Startups Try To Save Cash, Turn Profitable As No Funding Available
To cope up with the effects of disruption caused by COVID-19, startups are taking proper measures to ensure they can sustain for long as there is no hope of funding anytime soon.
Many startups have started slashing marketing expenses and fixed costs. Some startups are diversifying their revenue streams and are offering COVID-19 related solutions.
Tech Platform Instamojo said that it became EBIDTA profitable in May, with its gross margins jumping from 35% to 60% during the June quarter.
Sampad Swain, co-founder and CEO of Instamojo, said,
“By March-end, we took some serious business calls and undertook several cost-cutting measures. Two-thirds of our employees had to take salary cuts, we had to renegotiate infrastructure costs including office rents and pulled the plug on digital advertising which was 40% of our acquisition costs.”
TravelTech startup ixigo cut its digital marketing budget and re-negotiated contracts with vendors to reduce fixed costs.
During April and May, when travel bookings took a massive hit, ixigo worked on automation to reduce customer redressal costs and increase unit economics.
Aims to turn ixigo profitable this financial year, Aloke Bajpai, co-founder and CEO of ixigo, said,
“Covid-19 has taught companies to be more efficient, especially on marketing and operational costs, and rationalize spends. We cut our marketing spends completely and were still able to retain more than half of our active user base.”
Since capital is getting scarce, the majority of the startups are following the same strategies (slashing marketing expenses and fixed costs) to keep their business afloat.
We wish well for each startup and hope good times come soon.