean that’s going to be a big lacuna which the government will have to fix. I don’t think it’s within the VC ecosystem we have enough money to make that happen.

Devang: So next thing is around the use of technology which is kind of springing up now so there have been a couple of demos you know given to governments some have been publicly televised and also some of these solutions which have been effective to contain COVID-19 outside India has been around a lot of data collection analysing trying to make sure that for example people who have travelled abroad or who’s come in contact with other patients are quarantined and come uncontained and tracking their movements so that they are not going out in crowded places or things like that even Apple and Google announced a joint venture a couple of days ago where they’ve said it respects privacy to a large extent while also being able to provide these kind technology to help in contact tracing while essentially the question, is there a trade-off that people will have to make between privacy and health care which should be a fundamental right for them at the end of the day?

Anirudh: I’ve always believed privacy is a myth because if you want better services if you want a better quality of life privacy is what you give up for it right? So, I will give a very simple example if you want to live in a one-star hotel without room service without anything you get a lot more privacy than living in a five-star hotel where a guy comes to your room three times a day to clean it and knows everything else that is going on so it’s the price you pay and I think that even today like how sure are we that we with all the privacy laws in place are they all being followed every couple of years there is some company who says there’s something or lead or they had some changes they didn’t realise it was giving out so much information and in that sense I do not see that that you know we’re living in a myth that there is a privacy that there’s someone who’s checking everything but the pay service technology is growing I don’t think any government organisation can even understand what’s really happening at a Facebook or what’s happening at a Google or what’s happening at even at Apple that being said I think when it comes to health care you know could we have figured out this crisis if we had better quality data? I’m pretty sure we could have but then again we were dealing with this crisis in a country that doesn’t really open up its databases right or you know for the for the lack of better words probably changing up what really the data exists over there so we should take it with a grain of salt I think we would love to know if there was somebody around us that has a COVID-19 case in most cases the government has created databases for this and obviously that could be taken as an invasion of privacy but without that information would we be as secure traveling? Would you really want to know the next time you are on a plane whether the guy next to you showed some COVID-19? would you want to know who did not want to know well that he was next to somebody that had one or met somebody that was asymptomatic for that I think we’ll have to give up some of our privacy for that to happen and we should be comfortable with that at least in this current case till we find a vaccine I think all bets are off once the vaccine is found.

Jinesh: I think obviously the myth right I think if you really want to assure yourself of traceability and transparency I think anyways I’m not sure I agree with Anirudh we have all things having kept private or not because I see Google measuring us every time that we travel to capture all our moments I’m sure people will be doing it without our permission.

Devang: Maybe explicitly saying it out is you know we’ll also help build trust rather than just.

We recently did a survey with a lot of CFOs that we worked with and apart from you know some of the standard maybe not standard but you know some pertinent issues that they feel so one of the almost 25 to 30% CFOs mentioned that one of their issues is that a lot of the labors are migrant labors are migrated back to their hometowns right and so now these you know kind of villages which will were not probably built to accommodate such a population are getting stress while at the same time you know the urban centers which were banking on these you know these folks are not able to manage are not able to get the help that they need so I split questions there one is you think and they were already a lot of focus on the you know the a lot of focus on the next billion users sector in India do you think that is going to accelerate or is this a temporary phenomenon so the question is around how is the tech adoption in the rural areas not specifically to farming or agriculture but how is the COVID situation going to affect the tech adoption in rural areas whether it’s for health care, education or whatever it might be?

Anirudh: If I take a look at what really has happened in the last five to six years of the advent of JIO coming in data access is there in the country for the first time so that is something which is now taken care across the country second if you take a look migration in India is not going to stop because people will go where money is I mean there could be a temporary phenomenon that people would go back to villages but there is no employment generation there right so if Indian government uses this COVID19 crisis to hit a generation of employment in the rural India and then people would not come back to urban India as an offering they’re slightly less pressure on the urban India but if that doesn’t happen I think I don’t see a reverse trend of urbanisation not happening ever I think urbanisation is going to happen for sure if there are three and a half crore people doing construction in this country there is a construction going to happen for making the new urban area but if you are able to create opportunities of employment maybe in terms of FinTech just like what Anirudh mentioned for banking people start using neo-banking correspondence something like that sort of thing happens or maybe the government uses entire rural India access of agriculture produce to start doing food processing in the country and a more increased amount of processing in the country maybe you could see some kind of employment being generated in that part of the country as well but our long-term basis is I think of the migration issue people who go back come back in three months and life has to go on it’s not end of the world so I don’t see a major change happening in the migration piece of a country.

Anirudh: Just to add to Jinesh point he made this point earlier as well that in rural India most people are living on the essentials and not really going after the discretionary spends so I don’t see a driver who was paying 20,000/- or 22,000/- in Mumbai and then being able to run a household in rural India how is he going to do that same thing by living in rural India? I think eventually the economics are going to come into play and he will have to come back to the city no one in tier 2 and tier 3 cities is going to pay him 25,000/- a month to not drive a car. Most people won’t even have drivers so in that case where does he go? he’s going to come back to the city. Yes, there’s going to be a temporary disruption, a lot of people really, because of the interstate lockdowns got stuck and they’ve had to walk kilometres and kilometres so you might have a very small part of the population that may not come back but eventually the economics are going to come back into play you definitely get paid higher in the city and that the arbitrage between working in the city and living in rural India is going to come back into play and I think it might take one or two quarters so the supply chain is going to come back and economics will eventually drive everything back to the city.

Devang: There are a lot of questions but I think we are running out of time. We will try to keep it short. So, the first one for Anirudh there’s a question around what could be the short-term and long-term impacts on renewable energy?

Anirudh: I think there could be a dual impact and thank you so much for this question first of all I think because most businesses are going to see a couple of quarters of washout it’s a proven thing now that distributed solar energy on top of rooftops is a much cheaper in cost for commercial and industrial companies compared to buying from the grid and so I think there may be a better adoption over there and in fact we’ve seen in our energy business that we’ve had incoming inquiries even from listed companies that are saying hey! listen we want as many roof-tops we have can you please put up solar projects over there because the cost is 20%-30% in some cases 60% cheaper than buying from the grid. So I definitely see that there’ll be more incoming inquiries for setting up opex projects I think there’ll be a marked decrease in capex projects where companies are going to put on their own capital to put up solar projects because you know many of them are going to be stressed many of them are required to pay salaries while there’s no revenue coming in. However, I definitely would warn anybody that’s on the opex side and giving out capital while seems like there is so much inquiries coming in, this is your time to really increase your underwriting skills understand if those businesses are going to survive if there is a W-shaped recovery and you’ve made an investment just at the peak of the W and then it goes back down you could see a complete loss of capital any opex project and I think this is something I learned from my time in the U.S. is when we were selling long term five years six years, energy rate projects the supply would always credit qualify the buyer of the energy and the idea was that can you actually make this payment for five years or is this business going to shut down in five years and I’m going to be left with a long term contract where I have to unwind it into the market so similarly to setting up a 15 year solar power project on someone’s rooftop and their business may not exist in seven years every single metric you’ve shown that I’m going to make money back on this project is going to be negative it’s going to be wrong so you have to bring better under writing skills and be much more cognizant of where you’re putting in the money and if the business is not going to survive the length of the time your project is on their rooftop better to say ‘no’ than to say ‘yes’ and then worry about it later.

Devang: Thanks and so last question and we can’t let you guys go with two VCs on the panel you know this is something that is bound to come so what do you think are the next new opportunities that will emerge out of this unpredictable situation and if you guys can share whether you are already actively investing or not and what are the criteria or if the criteria have changed for you to invest in because of COVID-19?

Jinesh: I think areas or sectors which we think will pick up is education. Anything which can be done using technology and can reduce the cost I think those are sectors which people would want to invest I am focusing on agriculture sector and we think this crisis is going to bring more opportunities for people to use technology in that sector so we’re going to keep investing in the sector but in the initially when without the crisis we used to worry about break-in happening three to five years now we are not really sure whether we want to fund companies where the break-ins can happen three to five years. People look at genuine business models which can start delivering value for the customers and make money for itself. We think as a fund we will continue to make investments but we will set the bar much higher than what you should in the past. We will wait for the real business model and will look for execution teams and figure out people who can work out even in such situations like COVID-19.

Anirudh: I think I’ll take a Segway just from Jinesh I think adaptability of the founder is the question today and if we don’t see and what we really want to see that founders that are quickly adapted to the situation they either figure out how to cut cost they figured out how to how to you know find new revenue lines and they’ve overall been with it right they’ve not they’ve not lagged it they’ve been ahead of the crisis at all point and I think those kind of things really are going to be part of our decision-making moving forward because I don’t see how this is just one of thing it could become a recurring event for us in terms of writing cheques we’re still writing cheques in fact we just signed a term sheet that we should be signing a timesheet in the next couple of hours so the money flow is still on from our side yes we are much more vigilant on the valuations we always were and in terms of burn you know typically I never wrote checks into businesses that had massive burns at the start you know we can understand growth spending but we don’t understand develop huge development spends so in that way you know I think that policy has paid as well in throughout I’ve been through three recessions now in the last ten years and every single time those businesses have done well I think there could be a huge business opportunity in B2B companies that are taking other businesses digital first and I think those are some of the companies were looking at investing into but again we haven’t really found that one company that really is going to make it happen but hopefully in the next 30 to 60 days we’ll find something that we can already dig our teeth into and that can take other SMEs online and it could be a growth a huge money-making opportunity over there.

Devang: thanks guys thanks a lot for this all this wanted to give you a couple of second anything else that you want to cover all if people want to you know follow you or hear your thoughts on you know on anything where can they find you on any any any place you break if they can find you on Twitter blogging anything else.

Anirudh: You can find me everywhere I always use the the nickname show me the money SHOWMEDAMANI I’m on active on Twitter active on Linkedin in terms of I think any parting comment from my side would be there would be like guys whether you have money in the bank account whether it’s 5 lakhs 5 crores or 50 crores you have to make it run for the next 18 months and your survival is the most important thing more than anything else right if you did not grow at all for the next 18 months but you survived the 18 months and you are ready to and you were doing business and you are still you know able to survive this this really tough period I think that there’s a lot of respect for that and you’ll find you know it’ll be this case where you know people want to come in invest into you because you’re resilient because you’re smart and because your dab I think those are the ending thoughts from my side.

Jinesh: My perspective I mean I used to write an email because that remains on the mailbox and I can respond on time to social media I’m available but it’s very short response time so out emails or the social media. In terms of the parting comments I mean it’s like guys this I mean this crisis will happen right I mean we all we all could say good things but we never knew so this is to figure out how you’re going to survive for this and I mean time always changes right it’s a tough time it’s going to change them and wait for one to three quarters four quarters and I think we’ll be back to normal so I know the world we just have to hang around and hopefully we will make through it on the other side.

Devang: Awesome! Thanks Jinesh and Anirudh for joining us. Stay safe, stay healthy.

Audience, if you have any thoughts feedback comments on this please send us an email on connect@kredx.com if you have any panelist specific questions for Jinesh and Anirudh you can send it to them directly on what they mentioned or you can send it to us and we will forward it to them and everyone here also please stay safe and thanks for joining. The video will be available on YouTube, send us an email on connect@kredx.com we will get back to you on that.

Thanks guys, thank you so much.