Author: CA Niraj Bora
COVID-19 has changed our lives in many ways than anyone has imagined. Whether we accept it or not, some of the businesses will undergo structural changes and not just temporary ones. Due to this, there are shifts in the consumption pattern, mobility, and the way businesses are operating has changed during the COVID-19 pandemic worldwide.
The world has moved to consume content online, be it entertainment, education, news, books, fitness, gaming or work. Due to this, investors are favouring some bets that would test this pandemic times as well. Investments in other segments are comparatively slow till we get more clarity on COVID-19’s existence timelines.
Remote working and collaboration tools: WFH is going to pick-up and a portion of the working population would be permanently working from home even post the pandemic. Tools that enable better, faster and smooth communication between team members like zoom, slack, etc will see huge investments in their sectors with more niche products. Products that teach new ways of doing meetings, chats, mailers, group discussions, etc. will be more adaptable by consumers and businesses than before.
Digital offerings based product and services: Digital offerings based companies across segments like education, fitness, e-retail, BFSI, etc. will see a large uptick in the userbase since the consumers are planning to reduce contact-based shopping and other activities. Edtech was already a hot sector and now it will spread to a variety of courses apart from traditional K-12 and entrance exams. Fitness, to my surprise, has picked-up better than expected and has come close enough to providing gym like experiences at home.
E-tail was seen as a lifesaver in scenarios wherein travel needs to be avoided. Essential as well as non-essential e-tail will show growth in their business. BSFI has gone digital from the start. However, lending was a more paper-based model till not and it has seen more change to paperless lending, investments, etc.
Healthcare: Healthcare was always a focus for the investment community in India, and it will further pick-up pace after realising the shortcomings in the existing infrastructure required during such a pandemic. Hygiene products and healthcare services will shine better post and during the COVID-19 pandemic. India has always spent very less in healthcare (~1.3%) as against 15%+ by the US. Healthcare will be in focus in the next few years until the infrastructure is upgraded to meet the ever-increasing demand.
Gaming startups: Gaming and sports are primarily indoors in these times and most of the restrictions warrant in-house entertainment among friends and families. A large variety of games are picking up steam due to a large number of userbase added in a short time frame. However, it remains to be seen which ones of them have better stickiness, as people will have less disposable time to spend once lockdown restrictions are lifted.
With work from home picking up, I believe a large pool of women would become a part of the workforce and the economy would be largely benefitted by it. Due to this, discretionary spending segments of working women will see a large uptick, including segments like apparel, cosmetics, FMCG, home appliances, and other home automation segments.
Automation and Robotics: Companies will adopt more automated and contactless methods in business processes, be it in the logistics warehouse, e-tail delivery, or in the manufacturing segment. Robotics is already a very promising field and the adoption of systems replacing manual work will acquire pace and growth post-pandemic era.
Rich Valuations of startups is a thing of past in these times, as many companies are looking for survival instead of growth during the pandemic. Thus, good deals with more realistic valuations are floating in the market and is another reason to look at investments in these times.
The duration to which things become normal will also impact sector-wise attractiveness. The longer the recovery period, the more shifts will be observed in consumption trends, delivering and distributing content, ways of providing services, etc.
About the Author:
CA Niraj Bora is a financial expert and startup investor his investments in several interesting startups like Farmpal (a tech-forward Agri company), Myturf Hospitality (that runs the premium student accommodation), and Tribe Stays. CA Bora who has hails from a private equity background started his career with Haribhakti & Co (then a member of BDO International).