In the last 4 months, I must have met over 3 dozen startups in Mumbai, Bangalore and Delhi, most of them have got initial round of funding (very small) and are looking for next round of funding, though I feels they are exceptions and the chances of you getting any bootstrap funding is almost zero unless
1. You already have good contacts and network with VC
2. You are in your 30s and have say 10+ years of experience, specially at management level in some really big corporation
3. You are a team (2 is good, 3 is even good) from IIT/IIM
so if you (like me) don’t fell in these categories, you are better off putting your own money in your venture rather than looking for external funding since you won’t get any. I have always felt, in India, you can easily bootstrap for 5 Lakh, may be 10 lakh at max if you do not hire anyone and do all your work (like development, Maintenance and marketing) and it is not that difficult to get such amount now days, infact if you are 3 partners, you all 3 can put 2 lakh each and do all the work and that 6 lakh can go a really long way!
No investor is going to give you any money of his, if you yourself do not want to put any money of yours on your own idea.
Another problem of getting initial seedfund of 20 lakh and less is that, for investors it is not worth their time to deal in such small amount and you may be wasting your time too in trying to contact with them, you may be better of putting that time in building the product and talking to clients and getting their feedback, if you good traction and visibility, investors will anyway chase you.
I am in Delhi for almost a week now, unlike last time (in January) when I almost died due to extreme cold, this time, the weather is way much better now, of course this is just the beginning of delhi summer. So during my stay in delhi, I can certainly notice few remarkable things about it which make it stands out from other metros, one of which is the number of property brokers and agents. It seems in every nook and corner, there is one property broker shop. Infact I saw a lane where out of 12 shops, 5 were of property agents!
It is not difficult to imagine that becoming a property agent do not require much skills or educatoin in India, and anyone who can talk and has good connections can start the business and there is easy and good money in it.
I think the time has come for India to start regulating properties buying/selling in a more controlled way and starts issuing licenses for being a property agent just like in USA and other countries and of course there is loads of money on the table for the government.
What do you think, which is the largest and promising online business that has started in the past 3 years in India ? the chances are, you won’t be able to answer it, even I can’t because I don’t think there is any. There are some startups which are VC funded like asklaila but they are not going anywhere, there is ibibo with deep pockets but they are only copying ideas from others with offering anything new and then there are hundreds of startups which starts with good idea/concept and shuts down because of lack of traction, visibility and revenue.
So in short, India hasn’t seen any big idea taking off and I feels things won’t be changing in 2010-11 too, the most obvious business models are already been implemented in the form of transferring of print classifieds to online portals, like jobs, matrimonials, buying/selling vehicles etc and now we are seeing very vertical startups, say offering loan comparison, food ordering and even selling shoes online, I have serious doubts of any of these becoming next Naukri or shaadi or justdial (100+ crores businesses)
As the time is passing by, I am getting more and more convinced that in India, if you want to launch a successful startup, you have to merge both online and offline market as well as mobiles, you can not be successful just by offering some stand online service and hoping to make money through advertisement, which is the worst business model for a startup as you don’t want to make money from attention when the real money is in intention
I met many angel investors during my visit to Mumbai as well as have interacted with them at various other occasions including my failed attempt in 2008 to raise some fund for a project of mine, so I do have experience of 3-4 years of understanding angel investors fairly well, so here is a post about how Indian investors think and work. I hope it helps few of you guys who are looking to raise some funds.
1. Most of them look to spend 50 lakh (unless they are very sure that the idea is great in which case they will get money from some network) only so if you are looking to raise say 2 crore, you need to find multiple angel investors.
2. The chances of putting money on just idea are very less, like 1 in 1000. Everyone want to see some working revenue model and first client. For US angel investors, proof of concept normally do it but this is not the case with Indian angel investors.
3. They are there to make money, none of them is looking to change the world so if your model has no earning potential, you better find something before approaching them.
4. They love IIT/IIM people like anything, try to find someone and get in your team as a mentor if that is possible.
5. Most of them will never say direct No and will keep you in loop, something you should be careful of, as you don’t want to waste your time chasing angel investors, if your product is good, they themselves will come to you,
6. Don’t expect them to put money unless you yourselves haven’t put any. Every angel expect you to put 20 lakh atleast from your own side first to make them believe that you are serious. Ofcourse for web startups you don’t need this much money specially if you yourself can do all the work but still, they do want you to take the first steps and risk before they put their money.
7. Angel Investors don’t like people who are doing jobs and running the startups in parallel (why will they?), so if you are looking to approach angel investors, you better have a really good reason of why you are keeping your job and when you are planning to quit.
8. I often got this feeling that most of the Indian angel investors like to play very safe, I mean may be because of lack of proper funding options for startups, the “power” balance is highly shifted towards them, hopefully in next few years, this shift gets more balanced with more money getting poured from NRIs.
9. If you have a team of 2-3 people, the chances of you getting the funding is higher then a single person, I personally feels 3 is a crowd and 2 are enough.
10. If you think you can not survive without the angel funding, offer them good equity, say 30% for reasonable price, say 50 lakh. Giving 30% may look big but this will help you to get moving. If you don’t want to give this much equity, raise money on your own first or find more partners.
11. Be realistic and think from the investors point of view, you better don’t attach any immolation, they are a real turnoff and shows your immaturity.
12. Did I mentioned that they are only there to make money ?
February 12th, 2010 in
Entrepreneurship |
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So I am back from Mumbai after attending eSummit 2010 at IIT Bombay. Normally I tends to avoid such summits due to high noise ratio as well as because of time wastage in traveling but still this time I felt, lets go and see and it turned out to be great decision, I spent the full day at vulture’s nest where 12 “startups” were looking to raise some funding from group of angel investors.
The event though was supposed to be started at 10:30 started at 11:10 because few guys came late which also meant less time for people like me to spend on other sessions, anyway
Things which I loved about the eSummit 2010
1. It was fairly well organized, though many (including me) failed to find the rooms where the seminars were taking place initially
2. Lunch was great.
3. I think such events are really good for college students as they see fellow students and people of their age launching their own companies and Entrepneurship is Infectious 
4. They provided networking option too using which any attendee could talk to anyone, I am not sure if other such summits are following this but if they are not, they should.
There is similar eSummit which is taking place at IIT Delhi on 17th of Feb (it is 3 day even I think), you can check it and see if it works for you. There is another startup event being organized in Bangalore unplugged, which I will be attending as it looks promising.
February 9th, 2010 in
Life |
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So in the last 3 days, my feed reader is filled with Apple iPad related news, mostly with negative reviews talking about how feature deficient the product is so after going through the list of its features, here is my review of it and what I think about the whole fiasco -
1. There is No Coolness Factor with iPad – iPad is not a new product in market, is not offering any new features and is overly costly.
2. I am not even sure if Apple was ready to launch the product, I mean it don’t have USB and flash support and for me it is hard to believe any hardware nowdays without USB support. There are some other hardware limitations too limiting the user functionality.
3. Most of the people are still not sure what the device is for – I won’t be surprised if many still wondering, what exactly iPad is supposed to do ? is it targeted towards tech savvy crowd or a common men ? I am myself not very sure if I get iPad, what I will do with it
4. I don’t believe in product name should be great but they could had come up with something better then iPad as apple’s target crowd is tech savy so something more tech sounding would had been better.
5. You can not take your loyal customers (even fanboys) for granted – Yes,, even apple has huge loyal fanbase but if Apple were thinking that people are willing to pay $800 for iPad just to have another Apple product, then they are wrong.
What Indian Companies can Learn from Apple iPad Launch Failure
1. Launching a product which is not ready for market is a recipe for disaster no matter how big you are. Many Indian companies do this and I myself have been guilty of doing this.
2. Underestimating the customer and taking them for granted – no one will just come and handle you the money because you are so awesome, infact in India, getting money from the customer is even more difficult so you better don’t take them for granted.
3. Is the product even worth buying – In his 10 rules for web startups, evan williams has talked about you being the user of your own product, I wonders how many of the apple executives will be using iPad (it is not about being able to afford it) in future.
January 31st, 2010 in
Web |
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This is a quick “10 Pointer list” (could had more points easily) based on what I am seeing and have seen on Indian web space and what problems online businesses faces or common mistakes they make -
1. Majority of the people who are starting the web startups in India thinks they can make money from anything building anything, this just don’t work, the advertising model also don’t work (unless you are a 2-3 member team with little expenses). You can look at the 2007-08 posts review of startups of plugged.in,alootechie,startupdunia and see how many are still surviving ?
2. Last time I had covered this posting too, Too Spread Too Thin is a major problem in India, about which nothing can be done unfortunately.
3. Another mistake which founders do (I myself did couple of times) is to overestimated the market heavily, means not able to to understand the volume and value of the market. Most of the figures which are projected of various Indian sectors (say media or advertising or marketing) are often fragmented and the saying the market is of 350 crore often do not mean the market has full untapped potential of 350 crore.
4. Entry level barrier is too low and IP laws are non existing which means copycats pop up in matter of weeks in India, the cost of starting a web business has come down so much that anyone can start it in matter of days without building any business plan or revenue model, once a site starts getting some traction, 20 similar sites also pops up adding no value and just crowding the market.
5. Ignoring existing players – With online businesses, many times, when you start business, you fail to see the overlap between already existing players or players which are there but you never see them and later finds them.
6. Unlike in USA, All Venture Capitalists in India like to play safe so the money is only going into big players who knows how to pitch themselves or have good connection, of course, we can not blame VC for playing safe, it is their money and India is yet to mature.
7. People in India don’t want to use credit cards which often makes cost of acquiring customer very high, this hist cost of acquisition and retention is the reason why majority of the sites in India which starts with big bang either shuts down after 2 years or goes into maintenance mode due to not turning enough profits.
8. Payment Gateways – The situation of payment gateways haven‘t improved much, last month when I was looking to make to post on them and reviewing most of them, many of them were not even working properly, most of them have ridiculous fees (I call it ridiculous business model) where they are charging heavily on per transaction.
9. Last Mile connectivity – The lesser the said about this, the better it is. India seriously needs a package like Reliance Moonsoon Hungama which was offered by reliance in 2000 for Rs 500 which created a revolution and people went crazy for mobiles which now had resulted in 640 million mobile connections, now mobile connections being getting saturated, it is good time to get into broadband war for these operators and start offering Internet for free or for Rs 99. let people get the “taste” of internet, once they get it, they will automatically start using it. The reason for such long Rant is, though TRAI says India has 8 crore active users online (those who uses internet once per month), from what ever I have seen, I think India has about 3-4 crore active users, mostly in the range of 16 to 32 crowd.
10 – Short Sightedness of founders for long term – Though I really can’t blame founders for this, but many times i have seen founders looking to make huge profits or looking to exit in second or third year, this is not very unlikely scenario in India. For example, Faisal Farooqui started Mouthshut in 2000 and is still running it. he could had sold it for a decent price in 2006, may be in 2008 as well but he kept it, a good lesson for others too.
I can think of few more points but will cut down the list here only
In the past 3 months I have traveled a lot and is planning to travel more, on 7th February, I will be at entrepreneurship summit which will be held at IIT Bombay, now for such travels, I normally look at all the top 4-5 travel sites to find the cheapest hotels and flights, though after using them couple of times, let me assure you, there is no price difference between any, so here is my tip to other guys to save some money and Time, stick to one OTA site and they will help you to get more concessions in long run as old customer.
Now to the Post Topic – why on the web, Design and usability matters specially when you are in competitive field, Online Travel Agents and Hotel booking is a low margin, cut throat businesses with way too many players playing volume game trying to lure the same set of customers chasing limited amount of money, this is where I love ixigo, it is a no frill site with no ads, very clean design, no images and offers what the users wants. All other sites pushes something else too or shows ads or are not user friendly and ixigo certainly stands way apart from them.
I am of course no way associated with ixigo, just a regular user of it who feels others travel sites should work on usability and design of their sites to make them more responsive and interactive to retain the customer.
The biggest problem any Indian startup targeting online space facing is the medium being “Too Spread Too Thin”
Indian Online Space is way too Spread and is way too thin, making each startup to push extra hard to find, convince, acquire and retain customer meaning the startup to put more resources hence higher burn ratio something which I am seeing more and more often.
As a startup, you can not do anything to change the market other then evolving and remolding yourself to be what the market yourself to be and the great thing about Indian market is, the rewards are huge for the players who have followed what the market want them to be.
For me, 2009 started on really bad note, for some reason I wasn’t feeling well mentally, was down and out, was visiting doctors regularly for first month but yesterday when I sat and looked at the whole year, it was probably the best year of my life. in terms of learning, growth and financially.
The more I think about life, the more I feels, it is all about solving problems and cracking codes, once you are able to solve it, you get a reward. Now some people are way too quick in solving them, going higher and higher in life in terms of success where as some just sit and stuck in the the very basic problems of life.
Anyway so today on 1st of jan 2010, I have sat some goals (I am not a great believer in making goals public so won’t do it) for the year even though I know that other then financial goals, I won’t be achieving most of them as more likely I will be getting/achieving something unknown (yearly goals are flawed, you should always set weekly goals), I think this is what keeps me going though, the thrill, the excitement of something unknown.
In 2009, My primary focus was on money but now I want to focus on the overall growth of my assets and networking. I also want to grow with others, means, I want to build partnership where I can help others to achieve their dreams and goals with my experience and knowledge. And ofcourse, I do want a better health!
Best Wishes to everyone, Have a Great year and try to enjoy each and every moment of life.
January 1st, 2010 in
Life |
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