Category Archives: Entrepreneurship

How to Build a Startup in India – Complete Guide

In last 4 years, I have built 3 startups and multiple products, some did well, some didn’t. Currently I am building AeroLeads which is a prospect generation software, before this, I built InBoundio and before it WorkMonk (now shut down). In between, I took few short and one long break (of one year). With all this experience, I have learnt a lot about how to build a business, about technology, marketing, sales and finances.

When I was starting, I made lot of mistakes and wasted lot of time in doing things which were counter productive or didn’t align with building and growing a business. I also made lot of mistakes from technology and hiring people too. So I thought to write a Complete Guide on How to Build a Startup in India. I am sharing all what I have seen and learnt from my mistakes and what you can do to avoid them.

1. Idea and What to build

Do what you want to do. I am a firm believer in this as the startups require lot of hard work and if you are not having fun and doing what you find it exciting, you will soon lose motivation.

Ideally you want to start from a pain point and see what solution you can build. It will be good if that is a problem faced by many as this will determine your market size. There is also “sell Antibiotic and Not Vitamins” concept as people only pay for antibiotics, not for vitamins.

Almost all the startups (at least the successful ones) are built around a solution for a problem. Do not create artificial problems as it is easy to have tunnel vision as a startup founder.

Also almost always people start with something else and end up building something else after few failures and iterations.

2. Team

Going solo is stupid and suicidal. I know because I am a single founder. Always have a co-founder who will share pain, expenses, problems and work load. Normally college friends become the best co-founders. Founding team of 2-3 is best. I have seen teams which are too big often split up later and ends up as 2-3 founder company anyway. You can have your brother/spouse as co-founder too but make sure he/she shares the responsibility. Way too many people add directors/co-founders for name sake which creates false illusion of someone being there.

Build your core team based on character and not on skills since skills can be build easily, character can’t. Make sure you like these people and enjoy working with them since you will be spending 50% of your awake time with them.

3. How to start

You are better of starting from your home. Don’t jump taking office, furniture, startup branding material, forming company etc. These things are not important initially. Way too too many startup founders make this mistake and loses focus. When time and money are at scarcity, use it wisely.

Spend all your time and resources on building and selling. Don’t bother about fancy office, furniture, stationery, t-shirts and even registering company. These can be dealt with later.

Whether to register a private limited company or not is your choice. My opinion on it keeps on changing but I feels if there are multiple co-founders and partners, you should register a private limited company. You can get it done for around 20k. Do get proper partnership agreements done too.

Initially you may want to pool some money and keep it in your bank account say 5 lakh which can use to pay bills too. Such buffer amount is needed so you don’t have to keep using your personal funds which will make tracking expenses difficult.

4. Technology

One of the founder has to understand technology. Way too many startups fail because of bad technical decision specially choosing wrong technology stack (I have done it). Ask others what is the best option for you. As few more people. This is one thing which has huge cost of failure involved. Don’t just chose something because this is all you know. You can spend 3 months learning something which will be far more beneficial so be open for it.

Also do not do premature scaling. Don’t buy costly servers and start talking about scaling with you have few hundred records and your product don’t even need that. Don’t use technology just because it is cool. Using AWS, angular, node.js is fine but may be overkill if all you need is $10/month hosting and a web framework which supports crud operation.

Do explore all the options and do keep things like how easy it is to find developers, in what salary range, what kind of support is available, how active is the developer community etc. Never chose a technology stack just because it is cool.

4. How to Hire ?

There is no silver bullet, the best of the best I have seen makes hiring mistakes. Ideally you want to do inbound hiring. Let people come to you by hearing about you and your startup. This often brings ownership and commitment.

I have rarely seen finding your core members from Naukri or Monster working out for any startup. HasJobs, Startup Facebook Groups, LinkedIn/Twitter, Company career page on the hand has worked much better for me and others.

Don’t go for the resume screening too. Just talk to them and look what they can bring now and in future as well. Always prefer character over skill as skill can be build in few months, character can’t. Hiring a wrong person will be a huge liability in terms of time, money and resources invested, not to mention asking someone to leave is never easy for anyone so be very careful in hiring and always keep 3-6 months screening/trial period.

5. How to Raise Funding ?

Back in 2011, I had spent 3 months trying to raise funding. There wasn’t really much to show, there was no product or team and I was extremely hyper. I wasn’t sure how much I wanted to raise and the number kept on fluctuating from $200k to $1M on daily basis.

Needless to say, I couldn’t raise anything but still I did learnt some very valuable lessons by getting rejected from every VC and angel investors of India. DO NOT chase them, let them chase you. There are plenty of associates hanging out on linkedIn and who reads YourStory and NextBigWhat so if you are doing good, they will contact you. Raising Funding is a two sided market and investors values good startups and will quick to jump on to you if they see value.

From what I have seen, do not raise anything below 50 lakh. It is not worth diluting or going through the hassle of issuing stocks for small amounts. Normally with just 6-8 people, your burn rate will be 5 lakh per month at least so 50 lakh is a minimum (this is what I have seen in Bangalore). If you can raise more initially, even better as raising money is a huge pain and sucks time and energy.

Don’t be attached too many feelings and emotions with funding though, some of the biggest and successful tech product companies in India are bootstrapped and there are businesses which are family run. If you are not able to to make things move in 3 months, move on. Raising money is not your primary job, building a business is.

6. Finances

If you are running a private limited company, make sure you keep your finances clean. All the data for private limited companies are publicly available with directors name so you don’t want to default anything as as a director. Your name may get blacklisted if you don’t audit and file returns. Hire a good friendly CA (not a firm, they are only there to make money) who will give you good advice too.

Ideally one of the core founding team member should manage finances as money is oxygen for startups. It is also important if you want to raise funding in future too. I have tried to use various software but somehow never got used to them as I found them clumsy, I anyway don’t run a big company in terms of people so for me netbanking + excel file works. Find the best option for you and stick to it.

7. Sales and Marketing

Make sure you grow organically initially. Nothing is better than growing without sales and marketing teams and zero budget and growing by word of mouth. Lets the users find you as this will validate your business model too.

Avoid hiring too many sales and marketing people initially. Premature hiring specially of sales and marketing team will burn your cash really fast. Also I have seen people being casual in hiring sales and marketing people as compared to developers (often because the founders understand technology so can screen the people better as compared to sales and marketing) which often leads to wrong hiree.

If you don’t understand sales and marketing, it is good to learn by doing things yourself. Sales and Marketing will take more time and resources than technology and is integral part of busienss growht.

8. Relationship, Health, Life and Fun.

Every startup founder is a dreamer and wants to make it big but it is stupid to do it at the cost of relationship, health, life and fun. I think its OK to work 14 hours a day, living on top ramen and your startup being the center of your life for some time but you can’t do it for years. In fact this means you are making wrong decisions running your startup too as this is why you are not able to find the right work life balance. I can write a lot on this from my past mistakes but I feels if you are reading this, you can easily connect the dots and make the decisions for yourself. Take care of your health and relationships (parents, brother/sister, spouse, friends) since you can’t buy it with money, success and fame. Also keep learning and having fun in life and have it today, don’t wait for tomorrow.

I am very sure on this – You will spend your whole life ignoring everything, only working and making 100 million dollars and when you die, Times of India will goof up and miss out printing 2 digits.

If you have any questions or if you think I can help you in some way, feel free to contact me through comments, on linkedIn, twitter or through email.

How to Bootstrap in India

I am bootstrapping AeroLeads and InBoundio, 2 product based startups and strongly feels before raising money, everyone should bootstrap as you want to learn how to manage resources and money before you actually raise money to have more resources.

Here is what I can suggest from my learning, experience and what I have seen from other bootstrapped startups

1. Start from your own home – some of India’s biggest product startups started from founders bedroom (directi, fusioncharts). Working from your own house gives you huge advantage of working distraction free and without thinking about growth, expenses and profit. Once you takes an office, have few people around you and with hundreds of thing to worry about, you will not be able to think freely and do things fast. Starting from home often gives you extreme leverage to try all what you can and want to.

2. Do as much as you can including coding, sales and marketing - Every successful product startup founder I have met, there was this pattern. They understand technology stack as well as how to get users and customers. Before building a team and raising money, they completed the full cycle of product development and sales.

They know because they did initial programming, user onboarding, marketing, selling and support, something which is very important. I strongly feels even if you are not a great developer (I am also not a really good developer and often copy/paste code) still learn and understand the technology stack as it will help you a lot to make the right decisions. Similarly, understanding sales and marketing is equally important too. If you are bootstrapping, make sure the core team of co-founders do all this by themselves. It doesn’t matter how small and trivial the task is, do it once and then you can delegate to others.

3. Find Free and Cheap Resources instead of Paying full – Before paying, I always try to find if can I get that for free. There are so many startup resources available that there are good chances you can get everything for free (at least for few months). For example, through TheMorpheus and f6s startup site, I got 12 months free rackspace hosting worth $1000 and oLark premium for 3 months.

Search for startup deals and offers in Google and you should be able to find plenty. Do search for coupons and discount too as most of the SaaS companies do extend trials through coupons. I had also hired a freelancer from philippines in 2013 for well below the market price and he helped me a lot in testing the product, so keep using freelancers too if you can get the work done fast and cheap.

4. Look for Free Marketing – Nothing will burn your finances faster then you starting to spend money on marketing when your product is not finished. This I learnt the hard way as i foolishly lost money on marketing when the product sucked and wasn’t even complete. Contrary, by luck I got covered at TheHindu newspaper which eventually got us lot of signups (the product eventually didn’t took off). It was a pretty good experience in importance of free marketing. Even right now, my post How I got 1100+ SaaS user is the most linked and talked about blog post which brings lot of traffic and has helped me to network with lot of startup people.

Stop Comparing your Startup with Other Startups

If you are running a startup, please stop comparing it with others. You will be doing great favour to yourself, will have less clutter in your head and certainly will make better decisions.

I have met way too many startup founders and I myself have been guilty of doing this. We compare the growth rate (which every one lies about anyway), how much money someone has raised (again people lies and you never know the terms anyway), how many people a startup has (judging growth of a startup by how many people they have is like judging the taste of cup of tea by just looking at it) and so on.

It is stupid to compare your startup, your product, your team and yourself with others since you will never know who others are. Building something because others are building, hiring someone because others are hiring, raising money because others are raising is extremely stupid. You build your startup the way you want it and let others build their startup the way they want it.

There will always be startups who is doing better than you, this is how business and life works. So stand aside, appreciate others but don’t judge your startup from others parameters.

My Learning while building a Bootstrap Startup in India

I had written a post How I built a 1100+ users SaaS business as a Single Founder with Zero Marketing Budget some time back which got covered at YourStory. Since then I have got lot of mails asking many questions, I did tried my best (and will always be) to answer to everyone but it is not possible to reply to everyone so I thought I should write down a post putting down all my learning.

I feels most of the failed startup owners quietly disappear instead of sharing their learning and unfortunately what all I learnt, learn through failures after paying big price so I thought to share my knowledge and learning to other startup founders and entrepreneur so they can learn from it. I am writing it the way as I feel it, take it with pinch of salt.

1. There is nothing great about building a startup – You will start a startup with lot of excitement, want to make lot of money, change the world etc but the kicks will be temporary. Starting a startup, running a startup and making money from a startup are three totally different and often separate things.  Fun is in the first part but that has shortest life. Lot of people get sucked into thinking that there is something great about startups, there really isn’t. If you want kicks or wants to make money, there are less risky options available. Startups have very poor success rate, so you better understand the risk/reward and have solid reason behind doing it

2. India doesn’t have a startup ecosystem – There is lot of noise in India specially in bangalore about startups but really there is very little signal. Way too many people get sucked into this “startup” way of building business losing time and money both. There are plenty of startup trolls, advisors, accelerators, investors, has been wannabes in Balgoare who know nothing about building business and are just there for kicks, greed, ego and entertainment. If you are a startup founder, be careful. you are the only one who is taking risk, never forget this.

3. It is very difficult to build a good team – Every seasoned entrepreneur can vouch for this, it is extremely difficult to hire and retain good talent, building a strong team is even more difficult. You will not find co-founders from startup events. Indians are also very emotional people, which often causes problem in building strong team and specially between co-founders who don’t know each other before partnering.

4. Exponential growth is a myth – Very few startups grow exponentially, don’t get fooled by those who are saying they are growing exponentially. Those who say numbers openly have a reason behind it. Most of the startup and startup founders also lies a lot.

5. Never compare your startup and yourself with anyone – I never read Indian startup blogs, techcrunch, HN etc, as it is waste of time. I am least interested in knowing who has got thousands of users or who got millions of funding, as you will never know the underneath reality. There is way too much going on with every startup and startup founders which you will never know. So don’t waste time following other startups unless you can learn something from them.

6. Bootstrapping is not easy – I have found bootstrapping to be difficult specially since I am doing it from Bangalore with no local support. I do know what I am doing and understand how to manage money and expenses and have a profitable startup but still, if you are first timer, expect lot of things to go wrong. Your expenses will be 2X-3X then what you think. I have learnt to manage expenses but only by failing and losing lot of money which hurts, or at least it used to.

7. Deadlines are meaningless – I have missed all my deadlines till now. Earlier it used to bother me, now I just don’t care. I have found it very difficult to set deadlines as there are way too many unknown variables so it makes sense to not set too many deadlines and sleep well in night.

8. You need help from all corners – This is something which I have seen with all successful startups. They always have some support system in terms of family, friends or some network. There is always brother, father, close friend, spouse etc as well as office space, logistics support system with successful startups. These things often happen at background and people never realizes this or acknowledge this but this local support system plays huge role in success of startups.

9. Single founders have limited bandwidth and fast burn rate – No one talks about founder burn rate but they have limited bandwidth. There is huge difference between single founder, two founders and three founder teams. A single guy can at max manage 2-3 people, any more and things will start falling apart. I had made a huge mistake earlier when I tried to manage 5 people which I couldn’t and it became ugly. Do not chew more than what you can swallow.

10. Don’t micromanage or use metrics – using KPIs, metrics, media mentions, traffic and even earnings are often deceptive in early stage startups. As startup founder, you are anyway will always be bias and will only look at things which you want to see so don’t waste too much time on these vanity metrics. They are not as important as you think they are.

11. People are not making as much money as you think they are – Earlier i used to think all these VC funded companies who have raised millions of dollars and people who are running the startups/companies makes lot of money. In reality, very few are making that kind of money. Founders become employees the moment you form a private limited company and raise funding and are not in full control irrespective of what they say publicly. Things never look what they are anyway, so if you think are thinking that there are tons of people making tons of money doing startups, you are wrong. Contrary, I have seen lot of people doing self owned services/development business or running small online businesses are doing fairly well. So if you can successfully build a small business, do it instead of building a big failed business.

12. There is nothing great about product companies nor anything bad about services companies – I had met someone in 2012 who proudly said they are a product based company focussing on Indian SaaS B2B market. They had 80 employees and with about 8 lakh rupees in revenue. I don’t think product companies need that many people, unfortunately in India, there is no such thing as product company, every product or services or B2C or B2B company eventually becomes an Operations company. Don’t get sucked into these definitions of product or service company, there is lot of overlapping between them when you are building India focussed business.

Entrepreneurship is test of Character and not test of skills

The title says it all, I don’t have to write much.

Whatever I have seen till now, from my experience of running 2 startups and after looking at hundreds of startups, entrepreneurship is test of character and not test of skills.

It is OK if you don’t know how to code, don’t know how to do marketing, don’t know how to build a team, don’t understand the market well or don’t have any money since these things can be learnt or achieved in some time. Startups don’t fails because of the above reason, startup fails because of lack of survival skills.

I have seen way too many people in India who are really smart, hard working, have awesome ideas and co-founders but they just quit and the moment you quit, it is all over. All the experience, learning, knowledge is lost.

Building a business or making money is not difficult, what you need is character and survival skills. Ability to go beyond your comfort zone and hang in there for some more time when it is tough to get going.

Our List of Mistakes and Learning while building WorkMonk

So we finally (soft) launched WorkMonk last week, it still has many bugs and design issues but we decided that no point in keep on fixing things and we should just launch the platform. I personally feels, you can do 80% development in 20% time, it is the last 20% which will take 80% of your time, so sometimes it is good to move on to next stages as per the deadlines and keep fixing/launching features as you go.

I am writing this post hoping it can help other startups and wannabe entrepreneurs.

Here are our Mistakes which we did in building WorkMonk

Mistakes
1. Hired wrong guys – this was expected (and this happens with everyone) since I am somewhat new to all this, anyway we quickly figured out the mistakes and corrected it so not much damage done.
2. Took decisions too fast specially those which involved money (I don’t have any regrets though as at that time, they looked the right decisions)
3. Tying to build things in mid air with no base. Building and creating things is fun but we didn’t realized the valuable time and resource loss. A big part of our code is now useless but it is ok as this is how you learn things, also I learnt some new ways of building things.
4. Instead of growing vertically, we started growing horizontally and started focusing on multiple markets instead of focusing on different segments of same market (ideally initially you should only focus on one segment of core market)
5. Not understanding the bandwidth – Every startup has certain bandwidth depending on the number of founders, size of core team, available resources etc, we miscalculated this though we quickly figured out the available bandwidth so not much damage done.
6. Too much focus on money and earnings rather than on technology and building platform.

Learnings
1. If you want to get something done, do it by yourself.
2. Money leaks fast.
3. Technology > People
4. Everything will take 2x-3x more time then your estimation
5. Stick to your strengths, converting your weaknesses to strengths only sounds good on paper.
6. Don’t get stuck in operations, keep building vertically
7. Don’t spread yourself too thin, specially if you are a single founder

List of VC firms and Angel Investors in India

Back in June 2011, I had made this list for my reference and thought to share with everyone. I am not giving the email ids for obvious reasons, you can always find the email ids/contact form from their sites anyway (or on linkedin), though if you are indeed serious about raising capital, I will highly advice you to contact the VC firms through some referral connection.

I have added few remarks in front of them, but do your own research. Feel free to drop me an email though, if you have something specific to ask. Please do note that this list is not complete in anyway, this is something which I had created for my own reference.

Feel free to add in the below wiki excel along with your remarks, please avoid removing content unless it is verbose or wrong.

Wiki Style List of VC firms and Angel Investors in India (publicly editable) – Feel free to add names/remarks to it

EDIT – I was hosting the excel file on editgrid but it got shutdown on 1st may 2014 and there was no email/alert so I have lost the excel file. But I have copied the list in text below.

Original list in case the above list is not accessible

Name of VC/Angel Group Remark
1 Indian Angels Network from 50 lakh to 10 crore, group of HNIs
2 Mumbai Angels upto 2 crore, group of HNIs
3 Seedfund upto 5 crore
4 Nirvana Ventures
5 Inventus Capital
6 India Innovation Fund
7 VenturEast
8 epiphany ventures
9 Tempes Capital
10 Hyderabad Angels very new angel group, group of HNIs
11 Accel Partners 2 crore to 10 crore
12 Sherpalo Ventures
13 Nexus India
14 India Vest
15 GVFL
16 Global technology ventures
17 DFJ
18 Matrix Partners
19 Indo US Ventures
20 Cannan Partners
21 Chennai Angels very new angel group, group of HNIs
Major VC Firms
26 Light Speed
27 ClearStone
28 NVP
29 SAIF Partners
30 Ojas Venture Partners
31 Helion Ventures
32 IDG Venture India
33 BVP
34 Sequoia 1 Crore to lot of money
Niche Specific/Other VC/State Investors
35 Reliance Venture Fund
36 Qualcomm Ventures
37 Omnivore Capital Agri funds, useless for IT/Tech
38 Impact Investment Partners Social fund for healthcare
39 SIDBI Venture Government backed funds
40 Gujarat Venture Fund (GVFL)
41 Rajasthan Venture Fund (RVCF)
42 Karnataka Venture Fund (KITVEN)
43 Small Enterprise and assistance Fund (SEAF)
44 Brand Capital (Times Group)

You can also check Angellist India too which has lot of names of early stage investors.

Why as non tech Founder, you have to (learn to) Code

There are 2 kind of founders, those who can code and those who can’t!

Fortunately I belong to the first category but if you belong to the second category, start to learn to code right now. After seeing hundreds of startups, even those which are not into IT/Product/Platform verticals, I can safely say that the founder(s) who can build things will always have 3X+ advantage over to those who can’t.

The biggest mistake Marketing/MBA founders make is to think that they can find some rockstar developer, pay him good money and he will build things for us. It just don’t work. It hasn’t worked in the past, it will not work in future too.

As a non tech founder, you have to know what is going on with your product/platform so even if you can’t understand the finer details of the work, you have to sit with the developers and ask them explain why we are doing this and how we are doing this. This doesn’t mean that you have to do full time hardcore coding but spend few hours to understand the tech part of your startup, this will help a lot after 6 months, always remember, it is not your developer who will build your company, you will.

[Problem] Why every startup is looking for a RockStar when there are NO Rockstars who want to work for them?

Yesterday I had a 1.5 hour long discussion with Sumit Datta, he has tremendous knowledge about startups, he himself ran a startup and currently works in a VC funded company in Bangalore. Half of our conversation was about “How to find Best (read as Rockstar, I don’t know what it really means but it looks to be the “hip” word looking at hasgeek job board) Developers” and we both agreed that in India, As a startup company, it is almost impossible to find 5-6 really good developer. The logic is very simple, no one with 3+ years of experience want to work in a startup unless he really knows the founders. People who are married have different priorities and Indians in general are risk averse people and working in a startup leaving your 12+ lakh job sounds (and indeed it is) very high risk decision.

So this means, you can only hire people with < 3 years of experience, preferably freshers. This is where, it gets even more tougher. India's best engineering talent (from IITs/NITs/BITS/IIITs/DCE/NSIT) eventually land up in US for their masters/PhD, the rest lands up in IIMs just after graduation, and those amazing developers who don't chose to do MBA or Masters gets hired by Google, Amazon, Microsoft, Adobe (and dozen more) companies for 12 to 15 lakh salaries with perks and as a startup, you just can't convince those people to leave their Mon to Fri job in Fortune 500 companies.

This brings us to the point why I am writing this post, How many Rockstar developers are there in India who really want to work in a statup ? I know, every startup wants few rockstar developer who can work for peanuts, get some esop and help the founders make millions but how many Rockstars in India are really there who wants to work in a startup ? My answer is, not more than 200.

There are over 1000+ startups looking to hire these 200 people which reminds me of “Rakhi ka Swayamvar”. As per Sumit, this is also a reason why India is not able to build a billion dollar product company. There is absolutely no talent available for startup and desi companies. What scares me is, as a startup founder, there is nothing you can do to change this situation, just keep on trying and struggling against time and hope to find few good people, as the other 1000 startup founders are doing.

Btw, WorkMonk is also looking for an excellent developer (no, NO rockstars, but it will be nice if you can sing and dance) who wants to work with an excellent team, mentors and investors. Please drop me an email to “jobs at workmonk dot in” and we can talk. Make sure you do read this Blog Post too.

This is how Sanjeev Bikhchandani started Naukri

Brief snippet of an article I had read and clipped it, it is an amazing summary of how stratup founders need to work, there is no initial glory, money or fame even after running the startup for 3+ years and raising funding. Also he worked without salary for 3+ years too and kept on doing another job (the original article is a must read).

Well, for the first three years, my wife was in Nestle and the company couldn’t pay me. The next two years, the company could pay me and my wife was still in Nestle so we were okay. She quit in 1995 and around 1996 I became the Consulting Editor of The Pioneer’s career supplement called Avenues. That gave me a monthly cheque; we were not well-off but we got by.
By that time my reference group had changed, so I was not seeing what my batch mates were getting. In 2000 when we got venture capital from ICICI, I had been through the second round of not taking salary for three years — 1997 to 2000. That was tough.

During that time my wife was not working, so I had to do a second job. I got up at 6.00 in the morning, dropped her to the bus stop, was in the office by 7.00, worked till 12.00 then would go to The Pioneer come back and work till midnight again. This went on for three years.

That was tough, but the thing about doing your own business is that you are probably very happy even though you are not making money, for the simple reason that you are in control of your life and priorities and that is important to me.