SA’s tech startups are responding to the threat of the coronavirus by putting in place austerity measures and devising new innovative solutions for customers, while instructing employees to work remotely from their homes.
Following President Cyril Ramaphosa’s declaration on Sunday of the virus as a state of emergency, several tech companies Ventureburn contacted yesterday by email, said they had already taken measures such as halting international travel and requesting that team members work from home.
Cape Town tech company Entersekt, had taken a decision in the first week of March to stop all but the most essential international travel and have asked that employees returning from trips to self-isolate for two weeks as standard practice.
SA’s tech startups are responding to the coronavirus threat by putting in place austerity measures and devising new innovative solutions for customers
CEO Schalk Nolte said while as a tech company, Entersekt is geared up for remote work, the company hasn’t made any decisions on whether people should work from home yet.
“It’s obvious that the closing of schools will affect families a lot, and we will do what we can to assist parents around that, but it’s currently up to senior managers what their teams do based on discussions with them and their individual circumstances,” he added.
He said as Entersekt’s products help enterprises like banks and insurers to interact with their customers remotely and securely, the company foresees the frequency of use increase in the short term as more people bank and shop online.
“We don’t know how deep the economic impact will be and how soon the global economy will rebound after the worst of the epidemic is over, so there are medium to longer-term risks, but we remain confident,” he said.
However, for Manuel Koser (pictured above) the managing director of Cape Town based investment company Silvertree Holdings, the virus has created “very testing times” for public health and infrastructure, politics, socially, economically and on many more levels.
Koser, who said he was self-isolating because he has a pre-deposed immune illness, said the Silvertree investment team had spent last week and the weekend scenario planning and drafting Covid-19 action plans to be deployed across its investment portfolio, which consists mainly of a number of SA ecommerce businesses.
“It will be testing times for startups now as the fundraising winter is coming and valuations will come down significantly as investors wait and see, it might take three to four weeks or months or years. The best to preserve cash now and plan for the worst,” he said.
But, he said some of the best tech companies globally have been built during crisis. “Hard times now but make us all better managers, entrepreneurs, investors if we act level-headed,” he said.
Added Trevor Gosling, the co-founder and CEO of fintech startup LulaLend: “There’s a lot of nervous energy in the office at the moment as we journey through these unprecedented times but there is definitely a positive mentality to take up the challenge”.
Gosling said as the business funds small businesses, he and his team has already seen a number of industries “feeling some pain” including tourism, events, and businesses that rely on China (and other highly-affected areas) for stock and raw materials.
“For us it’s very important that we’re able to support our customers through this difficult time to make sure they get through and flourish,” he added.
“At the moment we have not seen a revenue impact but we do need a strong and growing SME environment to assist us. To this end, we are developing innovative solutions to assist customers with their cash flow to keep them operating as effectively as possible,” he said.
‘Decline in disposable income’
Ernest North, co-founder of Johannesburg based insurtech Naked, said it was too early to tell what effect the virus would have on the overall economy.
“On the one hand, Naked’s ability to keep selling car insurance without a call centre is a relative advantage compared to traditional providers, but on the other hand, and more important is our concern with the risk to people’s health and the impact on the economy as a whole.
“We are concerned about more systemic damage to the economy, and ultimately as disposable income levels reduce, the risk that people cancel financial services products. As such we don’t expect a decline in immediate revenue, but the medium outlook is concerning,” he added.
‘Putting in place austerity measures’
For events ticketing platform Quicket the ban by Ramaphosa on Sunday of all gatherings of over 100 people, will lead to a loss in revenue in ticketing for the business.
Co-founder James Tagg said the loss in ticketing would extend to the wider events community, including the event organisers and their suppliers facing tremendous loss of income.
“We are viewing this as an industry-wide loss in revenue and are putting in place austerity measures as much as any other businesses facing these losses.
“We are also trying to look at the positive ways in which we can help event organisers to transform their events — ideas such as moving their events online, running webinars, fundraisers, merchandise sales, online tournaments and events, and any other ways that we can help them to sustain their income, and by extension our own,” he said.
Added Tagg: “The mood is one of solidarity and committed focus — while we are separated physically, we are pulling together as a team to help each other and to look at creative ways to help our event organisers stay afloat during these challenging times”.
Featured image: Silvertree Holdings managing director Manuel Koser (Supplied)