The founders and CEO of the business think that this might be the time for them to start over.
The cheap bus ticket selling platform VeXeRe co-founded by Tran Nguyen Le Van and his partners in 2013 has earned initial successes. According to the statistics collected at the end of 2019, this startup has maintained its ticket sales growth of more than 300% per year with 3 million accesses per month. VeXeRe has successfully implemented 4 capital mobilizations, and currently has 150 employees with more than 550 cooperative bus brands and operating on 2,600 domestic and foreign routes.
However, since the epidemic started, the revenue of VeXeRe has continuously dropped and reached 0 as bus routes stop operation to implement emergency measures to prevent the epidemic.
VeXeRe has 3 main business sectors, which are providing online ticket booking measures to customers, managing software to bus operators, and ticket sales assisting software to agencies. “All of the 3 sectors are delayed due to bus routes stop operating”, said Van.
Currently, besides the maximum cut in operating costs, the company has not reduced employees’ wages as well as the number of employees, as they still have the capital provided by the investors, especially during the capital mobilization at the end of 2019. According to the CEO’s calculations, without revenue and with the mobilized capital, this startup may still be able to maintain operation in 3 the next 3 years.
Similarly, Puritrak, which is an air purifier supplier with artificial intelligence technology focusing on offices and schools, also has paralyzed revenue in the epidemic period. Founder and CEO of Puritrak Nguyen Trung Hieu says that all marketing activities aiming towards schools remain inactive. The personal customer sector also shares the same fate as people tend to pay more attention to more necessary goods than additional products such as air purifiers when their income declines. “All business sectors are paralyzed”, said Hieu. “The current difficulty is that we will have to start approaching the customers from the beginning after a long period of marketing. This is a huge cost in terms of efforts and money”.
According to Puritrak’s calculations, if this is prolonged in 6 months, the business may not survive.
However, there are still startups that have been making profits during COVID-19 as the consuming trend changes from offline to online shopping. CEO of Loship, which is a Vietnamese food delivery application, Nguyen Hoang Trung says “We can see significant growth in the food delivery, grocery shopping, clothes washing and medicine delivery sectors”.
In addition to many restaurants being closed due to the impacts of the epidemic, there are many restaurants that have shifted their business operation to online shopping and integrated into the Loship platform such as MEATdeli, the Golden Gate chain with Icook, KFC, Jollibee, or Phuc Long, etc. Moreover, Loship has also noted a dramatic increase in the number of newly-registered drivers. People working in other fields have also taken up the job as “shippers” to tackle the current unemployment, as well as to maintain a stable income flow.
For many other startups, this is the period of hibernation or of the maximum reduction of personnel, VeXeRe is doing the opposite. This is the time when the company increases recruitment, especially for positions such as IT managers or product managers, etc.
Moreover, many automakers that had good sales and profits even though they previously operated independently have had their operations become more difficult due to the epidemic. This is the time for them to think about restructuring operations, digital transformation, and technology applications to save operating costs. Therefore, the number of customers that are car companies looking to use VeXeRe's management software has increased sharply, even though they have not generated revenue.
“There are always opportunities amid challenges”, said Van. “A hibernation is also an option, but this should be the time for market observation, which sometimes may show you a more suitable direction”. According to Hieu, the epidemic is not the most fearsome thing for a startup. Instead, it is the fear of lagging behind in the society”. The epidemic is paralyzing the whole society, and not only startups but also major enterprises will have to return to the starting point. “There are always opportunities for startups to change and complete themselves among risks. The first step is to restructure the business’s activities, find out the unsuitable factors, thus making the operation effective and reducing costs”, said Hieu.
According to Csaba Bundik, the founder and CEO of CETA Consulting and the co-founder of VietAccelerator, an angelic investment fund for Vietnamese startups, “there are still opportunities amid challenges”. Global investment funds are spending their money on startups with responsive measures to the issues stemmed from COVID-19, such as tackling the problems related to health and education in the context of the global social distancing. In Vietnam, startups that are in need of capital to further operate in this field may look into the newly-published program of EXPARA, which is an investment fund headquartered in Singapore.
Csaba Bundik, who has had several years of experience of working as a mentor for startups, and has also succeeded in overcoming the financial crisis in 2008, gives startups 4 pieces of advice in dealing with the current situation. Firstly, all crises create new opportunities, which may not be seen immediately by every startup. Secondly, startups must remain active. The market is always moving, and it will not be the same after the epidemic. Thirdly, the epidemic will leave immense consequences, but startups need to remember that their competitors will also share the same fate. Thus, one of the best business strategies is to stay on the market longer than the competitors. Finally, there are always available financial resources and supporting packages on the market, such as the aiding packages that the Vietnamese government gives small and medium enterprises, helping them in overcoming the epidemic. This is the energy source that may aid startups in prolonging their business, and may even help them overcome the crisis and develop dramatically.
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