COVID-19's Reshaping of Market Dynamics - Lessons from 10 Weeks in the Future
In difficult times, it can be helpful to look to the past (or the future) to understand how similar situations were handled and overcome. In our latest webinar, MAGNiTT’s Philip Bahoshy catches up with Walid Faza, Partner & COO at China’s MSA Capital, to talk about lessons from 10 weeks in the future and how we can learn from China’s ecosystem, as well as how the current crisis is reshaping the market dynamics.
Philip and Walid discussed a variety of topics, including:
Lessons and trends we can learn from China and South East Asia and how they are dealing in the venture space
Walid talks about this being a “black swan event” for which there is no prescriptive remedy, yet out of chaos people are looking towards the opportunities and how this can be helpful. As China has already been through SARS in 2003, there are lessons that can be learned. SARS forced people to move online and caused a shift in technology by pushing users to adopt new habits of remote purchasing and delivery, and doing things that were done before.
He also discusses how post-SARS, they did not go back to their old ways as this new way was much more convenient and easy. Walid shares the example of Alibaba, which was a B2B platform and when SARS happened, moved into B2C. They created opportunities from challenges. He believes there is a human element to all of this that is unprecedented.
Philip and Walid discuss the investment activity in China including how VC investments are now are starting to pick up. However, it’s the companies that were able to manage the crisis, such as those that deal with data and testing. The number of deals will reduce significantly, but this doesn’t mean that new entrepreneurs or founders shouldn’t start new companies. In this new reality, we have so much to look forward to in terms of education and healthcare.
Encouraging digitalisation of products that previously may not have been embraced
Walid talks about this being a “dream come true” for those already positioned in technology. User adaptation and habits are changing. 5-7 years ago, people were questioning entertainment and distance learning, but now its here and here to stay.
Firstly, it is about the sanity and well being of founders, what are you doing to stay sane when everything has shifted? What routines are you doing for your own wellbeing? He discusses reaching out to people that can mentor you and help you move forward.
Changing your business plan for 2020 and looking for guidance
Philip opens up about being asked what he misses most from the corporate world. He says it is not having a boss. As you always have someone to lean on and someone who has a bit more experience than you that you can ask for advice or mentorship. However, when building your company, you are your own boss.
Walid shares that founders will pave the way of what reality we will see moving forward. You have to be decisive and bold and simply, breathe. He encourages having a routine every morning that will keep you sane, clearing your thoughts and communicating. You have to let things fall and understand that you are doing the best you can and that you couldn’t have mitigated all of the risks. He discusses, firstly looking at what you have e.g. getting your executive team together and discussing topics such as where costs can be cut and what makes sense to invest in moving forward.
He shares that we have to stop and see that a lot of things are going to be non-essential e.g. your business plan for 2020 where you will have lots of targets and goals, but will have to understand that a lot of these things are not going to happen. You should not worry about what other people will think. You are a leader. You need to restructure your business plan for 2020 and have the courage to say what is or is not going to work. Priorities need to change.
If investing in companies that are capitalising on the crisis is a long-term investment. Are they sustainable businesses?
Walid says it is not a “hit and run” and isn’t about being opportunistic in the short term.
He explores trust:
1. Founders trusting themselves
2. Building trust with your investors and suppliers - those that are in crisis mode and need you.
This is where you can build trust that is sustainable in the long run. Founders need to take stock of what is happening right now, cut costs and only invest in things that are revenue generating for the next three months.
If the investor/founder pitching relationship may move into a digital format moving forward
Philip shares that there has been a 117% increase in people applying to the 75 VCs on MAGNiTT in the past few months, so people are using digital platforms to connect. Walid thinks very much of the same will remain - pitching will evolve, how VCs look at metrics will change and even events. It makes sense to do things online to be time efficient and data driven.
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Other topics included whether investors should reach out and support the founders or vice-versa, what a crazy valuation is, whether you should be looking to fundraise right now or maintain growth, advice for fresh graduates, and more.
To check out the full discussion, watch the Webinar below now.
Here are some insights from the polls we launched during the webinar:
Here you can find the documents and below the video Walid mentioned during the session.
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