Tag: indian startups

Bollywood celebs turning investors in digital startups

This is the age of online start-ups and crowd-funding, with youngsters all over the country coming up with innovative business ideas in tune with the times. It is also the age of celebrities – film as well as television actors – turning investors in, or even co-founding, some of these. From Gul Panag’s fitness app Mobiefit, Ajay Devgn and Sanjay Dutt’s ticket buying portal Ticketplease.com to The Label Corp fashion and interiors portal bringing in Sussanne Khan, Malaika Arora Khan and Bipasha Basu for three separate sections, and even Salman Khan hopping on to the online bandwagon with his shopping portal, KhanMarketonline.com, starry start-ups are on the rise and how.

“The start-up scene in India is currently booming with an equal number of innovators and investors chasing the market, and celebrities are no different,” says market analyst Sameer Rastogi, managing partner at India Juris. He adds, “Over the last few years, we have seen a boom in the number of celebrities dipping more than a toe in the vast pool of tech start-ups and investments in the West. Now, in India, too, the surge is happening.”

Prashant Puri, co-founder and CEO, AdLift, points out that the digital space, in particular, is finding a lot of takers. “Recently, former Indian cricketer Sachin Tendulkar invested in Bengaluru-based Internet of Things (IoT) company Smartron India and Yuvraj Singh has a $10 million seed fund called YouWeCan Ventures… and when it comes to celebrity angel investing in the West, Ashton Kutcher is the best in the game. He knows how to spread his seed far and wide, which has helped him reach an amazing amount of success by investing in start-ups such as Skype, Airbnb, Foursquare, Hipmunk and LikeALittle, to name just a few. It’s safe to say that this man is addicted to investing in good ideas,” he shares.

For start-ups, celebrity investments have multiple benefits — funding, global exposure through the celebrity’s personal brand and indirect VC advice, points out Prashant.

“In the West, one of the best examples would be actress Jessica Alba. She invested in an e-commerce site called The Honest Company, a consumer goods company that emphasises non-toxic household products. Her association helped the brand reach out to a mass audience base and today the brand is one of the leading e-commerce sites in the West. A similar parallel can be drawn with Karisma Kapoor’s investment in Babyoye. She brought in the credibility of a celebrity who is also a mother herself, showing trust in a new company. So, the market value of the company immediately shot up a little,” he explains.

The celebrities themselves, he says, get the most out of their investment when the targeted demographic matches their own followers and fans. “It is easy to tap the market if an audience has already been established. For example, The Label Corp that has brand endowments by Malaika Arora Khan, Sussanne Khan and Bipasha Basu for various branches like home décor, fashion and accessories — each face’s personal brand helped to bring the start-up to the next level,” he points out.



Sameer points out, however, that in a lot of cases, the celebrity does not decide on the investment himself/herself. “Their wealth managers do the necessary basic ground check, which typically consists of evaluating whether a start-up is worth investing in and if so, how much funding they will get.”

I have been building a brand and name for so many years: Sunny Leone

Sunny Leone is no stranger to entrepreneurship, and affirms that time and experience along with everything she has learnt along the way has given her a wealth of entrepreneurial experience. “I started my own business when I was 18 and have been building a brand and name for myself for so many years that I thought it was time to capitalise on it and create something of my own,” she says. Talking about the space she has entered as an entrepreneur now — perfumes — she shares, “I’ve always believed in merchandising even before I got into movies, so the idea of creating a perfume line made the most sense to me and to my team. Being able to do things other than movies is a big deal for me too. I’m involved with every single aspect. It’s very important and very personal to me. I have picked everything from the scents to the colours and bottles… every tiny detail was chosen by me and my team, and my decision was the final one.”

Sharing her business philosophy, she says, “My personal business belief is the test-test-test theory. You just test and see if something works — if it does and you see results, you stick with it. Also, being able to know when it’s time to start micromanaging and letting other people do their jobs is extremely important!”

Anita Hassanandani Reddy  – TheBagTalk and Liftiee

Anita Hassanandani Reddy, of Star Plus’ Yeh Hai Mohabbatein fame, has two start-ups on her entrepreneurial check-list: TheBagTalk, a platform founded by her husband Rohit Reddy that will go live in September and Liftiee, a ride-sharing app of which the actress is one of the investors.

She points out that we’re in an age that presents us with some of the best opportunities for investment because of the kind of ideas coming up, especially geared towards the youth. “People are coming up with such innovative ideas these days. I feel these kinds of concepts can really, really work in today’s day and age,” she says and shares that one of the things that drew her to investing in Liftiee was its innovative concept. “I liked the idea. There have been times when we’ve all taken a lift or been stuck in a jam and wondered how a bike could have gotten us wherever we need to be, on time. I thought it was a very cool idea and something that I would use myself too. Plus, it’s connected with social media so it’s also a way of connecting with people, besides reducing traffic,” she avers.

TheBagTalk appeals to her creative side. She says, “My husband understands that for an actor, it’s important to have something on the side because what we do is not going to last forever. He’s taken up TheBagTalk as a full-time business within which he’s gifted me a line of bags of my own called AHR, for Anita Hassanandani Reddy, which I will be creatively involved in.”

Manoj Bajpayee – Muvizz

Not all celebrities are hopping on to the start-up bandwagon for the monetary aspect of the move. Ace actor Manoj Bajpayee attributes his involvement in Video On Demand (VoD) platform Muvizz to his passion for independent films and documentaries. “This is the best way to actually save and archive the assets that they are, so often lost in the shelves of government and subsidiary institutions. That is where the thought behind the platform came from, along with a drive to make available films that are having a very hard time in getting a release. Distributors are not interested in anything other than mainstream or middle-of-the-road cinema and so, a lot of great content is not even reaching the audience. That’s why when my partner, Abhay (Abhayanand Singh) came up with this concept, I immediately said yes because it spoke to my passion for good films,” he tells us.

Launched by Abhayanand Singh and Piiyush Singh, Muvizz is an online Video On Demand (VoD) platform offering a curated list of titles including short films, documentaries and feature films in various languages.

Talking about his role in the start-up, Manoj says, “I am the brand ambassador, mentor and partner. I hate how corporate it sounds, to be honest, because this is not a start-up intended to create money. It is intended to create awareness about these films and to create a community that will share views on the cinema they will have access to on the portal. I am involved creatively in the content and also in creating strategies to generate awareness about the service. This venture is a passion for all of us who are working day in and day out on it. You should come and see our office — our means are very limited, we have not over-stretched our needs and we are not immediately looking for big investors either. We want, first, to satisfy ourselves.”

Gul Panag – MobieFit

The actress-turned-politician along with her friend Gourav Jaswal has co-founded MobieFit Technologies Pvt Ltd, an m-Fitness venture focused on all-round health and fitness. “Fitness is something that I have always been passionate about, so being seen as an advocate of fitness and its impact on life, for me, became apparent with the advent of social media. My dedicated community on social media would keep asking for advice on fitness issues. In this day and age, I thought a DVD or video couldn’t be the final solution to their fitness-related queries. Also, I fundamentally believe that we don’t need to outsource our health and fitness to a third party. It needs to be in our own control, in our own time and as per our individual capability. This is how MobieFit was born. It is good that people are going to nutritionists, health experts or dietitians but ultimately, you have to be sitting on top of it all. If an app can give you that solution, then why not?”

From walking to strength training to running, the start-up has three apps in the market. “The Running app is India’s highest downloaded fitness app. Then we have a new app called MobieFit body that deals with strength training and another app called Walk, which is meant for recuperative, post-operative purposes.”

Gul is involved in everything from ideation to scaling up the venture. She shares, “Our offices are in Goa. I try to be there at least once a quarter. I’m extremely involved in ideation as well as all plans that involve scaling up and reaching revenue targets that have been set by the investors. At present, we have a 22 member team and a full-time chief operating officer.”

Does being a celebrity add an advantage in pushing the venture in the right direction? “It helps us in reaching out to more people. I am definitely a marketing tool that the company can and should utilise and I am 24/7 available for the same,” she says.

Saumya Tandon – 1018 MB.com

One of the two coveted bhabhijis on &TV’s popular show Bhabi Ji Ghar Par Hai, Saumya Tandon is the co-founder of 1018 MB.com, an on-demand alternative screening platform for movies in India. “Being a passionate movie lover and a part of the industry, the concept of this venture is very close to my heart. I realised with time that our industry is obsessed with only big-ticket, star-studded films and its structure does not support a lot of good content and talent. Thus, those among the audience with an appetite for niche cinema are starved for choice. 1018 MB is therefore geared as a democratic platform of movie screening where the audience chooses the films they want to watch, in a theatre of their choice at a convenient date and time,” she shares, adding, “I believe that rising mobile internet usage and improving demographics will transform movie viewing in India. 1018 MB is founded on the belief that going to theatres will remain relevant in India since it is one of the most important social activities. I feel that through the use of technology, big data and our neural algorithms, we can lead to the next revolution in the Indian theatre industry too.”

About what she brings to the table besides her celebrity status, she says, “I am the industry insider — I understand the problems of the industry and know the talent that needs to be brought on the platform, so I remain central to the concept. I ask the questions and my team — which consists of engineers and MBAs — provides solutions. In fact, I frequently say that I am the only normal person in a team full of geeks, which makes me special!”

She has also invested in Jugnoo, an on-demand Auto rickshaw service.

Shaan – Happydemic

Singer Shaan’s wife, Radhika Mukherji, and Amar Pandit recently co-founded Happydemic — an online entertainment platform operated by Happy Gaana Entertainment Pvt. Ltd. “The platform aims to connect music lovers and musicians,” Shaan says, adding, “The aim is to bridge the gap between the customer and the artiste and also help users find the perfect act that they can book in an easy and systematic way. My role in the set-up is to provide creative input and support for the platform. I bring in my knowledge and understanding of the field, which helps as a performing artist.”

The singer points out that while there has been a marked rise in the number of digital start-ups in India recently, there is a dearth of platforms in this particular space. “There is huge demand for quality entertainment in our country but the existing aggregators are quantity-focussed and function more like a listing of service providers. Happydemic, on the other hand, will follow a B2C model to bridge the gap between a customer and an artiste,” he avers.



Top 10 inspirational quotes by Indian entrepreneurs

Here are the top 10 quotes from Indian entrepreneurs everyone should live by. Learn from Sachin Bansal, Binny Bansal, Bhavish Aggarwal, Kunal Bahl, Vijay Shekhar Sharma, Naveen Tewari, Ritesh Agarwal, Shashank ND, Deepinder Goyal, Kunal Shah and Rahul Yadav.

Here are the top 10 quotes from Indian entrepreneurs everyone should live by. Learn from Sachin Bansal, Binny Bansal, Bhavish Aggarwal, Kunal Bahl, Vijay Shekhar Sharma, Naveen Tewari, Ritesh Agarwal, Shashank ND, Deepinder Goyal, Kunal Shah and Rahul Yadav.

1. Sachin and Binny Bansal, Flipkart

“The core of any business is to earn money. You have not done your job well until you find a stranger who is willing to open his/her wallet to give you money for the service/products that you are offering.”

2. Bhavish Aggarwal, Ola

“Go out and start up. It is the hardest thing to do. For me it was very hard. When I started, my parents thought I was going to become a travel agent. It was very hard to convince them that I was not.”

3. Kunal Bahl, Snapdeal

“Scale is important for a startup. Think big, but take one day at a time.”



4. Vijay Shekhar Sharma, Paytm

“Be so sharp that you cut”

5. Naveen Tewari, InMobi

“Entrepreneurship is all about how confident you are in changing something, because most of the people will not accept that change so go ahead and learn it.”

6. Ritesh Agarwal, OYO Rooms

“It is extremely important to build something that a 100 people absolutely love using rather than make something that a 1000 people would just, kind of, like.”

7. Shashank ND, Practo

“The goal has never been about being an entrepreneur or starting a company. It has always been about solving a problem we deeply care about.”



8. Deepinder Goyal, Zomato

“The fundamental model of our business is that in mature markets we should make profits and they shouldn’t need any more outside money to grow.”

9. Kunal Shah, FreeCharge

“If you fully accept the worst that can ever happen in your journey, fear won’t ever be an obstacle in starting-up.”

10. Rahul Yadav, Housing

“Life’s purpose is to be happy! So if you are happy, you are successful in life”





How Indian startups of today can become successful brands of tomorrow

Branding in India still finds itself in the nascent stage, largely confined to visual identification and communication, despite several incidents proving its importance in the Indian market.

The bygone 2015 was a year of both challenges and opportunities for startups – it posed a time of diminishing barriers to enter the marketplace and increase avenues for reaching and serving new potential customers than ever before, however, at the same time it also paved way for cut-throat competition.

In an already crowded marketplace, setting your startup apart is therefore crucial to survival and success.

However, branding in India still finds itself in the nascent stage, largely confined to visual identification and communication, despite several incidents proving its importance in the Indian market. It does not only help startups survive tough times, but also regain the trust of stakeholders afterwards.

We have listed 6 branding and marketing tips that every startup in India should follow for a bright future. Here’s what they are:

1. Focus Should Be Consumer Oriented

Most startups in the country are product or tech startups, where the founders and team are tech-oriented. What they tend to forget is that tech is merely an enabler and not the end goal in itself as opposed to a consumer oriented approach, which can guarantee a greater brand appreciation.

2. Product And Brand Should Go Hand-In-Hand

Idea of brand today is very look and feel. It’s something that is made to latch on to the product. It’s must for startups to realize that branding is essential to one’s business objective. Young startups don’t understand this very well despite several case studies. Say for example, Paperboat, which is a great case study of how this company thought of brand right from the packaging. They are thinking product and brand hand-in-hand rather than separate entities.

3. Activities To Build Equity, Garner Sales And For Immediate Gratification

Big companies know the importance for such activities, however, when Think Rasta works with startups, we break down their spends into three parts: Purpose spends (key-metrics for a young startup), equity spends (what to spend to build a brand’s equity over a period of time), and spends over experimenting (allocate a budget so that you can do activities on the brand just for fun, and hope that it works with your audience). Startups should not make the mistake of focusing on short term results, but focus on long term results and experimentation for better insight.



4. Build Content Over Campaigns

The best thing is to do both, but considering the cash constraints with startups, campaigns can be an expensive deal and a wasteful method of reaching out to the target group (TG). So the focus should be on creating customized content that is important for your consumer rather than merely talking about your brand. This is how your content will resonate with your audience. For eg, on your social media pages, do not focus on having 8 posts in a day around your brand, rather the idea should be to focus on the kind of content you create such that it is loved by your customers, even if you are making one post in a week!

5. Strategic Alliance: Associate With An Established Entity

One of the most sought after strategy in furious markets, it is a mutually beneficial alliance between two brands to reach out to their TG in most fruitful and economical way. It is imperative, as startups do not have financial bandwidth to do it all. Also, alliances with another market player might fetch you the most desired credibility factor that a startup requires at the nascent stages. For example, Hokey Pokey was a parlour-based model in Mumbai. After Think Rasta worked with them, today they are present across 2,000 stores as majorly an FMCG player. What Think Rasta did disruptively for them last year looking at their young target audience, Think Rasta tied up with NH7 and released a NH7 flavour as partnership marketing. NH7 is targeting exactly the same audience that Hokey Pokey is looking at.

6. Build Tight Framework, Be Decisive About Budgets And Get Professional Assistance

Identify a TG that is not broad (that one person who likes your campaign or content every time) and work towards it. Startups also has resource crunch and they simply can’t do ‘everything’. Professional assistance might be required at the time of implementation as it will bring more thoughts and resources that could do it better on your behalf. You may continue to focus on your product development while they take up on the assigned job. Being clear on what you want, how you want and the time frame you want it in will help you take decisions quicker and at the same time helo you stay within a framework.





Flipkart journey: How a modest online bookstore became a multibillion-dollar e-commerce platform

Flipkart is among the first batch of India’s biggest startups to have achieved a billion-dollar valuation today. Its success story has inspired many entrepreneurs to start their own startups.

Flipkart is among the first batch of India’s biggest startups to have achieved a billion-dollar valuation today. Its success story has inspired many entrepreneurs to start their own startups.

Flipkart is India’s biggest e-commerce platform, founded in 2007 by Sachin Bansal and Binny Bansal. Below is the infographics of their complete journey explaining how they started as a small book e-retailer with $6,500 in their pocket and became a $11-billion company.

Below are some highlights from Flipkart’s journey.

Origin of Flipkart:

It all started with two friends Sachin Bansal and Binny Bansal, working at Amazon,brainstorming ideas for a startup, as they found their regular jobs mundane.

They both were techies and wanted to build something where they don’t have to deal with marketing and sales. So they thought of building a comparator search engine for e-commerce. But soon they realised there weren’t enough e-commerce sites to compare and found a better opportunity in opening an e-commerce platform.

Soon after, they left their job at Amazon to give their idea a shape. That was the genesis of Flipkart.

Why the name ‘Flipkart’:

They wanted a name that could speak of more than books, so that it could suit any category of products that they may add in the future. At the same time they wanted the name to be catchy and simple. So they arrived at the name ‘Flipkart’ that in simple terms means,’Flipping things into kart’.

Flipkart’s in-house products:

Flipkart is not only just an e-commerce platform it also has its own in-house products.

July 2014: Flipkart launched its own set of tablets, mobile phones, phablet and networking router, under its own brand name, DigiFlip.

Sep 2014: Flipkart launched a wide range of home appliances and personal healthcare products under brand name ‘Citron’.



Acquisitions that made Flipkart stronger:

2010: Flipkart acquired WeRead, a social book recommendation tool. WeRead already had three million readers and 60 million books at the time of acquisition.

2011: Mime360, a digital content platform company. Flipkart acquired Mime360 to enter the digital distribution domain.

2011: Chakpak.com, a Bollywood news site. Flipkart acquired the rights to Chakpak’s digital catalogue, which includes 40,000 filmographies, 10,000 movies, and close to 50,000 ratings.

2012: Letsbuy.com, an Indian e-retailer in electronics. Flipkart has bought the company for an estimated $25 million.

2014: Acquired Myntra.com for an estimated $300-million deal. The deal was expected to help Flipkart strengthen its apparel portfolio, as Myntra was the leader in fashion e-commerce industry.

2015: Flipkart acquired a mobile marketing startup Appiterate to strengthen its mobile platform.

Today, Flipkart has 75 million registered users and delivers eight million shipments/month. The app is the first Indian app to cross 50 million users. Flipkart has come a long way from where it started and there is a longer journey ahead of it.





While on a hunt for a co-working space in India, this entrepreneur ended up creating one himself

When Shesh Rao Paplikar was hunting for office-space for a New York startup , where he worked as the chief technology officer, he sensed the need of a proper, functioning co-working space in India.

Real estate startups picked up late but looks like they are here to stay with co-working offices becoming most sought after workspaces in Indian metros where new startups are created every day.

Shesh Rao Paplikar

When Shesh Rao Paplikar was hunting for office-space for a New York startup , where he worked as the chief technology officer, he sensed the need of a proper, functioning co-working space in India. Shesh, who had spent close to a decade abroad, was used to very quality of co-working spaces. Despite a rigorous hunting process, Shesh could only fetch a very mediocre working space, where he himself as a CTO had to put in a lot of effort – from fixing the Wi-Fi, calling technicians and spending hours over the IVRs!

Shesh, who by then was contemplating the idea of starting something all by himself in the tech startup space, he found it difficult to find something that matched his expectations. This tussle inspired him to create a co-working space of his own, which he christened as the BHIVE Workspace.

Meeting his co-founder

Shesh and his co-founder Ravindra M.K were high-school classmates back in Mysore. Both of them go back in time where they had tried to give entrepreneurship a shot in 2003 during the final year of engineering. Though that venture failed to take shape, Shesh and Ravindran kept in touch with each other.

Ravindra MK

When Shesh moved back to India, Ravindran was initially helping Shesh put things together for BHIVE and eventually decided to quit his SAP job and join BHIVE.

The Bengaluru-based co-working space, which raised $1 million in funds from Blume Ventures last week, operates across 4 locations in India’s Silicon Valley Bengaluru. Launched in 2014, the workspace is now catering to over 150+ ventures and the company plans to expand into cities outside in Bengaluru.

Shesh sees the potential of the co-working space domain to become a billion dollar market. He expects BHIVE to churn revenue of $70 million annual revenue in the next two years.



Interaction with investors

Through several events that are conducted by the workspace the founders are given a chance to interact with investors and mentors. Elaborating on what investors visiting the space generally look for in a startup Shesh said, “Investors generally look for the quality of a team, product market fit and long-term revenue potential of the company.”

Shesh said that he has seen an exponential increase in the confidence level amongst startups. “Indian startup ecosystem has matured over the last three years and I see a lot more experienced people entering this field these days,” he added. He has also witnessed the entry of entrepreneurs, who were earlier working abroad, returning to India to set up something of their own.

He believes that there is a lot of capital available today, as people who were investing in real estate and other industries are now turning angels for startups.

Successful BEES !

Greenbooks was the first company that enrolled themselves to the workspace. Emphasising on workspace’s checklist for enrolment, Shesh said, “We look for companies which are financially stable who can afford the basic enrolment fee.” However, considering early stage startups lack financial stability, there are special passes such as weekend offers, etc that enable these companies afford the workspace. Some of the biggest success stories that have emerged from this space include Roadrunnr, LetsService and Springboard, to name a few.

With New York-based office rental startup WeWork gearing for their India debut, there has been a lot of chatter around the sustainability of Indian workspaces. However, Shesh says he BHIVE is ready to compete with WeWork as we have a better understanding of the market!

This article was originally published in Entrepreneur.com





The true value of Indian unicorns: Investment game

Investments in start-ups come attached with downside protection clauses, which are like a put option written by existing investors in favour of new investors.

A report in Mint earlier this month mentioned that Indian e-commerce firms Flipkart and Snapdeal have hit a “valuation wall”, with prospective investors unwilling to meet their latest headline valuations of $15.2 billion and $6.5 billion, respectively. This followed moves by T Rowe Price and Morgan Stanley in marking down the valuation of Flipkart to $12.75 billion and $11 billion respectively in their investor declarations.

Taken together, this possibly suggests that these e-commerce biggies might be in trouble, and possibly unable to compete with the Indian arm of Amazon.com Inc. While that is a plausible conclusion, there is another factor that might explain both the valuation discount and companies’ unwillingness to raise money at lower valuations—the optionality granted to investors.

When an investor invests Rs.1 crore for a 10% stake in a start-up, it is a common practice to assume that this investment values the start-up at Rs.10 crore. While this is intuitive and arithmetically sound, the problem is that it ignores the optionality that is inherent in any start-up investment.

Given the risks associated with investing in a start-up, investors usually demand some downside protection. While this downside protection comes in various forms, one of the most popular (and simple to understand) structures is called the “full ratchet”. According to this, existing investors in a company (this usually includes the founders) underwrite the new investor’s investment, and agree to fully compensate the new investor in case of a subsequent fall in the company’s valuation.

Let us assume that company XYZ raises Rs.1 crore from an investor, Alpha Partners, in exchange for a 10% stake. This investment gives XYZ a “pre-money” (excluding the fresh investment) valuation of Rs.9 crore, and a “post-money” (including the investment ) valuation of Rs.10 crore. Let’s say that a few months down the line, XYZ hasn’t done as well as expected, but needs fresh funds, which Beta Partners agrees to provide. Beta, however, insists on a pre-money valuation of Rs.8 crore.

Ordinarily, the value of Alpha’s investment would go down from Rs.1 crore to Rs.80 lakh (10% of Rs.8 crore). However, because Alpha had a “full ratchet” clause attached to its investments, the earlier investors (including founders) have to compensate Alpha with shares worth Rs.20 lakh (the difference in valuation). This way, despite the firm having not done too well, Alpha’s investment has remained protected, with older investors bearing the downside risk.



In other words, while the original agreement gave Alpha a tenth of the shares, Beta’s investment at a lower valuation means that Alpha now has an eighth of the remaining shares (though the total value of these shares remains the same). An even lower pre-money valuation by Beta would have resulted in a higher transfer from the original investors to Alpha.

This way, it is not hard to see that the full ratchet that was part of Alpha’s investment agreement is essentially a put option written by the older investors in favour of Alpha. There would be no problem if Beta’s pre-money valuation was higher than Alpha’s post-money valuation.

The lower Beta’s pre-money valuation is, the more the original investors must transfer to Alpha (this is limited by the number of shares the original investors retain. If Beta’s pre-money valuation is lower than Alpha’s investment, the original investors are completely wiped out, and we can assume that the company itself might cease to exist then).

Thus, for the Rs.1 crore that Alpha Partners invested in XYZ, it not only got a 10% stake in the company, but also a put option that protects its investment against a lower valuation in a further round. This put option is written by the existing investors in the company at the time of Alpha’s investment.

This implies that a share of the company held by Alpha partners includes a long put option, while a share of the company held by earlier investors includes a short put option (since they have implicitly written this option). In other words, a share held by the new investors is worth much more than a share held by earlier investors. Alpha might have invested Rs.1 crore for a 10% stake, but the value of the company is far less than Rs.10 crore. In order to determine the precise valuation, we need to value the put option.

Valuing a put option in a start-up is different from valuing one in a publicly traded company. The most important difference is the way in which the price moves—while it is slow and steady for a public company, start-ups either grow fast or die, implying we need a different process for prices or returns. Moreover, opportunities for trading in start-up companies are fewer, and the full ratchets don’t come with an expiry date attached, implying we need a different model to value such options.

With the formula in hand, we can now value the option embedded in investments in start-ups, and what this tells us about the overall valuation of the company. Starting with our example, for a Rs.1 crore investment for a 10% share of the company, the value of the full ratchet option can be derived from this formula as Rs.27.8 lakh. In other words, the Rs.1 crore that Alpha invested pays for both a 10% stake in XYZ as well as an option worth Rs.27.8 lakh. The stake itself thus costs only Rs.72.2 lakh, implying that the full company can be valued at Rs.7.2 crore (compared to the Rs.10 crore headline valuation).



We can now apply the formula to the latest round of venture capital investments in a few popular Indian private companies. It must be noted, though, that these investments need not have come with a full ratchet protection, and the valuation is sensitive to the nature of protection used (sometimes the ratchet can be set at a higher strike price. At other times, a “weighted average” method could be used to determine the transfer of shares, which decreases the option payout).

It is interesting to note that Morgan Stanley’s reported valuation of Flipkart is not very far from the value we have calculated assuming a full ratchet downside protection (along with other assumptions).

An additional feature of downside protection instruments such as ratchets is that they “telescope”. Each round of investors is long an option that comes along with their investment, but short another option that comes with the next round of investment! Thus, with every succeeding round of increasing valuations, investors from the previous round can go from being long a put option to being short an option. And this creates conflicts when it comes to fund raising.

The latest round of investors usually don’t mind a “down round” (an investment round that values the company lower than the preceding round) since their ratchets protect them, but earlier investors are short such ratchets, and don’t want to see their stakes diluted. Thus, when a company is unable to find investors who are willing to meet its current round of valuation, it can lead to conflict between different sets of investors in the company itself. When US-based payments company Square went public in 2015, about $93 million worth of stock had to be paid out to its last round of private investors. These investors had been promised a 20% return on their investments, and when the initial public offering (IPO) had to be priced low, they had to be compensated with additional stocks. It is interesting to note that Goldman Sachs and JPMorgan Chase & Co., who held ratchet options after having invested in the last private round, were also among the underwriters to the IPO.

Image credit: www.alleywatch.com



Indian Startup Story – Why are Most Startups Feeling the Heat? What’s Next for them?

It is well documented now that the Great Indian Startup journey is going through a bumpy ride at the moment. Is it the end of the ‘Gold Rush’?

It is well documented now that the Great Indian Startup journey is going through a bumpy ride at the moment. Is it the end of the ‘Gold Rush’? A lot of people have been talking about the doomsday kind of a scenario. We certainly have seen glimpse of it with the ‘Unicorns’ of Indian startup world taking a hit. First it was Flipkart investors de-valuing their investments. Now Zomato, another blue-eyed boy of the new world taking a hit with one of the I-Banks – devaluing its valuation by as much as 50%. Other smaller players have either shut shop or pivoted to new models. We all know about the TinyOwl saga or how Pepper Tap fired most of its staff and pivoted to a pure logistics play.

So why is this happening? What should be done to change the scenario. There is something about companies growing at an unprecedented pace, solving problems of their newly acquired customers while simultaneously addressing 1000s of internal operational challenges. In doing so – they burn cash and sometimes that in turn burns the company down.

However, there are several new-age players out there who are trying to do it the right way. Some of the companies that come to my mind include Big Basket & Satva Kart in the e-grocer space. Then we also have companies like Cardekho – which is not a typical start-up but has established a business model and has used the old business principles to grow sustainably. Another interesting player that has caught my attention is Swiggy – surviving and growing in a segment where a lot of startups have come and gone. Even though – they have been lucky to an extent that Zomato was late in joining the race. Till now they have managed to stay ahead of them.

Related Post: From Uber to Zomato, tech startups struggle to sustain valuations

So what is that they have done well? And is there any holy grail for success? However, during this tough time when funding has dried up and everyone is figuring out ways to extend that runway. There are definitely few things that companies can follow to ensure efficiency is achieved.



These are:

  • Unit economics: Finally, start-ups are waking up to the holy grail of any successful business ever. Your unit economics need to make sense or move increasingly in that direction. Gone are the days when GMV/Customer growth was the key to raising funding. Now you need to show pockets of profitability in your overall business plan. Be it a hub or a product or a service. Use fund capital like you will use your own capital and you will know the answer to most of the questions.

 

  • Marketing ≠ discounting: Most start-ups are guilty of falling for this trap. Instead of marketing the USPs, convenience factor, problem they are solving – most of the communication is directed and focused towards how cheap the offering is. There are multiple issues with this approach:

 

  1. Customer is being trained to expect a discount every time he books a service/buys a product from you.
  2. Internally your employees increasingly get convinced that only way to sell is to discount our offering(s). This also leads of lack of trust in your own employees in your product.
  3. Rising discounts leads to higher burn which forces companies to cut corners on the fulfilment side. This becomes a vicious cycle.

 

This behaviour is well imbibed in today in most Indian start-ups. However, given the market conditions and the fact that funding will be difficult to come by. This will do a world of good to the companies to stop this exercise. Yes, sales might take a hit in the short run.

Related Post: Is Oyo Rooms the startup equivalent of a Ponzi scheme?



This brings me to the next point;

  • Market the right way: If you consistently communicate and deliver on the following – your sales story will get back on track.

 

  • Deliver value consistently.

 

  • Trust your product: If what you have made is solving a real problem and you genuinely believe in the product and others are also trusting you as well (investors, co-founders, employees) – then back your instincts by highlighting the value, USP etc rather than using discounts.

 

  • Identify & focus on your target audience – are you seeking deal seekers? or value seekers?

 

  • Be Agile: Being Dynamic has to be in every start-up’s DNA. However, the biggest challenge is when is the right time to change? If something is not working out – do you change immediately or should you wait? In most cases you should act first and then change things while you doing them. A start-up cannot afford the luxury of second guessing every decision nor can it waste time in contemplating the pros and cons of every action. Key is to back up your instincts and adapt them to market changes.

 

  • Look at the data with a hawk-eye: This should be done irrespective of the upturn or downturn. Data will always tell a story. Be honest with it and you will know what decisions to make.

 

  • Scale or conserve: Given the sluggish economy and funds taking a hard look at all start-ups. It is extremely important to maintain that critical balance of meeting growth targets along with not going over with your spending. Again, the key is to align your investors on what they want right now? If they still ask you to chase growth without being prudent with your spending – Question them back in the current scenario and try to ensure that the next round of funds are also coming from them!!. SUSTAINABLE GROWTH IS THE KEY!!

 

  • Be transparent and over communicate: Most start-ups lag in this aspect. Most employees are left to draw their own conclusions through the unofficial channels and coffee machine discussions. This does more damage to any start-up than anything else, a common streak among all the unicorn start-ups. The founders keep all forms of communication channel open and clear any confusion asap. A good example here is Zomato. Whenever, any confusion/counter productive news starts doing the round – Deepi is the first person to send out a company wide mail to stop the rumour mill from churning out unproductive grape-wine

 

Solving your business/operations problem is equally if not more important to solving customer problem. If you solve the customer problems but your internal problems is making your business nonviable – who should you blame for it? Finally, funding will still be available but folks would have to work a lot harder to get it than they ever did in the past.

Related Post: 7 Things I learned from my first startup failure

Image credit: www.techwire.net



This Latur-based e-commerce entrepreneur wants to prove that small cities can produce big businesses

Entrepreneurship is tough enough, but imagine starting up in a small town with none of the ‘ecosystem support’ that a big-city entrepreneur takes for granted.

Entrepreneurship is tough enough, but imagine starting up in a small town with none of the ‘ecosystem support’ that a big-city entrepreneur takes for granted. Google had changed its search algorithm to make offline link building useless, and Abhilash Pillai and his team in Latur were suddenly out of business.

Abhilash along with his two friends had set up Spiderroost Technologies, a web development and SEO company, in 2006, and had to shut it down as it wasn’t doing well. Even the Global SEO contest they won didn’t save it. It was like, all of a sudden, audio cassettes were replaced by MP3’s and then nobody would buy the old cassettes.

Entangling the Spider web

“The new algorithm required much more skills for the team and we were not prepared for this. Finally, I dissolved the partnership firm and decided to go for web designing as I could work as a freelancer on my own and earn money,” says 39-year-old Abhilash.

Though born in Kerala, Abhilash and his family moved to Latur when his father had started businesses in the town. His father had migrated from Kerala to Mumbai, and later was asked to take charge of a construction contract at Latur by a company he was employed at in Mumbai. He then decided to start his own business in Latur.

Abhilash finished his schooling in Latur. He then went to Pune for his CA and returned to Latur to look after his father’s business. With deep interest in computer science, Abhilash used to spend most of his spare time to learn web designing, SEO, graphics, and animation on the Internet.

After shutting down Spiderroost Technologies, Abhilash started to learn a lot more about web design. He approached few hotels and asked them whether they needed a website done. “I did my first website for Rs 1,500, and the client was very impressed with my work. I then did a few more at a lesser cost. It was pretty hard to educate people about websites and took lot of time to convince them. Then came the TV ads showing websites for Rs 100, which made marketing web design business harder,” adds Abhilash.

Bringing the offline online

He soon decided to wait for the customer to show up and demand a website. He kept taking on freelance web design and services projects. With time, he was able to establish his next company Rinisha Web Services, started in 2010. Abhilash adds,

“The most painful thing for an entrepreneur is to begin something from the start. I tried on various freelance sites, but without a minimum number of reputation online (reviews) it was hard for me to get orders.”



However, Abhilash saw that the scope of Rinisha in Latur was limited. He found that he had to create speed draw videos, graphics and other small freelancing jobs in freelance sites to get some extra money. He realised that the revenues were just enough to meet his expenses. Rinisha got one client in Latur, and two companies in Pune and Mumbai.

Abhilash wanted to create a company that not only had a presence in smaller towns but could reach across the globe. And he felt that e-commerce was the perfect answer.  So, with the need to do something bigger, he decided to start Kots a fashion e-commerce platform in October 2015.

E-commerce in Latur

After a lot of research, Abhilash decided to build Kots. The site is in its beta version, and the payment gateway is pending. It is an online portal that sells men’s apparel. It is a venture of Rinisha Ecommerce Private Limited, founded by Abhilash and his wife.

For t-shirts, the team is creating graphics in house, while the manufacture and shipment of the products is being executed by 99 Prints Tirpur. The team at Kots has an arrangement with the company, where the orders placed on the website will be designed in-house in Latur, but will be manufactured and shipped to the consumer from 99 Prints.

For the other apparel like trousers and jeans, the team has tied up with local manufacturers in Latur who don’t have an online presence and are looking to sell their products online.

To back up the project, Abhilash has started a retail outlet as well to support the online business until it picks up steam. While Rinisha Web services exists, with Kots, Abhilash believes that he can reach a wider audience and even showcase the web development and digital marketing skills of Rinisha.

Apart from funding, Abhilash is looking for partners in specific areas like logistics, traditional or offline marketing, legal and finance and artificial intelligence. Currently, two final year BCA students Sumeet Jadhav and Anup Dabadgavakar are part of the team. There also is Shubhangi Kadam and Priya Vibhute who work as graphic designers.

The growing e-commerce market in Tier II cities

The Tier II and III city markets are becoming big in the radar of both local players as well as bigger players like Amazon. The e-commerce giant reported that it has witnessed massive growth in Tier II cities, reaching 50 per cent, from the 36 per cent a year ago. Many believe that an undeniable advantage in Tier II cities is that the market is unorganised compared to Tier I cities.

Speaking about why Latur, Abhilash says that, “Many people say I am the right person in the ‘wrong city’, probably signifying that I have a better future in bigger cities. But I choose to stay back as I want to do something different and bring about some kind of Internet revolution in Latur. But in these 9 to 10 years, I have realised that if you are a tech person living in a small Tier III city you will understand how difficult it is to do business without venturing into other cities.”





Bootstrapped and profitable, this Kota-based edtech startup is set to achieve 28cr turnover

Started with only four employees and 700 students, this Kota-based firm today has 220 employees and 6,465 students on board.

The online test preparation market has become a promising sector for startups in the last couple of years, given the growing use of smartphones and significant traction of students.  But the concept of delivering educational services via mobile phones was not that lucrative in the 2007-08 era.

In 2007, Nitin Vijay (32), an alumnus of IIT BHU, dared to think ahead of his time to launch Motion Education, which offers courses for students from Classes VI to XII on Olympiads, NTSE, JEE-Main, JEE-Advanced and pre-medical exams. Started with only four employees and 700 students, this Kota-based firm today has 220 employees and 6,465 students on board.

Laying the foundation stone

Nitin started Motion IIT-JEE in December 2007 with a seed capital of Rs one lakh, just six months after he finished his B.Tech. Born and brought up in Varanasi, Nitin decided to set up his venture in Kota, Rajasthan, given its popularity and potential market for coaching institutes. His entrepreneurial journey took off with his first venture Kota Point in Varanasi, where he used to teach physics for IIT and PMT (Pre-Medical Test) aspirants. Later, he moved out of Kota Point to fuel his dream of establishing Motion Education.

Make learning more efficient

In 2012, Motion Education launched Motion Solution Lab to record lectures, simulations and quizzes. It makes e-learning accessible via DLP (Distance Learning Programme), which includes video lectures, video solutions, study material packages for all the courses. Last year, it launched Motion Edu Tab programme, where tablets are used in classrooms to track students’ performance and modify class lectures as per the requirements generated through various performance reports.

Nitin Vijay, Founder, Motion Education

Nitin states the model of Motion Education is similar to that of a school where a student has to follow daily schedule for classes, homework, test, cultural activities.

Motion Education today boasts of 18 physical coaching centers across India, including States like Assam, Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Odisha and Gujarat.

 



With products like Motion Solution Lab and Motion Edu-tab, we are able to monitor performances of every student individually, which we share with the student and provide a compiled report to the faculty as well, so that they can see where the class is lacking or the topic in which the class is weak,” says Nitin.

Organic growth so far…

Without raising funds, Motion Education has been showing organic growth since inception. The company is growing at a rate of 17 per cent year on year for classroom coaching and 140 per cent for e-learning.

The startup generates revenue from fees received from students in classroom and sale of e-learning tool to individuals, schools or institutions. In the next three years, Motion Education plans to reach out to three lakh students and 700 learning institutes. The company is expecting to attain a turnover of Rs 28 crore for this fiscal year.

Even big coaching institutes like Career Launcher and TIME have gone online with their test preparation modules. Moreover, the likes of Coursera, Udemy, Udacity, Khan Academy have broken the conventional mode of learning. Toppr, Embibe, Online Tyaari, EntrancePrime, Cracku, and CrunchPrep GRE are few of the startups that are shaping the unorganised and traditional test preparation market in India.

Industry and competition

The online test prep industry is valued at $8 billion, and has witnessed a spate of investor activity in the past couple of years. Bengaluru-based Vedantu raised $5 million from Accel Partners and Tiger Global Management, Toppr raised Rs 65 crore in May 2015, OnlineTyaari raised Rs 5 crore from both angel and VC investors. Bengaluru-based Byju emerged as frontrunner by raising $75 million from Sequoia Capital and Sofina, the largest fund raised by an edtech startup in India.

Today, when edtech startups are making noise everywhere only by raising funds, Motion Education sets an example as a bootstrapped startup that can be profitable year on year. Having tied up with more than 600 institutions, including schools, coaching centres and individual teachers, it has achieved a turnover of Rs 16 crore in FY 2014-15.

MOTION IIT-JEE is the culmination of a desire to start an entrepreneurial venture in IIT-JEE coaching in Kota, the coaching hub for school test preparations in engineering streams. The idea is to create a system which will lead to overall academic improvement of the students at a bare minimum cost,” says Nitin.

Image Credit: yourstory

This article was originally published in yourstory.com



Why Bangalore is the perfect breeding ground for entrepreneurs

What better place than “Namma Bengaluru”, whose famously cosmopolitan culture, agreeable climate and a young, enthusiastic populace provides the perfect breeding ground for original businesses.

“Do not go where the path may lead, go instead where there is no path and leave a trail,” Ralph Waldo Emerson, Poet.

An entrepreneur is a person who organizes, operates, and assumes the risk for a business venture. An entrepreneur is someone who believes they he/she has a good business idea and try very hard to start a business.

This entrepreneurial spirit describes the enthusiasm, excitement, initiative, commitment to the idea, the will to succeed and the dedication to the venture that is necessary to overcome the initial difficulties and demands faced by someone starting their own business.

Bangalore has had the reputation of being a technology and IT hub for a while now, and over the last few years has definitely evolved into a hub for entrepreneurs and startups as well (think Flipkart, Redbus and MakeMyTrip).

That ‘spirit’ is what has put Bangalore on global map and it now hosts 41 per cent of India’s startups. First-time entrepreneurs – many of them highly interested and proficient in various technical fields, many from outside Bangalore – are giving up the comfort of a steady job to set up small, dynamic companies that think out of the box and make you wonder “Why didn’t I think of this?”.

A thorough study of the startup ecosystems in different cities across the globe has shown that Bangalore has a strong early stage funding ecosystem, more mentors, and therefore ambitious and risky startups.



Suddenly, anyone who has an idea seems to have a company, fueling a boom in offline and online ventures in food, design, travel, fashion, healthcare and education. And what better place than “Namma Bengaluru”, whose famously cosmopolitan culture, agreeable climate and a young, enthusiastic populace provides the perfect breeding ground for original businesses.

A healthy growing set of funding options, and with a reliable IT solutions and infrastructure backbone, times have never been better for being an entrepreneur in Bangalore.

“We’re witnessing a strong thought wave here, where young and veteran professionals are looking at local problems, and exploring solutions within the city mainly through online portal systems.

RedBus’ CEO, PhanindraSama was recently selected by Endeavor magazine as a high impact entrepreneur. Phanindra took the idea to his college friends and colleagues and that was the beginning of RedBus.

It solves travel agent problems by allowing consumers to look at bus ticket availability across all the operators and book in advance, even across state boundaries.

They even give a layout of the bus seating, and allow a customer to return the ticket. RedBus has crossed the one-crore (10 Million) mark in the number of tickets sold in July 2012. It has over 2 million registered users and is rapidly approaching the $200 million gross merchandize value (GMV) mark. The company stresses a lot on keeping their costs low.

Flipkart’CEO, Sachin Bansal, a leading E-Commerce Provider in India is an IIT Delhi Alumnus. Sachin left Amazon to start Flipkart along with a friend Binny Bansal with a mere investment of Rs 4 Lakh. Today Flipkart generates Rs 1.5 Crore a day. It has a record user base of 1 Million in India only.

Myntra was established by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena in February 2007. All three are IIT alumni, and have worked for several start-ups.



The company started off in the business of personalization of products in Bangalore, and soon expanded to set up regional offices in New Delhi, Mumbai and Chennai. It began its operations in the B2B (business to business) segment with the personalization of gifts, which included T-shirts, mugs and caps to name a few.

However, in 2010, the company shifted its strategy to becoming a B2C (business to customer) oriented firm, expanding its catalogue to fashion and lifestyle products.

Big basket CEO UshaMuralidhar saw early a change in the Bangalore shopper’s attitudes that few could have foretold, especially when you consider that as much as 80 per cent of their orders include perishables, such as fruits and vegetables. The entrepreneurs behind these ventures are confident that this is a sign of bigger things to come.

As commonly observed with any start-up, Hari too had his fair share of adversity. According to him, HolidayIQ.com was ahead of the curve, making the most of the crowd sourcing. He says, “The adoption of travel among the average Indian is still growing. So back in 2006 using the internet, it was very difficult to tap into the small segment of people who traveled. The whole venture capital scene was very new in India, so raising money to sustain the project was also a challenge.”

Most of the content on HolidayIQ.com is user-generated, which added to the heady concoction of challenges. But with some initial seed funding and an institutional funding round from Accel Partners, Hari and his team pulled through, and today, HolidayIQ.com reports over 50,000 reviews a month.

When asked about why he persisted with the idea, he gave us some numbers to put the Indian tourism industry in perspective. “Last year, about 3 million foreigners came to India as tourists. The number of Indians who went abroad was about 15 million. The number of travelers in India is increasing at 15% per annum. As of last year, there was 400 million trips in India alone. Whichever way you slice it, the Indian opportunity is absolutely huge.”

To conclude right attitude, proper condition and correct approach can lead to great success. Startups need to be strategic about picking the right participation and not overdoing it by entering too many ventures. The entrepreneur is widely regarded as an integral player in the business culture of Bangalore life, and particularly as a spirit engine for job creation and economic growth.





From Uber to Zomato, tech startups struggle to sustain valuations

Many global internet companies are battling this downtrend. Uber, LinkedIn, Twitter, Airbnb, Snapchat, Dropbox, Cloudera and Palantir are some of the internet stars that have been devalued by 15-60% in the past year by some of their mutual fund investors

After Flipkart facing markdowns in valuation to the tune of 20-40% from US mutual funds, another Indian tech unicorn is now under scrutiny.

The brokerage arm of HSBC—which initiated coverage on Info Edge (India) Ltd, the largest shareholder of Zomato—cut its valuation of the restaurant listing site by half to $500 million. Zomato, however, has dismissed the HSBC report.

But Flipkart and Zomato are not the only ones. Many global internet companies, too, are battling this downtrend. Uber, LinkedIn, Twitter, Airbnb, Snapchat, Dropbox, Cloudera and Palantir are some of the internet stars that have been devalued by 15-60% in the past year by some of their mutual fund investors. Publicly traded stocks of NYSE-listed Twitter and LinkedIn have fallen as much as 61% and 39%, respectively, from their peaks.

The mutual funds have not given any reason for the sharp cut in valuation, but analysts say the markdowns were preceded by an inflation in their valuations when these mutual funds pumped in millions of dollars into these startups.

BlackRock Inc., Fidelity Investments, T. Rowe Price Group Inc. and Wellington Management run or advise mutual funds that own shares in at least 40 closely held startups valued at $1 billion or more apiece, according to a report by The Wall Street Journal. The flood of money into startups pushed their valuations higher. The number of VC-backed private companies valued over $1 billion was 146 as of February this year, against 45 two years earlier, the report said.

Flipkart, which was last year ranked among the world’s top 10 startups, is subject to the growing skepticism among investors with four mutual funds—Fidelity Rutland Square, Valic Co 1, Morgan Stanley and T Rowe Price–marking down the value of the shares in the Indian company. These investors now value Flipkart between $9 billion and $11 billion. It is quite a climb down for Flipkart, whose valuation rose 15 times in four years to $15.2 billion by mid-2015.

Also Read: Valuation of Flipkart slashed by two more investors

Flipkart co-founder and executive chairman Sachin Bansal has shrugged off valuation concerns. He said late last month that the markdown was a theoretical exercise and not based on any real transactions.



However, critics of Flipkart’s growth model do not quite agree. “Look at Amazon stocks. It is growing,” said Mahesh Murthy, co-founder Seedfund. “Flipkart is the only one among the Indian ecommerce companies which got devalued,” he said. Amazon’s stock price has gained 55% in the past year.

In a recent article, Haresh Chawla, investor and a partner at India Value Fund Advisors, said Flipkart was in the middle of a crisis of its own making and observed that half of its gross merchandise value was from selling mobile phones, which was unsustainable.

Like Flipkart, Zomato has also downplayed reports of a markdown. “We have not raised any round since the last round of funding to have a valuation reset,” said the company spokesperson. “HSBC has never spoken to us, and doesn’t obviously understand our business well,” the spokesperson said.

Deepinder Goyal, co-founder and CEO of Zomato, wrote in an internal mail to employees that the company’s existing investors were “bullish about us, and are willing to back us further, if needed”.

Early-stage funding

The skepticism among Flipkart’s investors and the brokerage firm that evaluated Zomato’s performance clearly show a change in sentiment. They conform to the overall slowdown in the Indian tech funding scene. The fund crunch is more visible at the early-stage levels.



Idea-stage startups: How to value enterprises that are yet to take shape

From the founding team to competition to how quickly a startup can turn profitable, all these factors play an important role in the valuation game.

For idea-stage startups, valuation is more of a creative drill than intricate calculations because they are often pre-revenue in nature and lack historical data. It’s hard to put a value on something that doesn’t exist. However, an investor would want to have a fair idea about potential returns.

“The only way to value a startup at an idea level is to see how much money it requires to survive for the next 12-18 months until the startup becomes ready to raise the next round,” says Harshad Lahoti, founding partner and CEO of ah! Ventures. “You will have to give the founder enough money to generate good traction. If not, he will not have that sort of traction to convince the next investor.”

Another step is to assess the viability and future potential of the idea. “The uniqueness of an idea and its competitive intensity, besides the potential of idea for speedy rollout and rapid scalability are select parameters to assign a basic ballpark estimated value to the intellectual property (IP) of the idea and its defendability,” says Bharat Banka, founder and former CEO of Aditya Birla Private Equity.

Also read: Lessons from my 2 years of startup life!

Lahoti says that at a seed level, the ballpark figure of stake dilution is 15-30 per cent. So once an entrepreneur says he is willing to dilute 30 per cent for Rs 50 lakh or whatever the amount required until the next round, there emerges a valuation.

“Now, people would argue on how one can decide that, since 15-30 per cent would mean that the valuation will double – if I am investing Rs 5 crore for 15 per cent, it will be Rs 10 crore for 30 per cent,” points out Lahoti. “However, we have a bottom range and top range here. After that, how we pinpoint a particular number in that range rests solely on how well one negotiates.” The better negotiator gets a better deal, he says, adding, “I believe it’s more of an art than a science.”

Valuations also depend on a company’s road to profitability. A startup that is projected to be profitable in two years will be valued way more than the one with a five-year profitability plan. Entrepreneurs need to avoid valuation on unrealistic financial assumptions, because they will eventually have to deliver their expectations to investors.



“It’s hard to come to a logical number,” says Sushanto Mitra, founder and CEO of Lead Angels, an alumni focused angel network. Mitra outlines three parameters for valuation of an idea-stage startup. “Investors think of the possible valuation in the next round and the probability of getting funding. The higher the next-round valuation and possibility of getting funding, the better would be the valuation at the idea level,” he says. Second, they look closely at the track record, domain knowledge and opportunity cost of the founders. “Finally, it would depend largely on the target stake in the company based on the asked amount,” he adds.

One way entrepreneurs can put a value on their idea is to look at companies that operate in a similar space. They need to talk to their peers in the ecosystem and also to startups that have received funding from the same investor.

Also read: 23 funding lessons for budding entrepreneurs and startups from Shark Tank

Although not an absolute requirement, many angel investors prefer startups in their locality. It helps them to interact more frequently and directly with the entrepreneurs to get real-time update on their progress. Also, a company in the heart of a startup hub such as Bangalore will be valued higher than a startup in Mysore or Visakhapatnam, just for the fact that competition drives up startup valuation. In a city such as Bangalore, there’s a higher degree of competition among investors. Investors agree that negotiating a lower valuation is easy with startups in remote locations.

Ashish Taneja, managing director at growX Ventures says that the key factor is the team. “A lot of average guys come up with brilliant ideas, but we don’t back them because it’s not just the idea, the real power lies in execution and that’s where you create value,” he says. “Average people won’t be able to foresee the future, they often quit early.”

Investors look for entrepreneurs who possess a strong will to survive the hardest times. “Ideas are dime a dozen. It is all about execution. An idea platform such as Quirky.com backed by GE, which gave 2 per cent equity to the ideators, shut shop. The only chance of getting valued for an idea is when the founding team has a strong patent or experience of building a successful startup,” says Avinash Kaushik, investor and founder at hardware startup accelerator RevvX. Kaushik also heads US-based Innoventure Partners in India.

Lahoti agrees. “In all the 22 startups that I have funded, there’s only one at the idea stage. The reason why I funded them is because the entrepreneur in his previous venture has exhibited that he’s capable of running a company right from conception, execution to exit,” he says.

Angel investors also prefer entrepreneurs to put in their money at the idea stage. There are very few people who back startups at the idea stage because the risk is high, says Lahoti. “Having an idea is just one per cent; 99 per cent is the execution of the idea. It’s all about whether the team has the ability to execute,” he adds.

Out of 2000 startups, 100 get funded and of this 100, only one will get funded on paper plans; the other 99 startups will have only good traction, points out Lahoti.

Startup founders should also consider convertible notes, which avoid the valuation dilemma at the initial phase and keep valuations open. A convertible note is like a soft loan with the difference that it does not need to be repaid as such and is converted into equity when the startup goes for the next level of funding.

Also read: How to get investors for your startup?

This article was originally published in Kotak Business Boosters

Image credit: raineugene.org



Man behind OYO Rooms : Ritesh Agarwal

The teenage boy – Ritesh Agarwal is the Founder & CEO of OYO Rooms – fastest growing Branded network of hotels offline & online.

The teenage boy – Ritesh Agarwal is the Founder & CEO of OYO Rooms – fastest growing Branded network of hotels offline & online. With a current valuation of nearly 360 Cr, OYO rooms does nothing out of the box but provides travelers the coolest yet cheapest efficient, young, standardized rooms with no add-ons attached to it!

Ritesh Agarwal (born 16 November 1993) is an Indian entrepreneur and the founder and CEO of OYO Rooms. He started his business career at age 17. He is the first resident Indian to win the Thiel Fellowship. More recently, he was named by Forbes in its “30 Under 30” list in the consumer tech sector.

He was born on November 16, 1993, in Bissam Cuttack and was raised in a middle-class Marwari family. His father works with an infrastructure corporation and his mother is a homemaker. He has three siblings.

He went to Sacred Heart School in Rayagada, Odisha. After finishing class 12th, he enrolled in Indian School of Business & Finance, Delhi. However, he didn’t continue with his college education and dropped out to start his own company without his family knowing of this move.

Also read: Oyo Rooms turns profitable with 15x growth year over year

He has often talked to the media about how he was scared of his parents getting to know that he has dropped out of college. In an interview with the Economic Times, Agarwal said, “When the newspapers started reporting it. My dad came to Delhi and was perplexed to see the office. It took me a day to convince him. My mom was very unhappy because she felt who would take me for a groom? You needed to be at least a graduate.

Professional Life

In 2011, Ritesh moved to Delhi with intentions of starting up something of his own and at the same time to prepare for SAT to move to the US for further studies.

Now, money back then was not a problem for him because he had savings from Kota and the pocket money was good; roughly Rs.15,000 for a month.

But fortunately or unfortunately, SAT never happened. Hence, he used to do nothing but meet and read about entrepreneurs, start-ups, businesses, and especially Airbnb!



Now, Ritesh during his days had seen and always felt that budget hotels in India didn’t even meet the very basic needs of a budget traveler. Hence, capitalizing on this opportunity, he started his first venture in 2012 – Oravel Stays! It was an aggregator of bed and breakfast stays across India.

In simpler terms, it was meant to be destination for short and midterm rentals for bed and breakfast joints, private rooms and serviced apartments.

In a matter of no time, he also secured funding of Rs 30 lakhs from VentureNursery, an accelerator firm which brought together a bunch of storied investors to nurture start-ups.

With sufficient money in his pockets, he started working on his new found interest and at the same time, he also presented his idea at the Thiel Fellowship – a global contest intended for students under the age of 20. He managed to reach amongst the top ten winners who received a sum of $100,000 [over two years (about Rs 2.7 lakhs / month)] as well as guidance and other resources, to drop out of school and create a start-up, from PayPal co-founder and Facebook investor – Peter Thiel.

Also read: How Vijay Shekhar Sharma started – Life of Paytm’s founder

Transform To OYO Rooms

And as a last resort Ritesh tweaked his present business model and in 2013 re-launched Oravel as “OYO Rooms”.

OYO means “ON YOUR OWN”

OYO Rooms was nothing but an idea to create India’s largest chain of efficient, young, standardized rooms with an intention to build the coolest chain of no add-on rooms which might not have Spa, Gym etc like the star hotels but will live upto the basic standards & high expectations for prices like never before. OYO’s team would visit the place, audit the hotel to understand the changes that would be required to standardize the property as per OYO standards, and shares the same with the hotels.

What motivated Ritesh even more was that, by now the company was clocking gross bookings of more than Rs.1 Cr. per month.

Since then; OYO Rooms has gone on to become India’s first technology driven network of standardized branded budget hotels and has also widely expanded its presence to 350+ hotels and more than 4000 rooms in 20 cities like Delhi, Gurgaon, Noida, Bangalore, Mumbai, Pune, Goa, Jaipur, Hyderabad, etc, and also aims to expand further to 1000 hotels in 25 cities by 2015 end.

Additionally, their OYO Rooms mobile app has been downloaded more than 160,000 times and more than 20,000 bookings have been made so far. The app ranks amongst the best-rated apps on Google Play Store and has also been listed as one of the top three apps in the ‘Travel & Local’ category.

Awards And Recognition

  • First resident Asian to win Thiel Fellowship, 2013.
  • Top 50 Entrepreneurs in 2013 by TATA First Dot powered by NEN Awards.
  • Named as one of the ‘8 Hottest Teenage Start Up Founders in the World’ in 2013 by Business Insider.
  • TiE-Lumis Entrepreneurial Excellence Award in 2014.
  • Business World Young Entrepreneur Award in 2015.

Also read: How Sachin Bansal started: Life of Flipkart founder

Image credit: www.theweek.in





Valuation of Flipkart slashed by two more investors

There is a growing sense of uneasiness within the Flipkart investors as they realize India’s top e-commerce firm to be overvalued. It is still to be seen by how much margin.

There is a growing sense of uneasiness within the Flipkart investors as they realize India’s top e-commerce firm to be overvalued. It is still to be seen by how much margin.

American mutual funds Fidelity Rutland Square Trust II and Valic Co. have joined US asset management firm T. Rowe Price and Morgan Stanley in reducing the value of their investments in Flipkart.

According to filings with the Securities and Exchange Commission, the mutual fund managed by Fidelity Investments lowered the value of Flipkart shares it owns by almost 40% to $82 apiece as of 29 February 2016 from $135.8 in August last year. Valic marked down the value of its investment in Flipkart by 29% to $98.19 a share from $139 apiece.

In February, global brokerage firm Morgan Stanley had marked down its stake in the Indian e-commerce behemoth Flipkart by 27 percent. The mutual fund, called the Institutional Fund Trust Mid Cap Growth Portfolio, marked its stake in Flipkart at $103.97 per share.

T. Rowe Price slashed the holding value of its investment in Flipkart by 15.1% in its report for the quarter through March 2016.

None of the four firms have given a rationale for the valuation. Lowering valuation of Flipkart hasn’t come as a shocker to industry observers. Market observers have been anticipating correction in valuation of privately held Internet companies.

The markdowns come at a time when Flipkart is reportedly trying to raise more funds amid an intense battle with SoftBank-backed Snapdeal and the local arm of Amazon.com Inc to maintain its supremacy in the Indian e-commerce market.

After that funding galore in the initial years, things in the investment domain have started to slow down from past few years — specially Q4’15. Investors are now looking for a sustainable business model and profitability rather than just initial disruption through technology.

Flipkart also counts Tiger Global Management, Naspers, Accel Partners, Iconiq Capital, GIC, DST Global and Sofina Societe, among others, as investors.

Few financial experts opine that investors in Flipkart, Snapdeal and others would look to exit from these companies in the course of next two to three years.



Lessons from my 2 years of startup life!

Getting high with lots of ideas? Had many night outs discussing business plans and ideas with friends? Aspiring to startup something?

Getting high with lots of ideas? Had many night outs discussing business plans and ideas with friends? Aspiring to startup something? But if you have not started yet, don’t worry. You can. I have gone through the same many many times until finally I got started. When I reflect on why it took so long for me to startup something here is what I learnt.

1. Having too many ideas but too less time to work on it – busy with corporate work? May be you haven’t found the idea that is worth more than your job.

2. Killing ideas before even they hatch – probably you learnt too much of risk management in your MBA! You need to forget books and start believing your instincts.

3. Keeping ideas as secret? You’ll not get started at all. Ideas die out when kept as secret. You’ll regret much later when you see someone else executing it with great success. You’ll keep saying to your wife and friends “See, I had this great idea long back.” Phew no use! You can get some sympathy – that’s it. Discuss your ideas with many people. Particularly with people whom you think could become your potential team mate if you get started with it.



4. I need to quit my job if I need to start with this idea. No need. Quitting your job is the last thing to do. Before quitting you have enough things to do about your idea. Start working on them in your spare time. If you don’t dedicate that time then you are not serious about that idea. If you choose to watch a movie vs working on the idea on a weekend, then you know it yourself.

5. I need lot of funding to start something of my own. Not always. First find your teammate with same passion on the idea, its going to be difficult to fight it alone. In today’s context there are many ways to get started without too much of money. Consider joining an incubation centre or look out for a potential angel.

6. I will do it myself, be it website, coding or selling. Thats entrepreneurs spirit! But finding your core team is very important. Leverage each others strengths, you cannot be an expert at everything. You need to learn to manage work than do all of it yourself.

7. “If I start something of my own, life will be easy.” Shit no! Life becomes 100x difficult. Its not easy, but its very interesting and satisfying.

Author: Shankar G

Co-founder & CEO at Spini

This article was originally published in LinkedIn

Image credit: blogs.walkerart.org



HyperTrack: A start-up to track people and products

HyperTrack is serial entrepreneur Deorah’s attempt at creating a global tech firm from India.

Serial entrepreneur and author of The Golden Tap, a book on—what else? — start-ups, Kashyap Deorah, is close to launching his fourth start-up, HyperTrack, which has created software for tracking products or people across the globe.

Deorah, 38, who has been working on building HyperTrack for almost nine months, is testing the software in several countries including India, the US, the Middle East, Australia and some in Europe.

The software is currently in private beta and is being tried out by 25 clients.

HyperTrack was founded in October 2015 by Deorah and Tapan Pandita, who together pooled in $300,000 to launch the venture. The company has already raised an undisclosed amount of angel funding from investors in Silicon Valley.

HyperTrack is Deorah’s attempt at creating a global technology firm from India.

“Only a few companies in the world have built the smartphone tracking technology that HyperTrack aspires to build. Uber and Google are two such companies. Today you can track your Uber but it is surprising that there is just no publicly available web service to continuously track people and things while they are out and about,” said Deorah.

Delhi-based HyperTrack’s services will allow businesses or consumers to track goods or people in real time.

Imagine ordering food online and getting to track the order on a map, as it moves towards you. Just like a cab ride, Deorah eventually wants to enable businesses to track bike taxis, shuttle services or any other kind of feet-on-the-street through its services.

“It’s a problem that app developers are facing worldwide. There is no web service to “track the app until it gets there,” he added.



HyperTrack’s software will allow businesses to track people, goods and pay per use. For companies that are just starting out and are in boot-strap stage, the services will be offered free for up to 1,000 orders a day.

HyperTrack is largely looking to make money from established and sufficiently funded start-ups. The companies could pay $35 per 1000 orders tracked.

The biggest challenge in front of Deorah would be to convince consumer internet firms, especially in India, which are already trying to curb costs to invest in software that helps improve service levels.

Deorah believes these services will help companies to plug into a technology which is expensive and hard to build in-house.

HyperTrack has a six-member team and Deorah is actively scouting for talent in Silicon Valley. He has managed to attract Google’s Abhishek Poddar to join as the head of product at HyperTrack.

Poddar, who was working as the product manager at Google San Francisco for more than three years, decided to quit his job and relocate to India to help build HyperTrack.

According to Deorah, unlike high-flying Silicon Valley executives who joined Indian unicorns at million dollar salaries only to move back a year later, Poddar will draw a fraction of his salary at Google but have high ownership in the company.

“The motivation is to move back and make most of the market. It is a good time to start up in India because you have a chance of building a real valuable company now rather than what was happening a year or two ago,” said Poddar.

Poddar is a graduate from Indian Institute of Technology, Kanpur and holds a management degree from Stanford.

HyperTrack is also close to hiring an engineer from Amazon who will be joining the firm in Delhi in the next 30 days, added Deorah, who declined to divulge further details.

The company has got Meena Srinivasan, formerly at fitness device maker FitBit, as its advisory chief financial officer and is looking to further strengthen its advisory board by signing on a couple of technology heavy hitters in the map space.

Last year, Deorah authored The Golden Tap: the inside story of hyper-funded Indian start-ups. Over the last 15 years, he has started and sold three companies. He is also an angel investor in over 20 companies in India and Silicon Valley. Deorah founded Chalo, a payments app which was acquired by OpenTable in 2013. Prior to that he founded Chaupaati, a phone commerce marketplace, sold to Future Group in 2010. He served Future Bazaar as president for over two years.

“I am a big believer of selling shovels in a gold rush. At a time when everybody is building consumer centric businesses, the company that makes software such as these to help them reduce costs and bring in efficiencies can be a billion dollar opportunity,” says Rohan Malhotra, co-founder Investopad, a start-up incubator.

This article was originally published in LiveMint



Forget Flipkart and Ola – Here are the other richest startups in Bangalore

We all know about the Flipkart and Ola stories. Let’s take a look at the other successful start-ups that call Bangalore home.

“I don’t think building this scale would be possible if I didn’t move base to Bangalore,” Ola CEO Bhavish Aggarwal recently said at an event.

He should know. Bhavish moved his scrappy cab-hailing startup from Mumbai to Bangalore in around 2012, and grew his little business into the US$5 billion behemoth it is today. Quikr, the listing website that just gobbled up CommonFloor, shifted to the city in 2014, and Paytm has been talking about doing so as well.

“Bengaluru, is to tech what Mumbai is to Bollywood,” Paytm CEO Vijay Shekhar told the Economic Times.

The reasons are simple. Long the tech hub of the country, Bangalore first saw “startups” like Infosys and Wipro grow to put Indian IT on the world map. Then came Flipkart, and with it, an entire industry of investors, tech talent, advisors and more entrepreneurs. Success bred success, and Bangalore soon became the melting pot of all things startup in the country.

We all know about the Flipkart and Ola stories. Let’s take a look at the other successful start-ups that call Bangalore home.

Swiggy

Swiggy is the freshest in the lot of startup successes here, rising to the top layers after a US$ 35 million round of funding from some of the best known names in the investor market. The food delivery company has already taken away considerable market share from Zomato, Tinyowl and others that have been around longer. Unlike other food delivery startups, Swiggy owns its delivery fleet, allowing them better control over logistics. With no minimum order requirements but a fee, well trained delivery boys, and a strong backend tech, Swiggy turned the tide in food tech this year, when everyone thought the sector was toxic. The company is now believed to be worth around US$125 million.

Also read: Top 10 Indian Startups and how they took off

Jabong

Jabong was the Myntra competitor before Flipkart and Myntra got together, and Jabong ran into a bunch of problems. The company has seen its founder quit, gotten a new chief, and cleaned up some of its business mess, but is not out of the woods completely.

Local media reports suggest it is up for sale, but can’t find a buyer. It is said to be valued at around US$200 million.



Bigbasket

Groceries delivered at your doorstep. Bigbasket revolutionized the way Indians shop for groceries when it allowed shoppers to buy everything from meat to cereals to vegetables online, and at reasonable prices. This Bangalore-based startup is now operational in about 15 cities, and valued at around US$400 million.

Bigbasket spawned a number of similar startups like Grofers and Peppertap that raised the bar with 2-hour deliveries, but remains the best choice in terms of availability range, and quality of product. The company has also launched its own express delivery service to take on rivals in the instant deliver space.

Quikr

Listings website Quikr, India’s very own take on Craigslist, is worth US$1.5 billion. The marketplace made some headlines last year after it listed goats for sale during the Muslim festival of Id. But other than goats, Quikr allows buyers and sellers to access everything from used cars to furniture, to even homes. Quikr also bought Commonfloor in January, making it a bigger entity.

InMobi

Adtech company Inmobi leads the race, with a valuation of about US$2.5 billion. The company competes with Google and Facebook in the mobile ads space, and hence might not be popular enough for everyday headlines. It is, however, popular in the right channels.

Google was at one point reportedly interested in buying the company, which CEO Naveen Tewari later dismissed. Much more recently, Microsoft was said to be contemplating the same. Tewari has dissed those rumors too. InMobi has raised US$220.6 million in disclosed funding till date, as per TIA data.

Also read: 27 Striking facts most people don’t know about startups

Image credit: bangalorememories1992.blogspot.com



3 former Housing co-founders to launch a HR management startup

At the core of the solution, the three are looking to make use of semantic search, machine learning and big data to build the product.

Abhishek Anand, Sanat Ghosh and Ravish Naresh, all co-founders of Housing.com, are set to launch a product startup in the human resource management sector, a week after resigning from the Mumbai-based real estate portal.

“We want to leverage technology to bring the process of ‘recruiting’ completely online. By building a platform where we can help candidates and companies to discover, communicate and engage with each during the entire ‘recruiting’ process,” said Ghosh, a 26-year-old IIT-Bombay graduate who built the product team at Housing.

Anand, the former CTO at the real estate portal, said while building Housing, he realised that the “recruitment” process is broken at the fundamental level. “When we dug deeper, we felt that this is a big enough problem that can be solved by building an Internet product and no one in the industry has approached it in the right manner,” said the 24-year-old.

At the core of the solution, the three are looking to make use of semantic search, machine learning and big data to build the product.

The three engineers – Ghosh, Anand, and Naresh – plan to move to Bengaluru and bootstrap in the coming months until they build the product.

Of the 12 IIT-Bombay graduates who co-founded Housing, nine have now left the company. After the ouster of co-founder and CEO Rahul Yadav, none of the founders hold a board position.

Anand was responsible for scaling the technology team of over 200 at Housing and led its Data Science Labs (DSL) division. Naresh, 26, scaled Housing’s on-ground data collection model to top 20 cities and later built the sales teams.

Also read: Top 10 Indian Startups and how they took off

Housing, too, revamped its top management team to get more experienced talent on board. It made numerous additions to its leadership team, including Mani Rangarajan, chief financial officer; Nikhil Rungta, chief marketing officer; Nandini Mehta, general counsel; and Abhishek Hota, chief of staff.

In November, Housing said it would focus on its home buying and selling business and scale down its listings and rentals, commercial properties, short stays and land businesses.

Housing competes with CommonFloor, 99Acres and MagicBricks, owned by the publisher of this paper.

“Abhishek, Ravish and Sanat played an important role in building the foundation of Housing.com. They are moving out to pursue their new dream of starting another new ventur. I am sure what they undertake next will be as exciting as Housing,” said Housing CEO Jason Kothari.

This article was originally published in ET Tech



The theory of Indian startups

The startup story of India has fascinated everybody, starting from students to the Prime Minister of the nation. But the moment flyers are printed about entrepreneurship courses for the school going and are nicely tucked in daily newspapers, it is time for us to take a step back and understand the entire situation.

THE PAST: We all know that billions of dollars were infused in our country’s startup ecosystem, almost nearing a global outcry for massive returns from a highly populated country with English speaking citizens who fancy smartphones. We saw some heroes rising and creating stellar businesses. But there were some bad things as well.

Firstly, most of the startups were opportunistic rather than being real disruptors. Young Indians were scouting for ideas in the US that could be speedily recreated in India. Almost every other youth was consciously or unconsciously trying to emulate the Rocket Internet legacy. While some startups made relevant localizations to the foreign ideas, some did not. But overall it looked like a stampede of Indians competing with each other fiercely in the hopes of getting a multi-million dollar cheque. If one got it, one aspired for a bigger cheque. The VCs promoted it; they had their own agendas to run. So ultimately, while many companies were rationally correct in their individual standing, collectively we did unsatisfactorily.

If we look at our achievements, more than 80% of all startups remain in 3 cities. Even if we forget the collective dependency of these startups on the disposable income of the urban city dwellers, the benefits of these could not be passed beyond tier I cities. If we observe India, there are huge Bottom of Pyramid opportunities that we seem to have missed. We lived in our fantasy to cash on the ideas that originated in the West. India is different. Out of all the nations considered paragon of entrepreneurial excellence, India has the least per capita income (even after PPP), least internet penetration, least internet bandwidth, lowest life expectancy, very low quality of infrastructure and more bad things. So what do we have? India holds the promise of growth, explosive growth.

The penetration of internet growth is the highest, our literacy rate is rising and the middle income segment is fattening as we speak. So when we copy other successful ideas, we are trying to confuse absolute numbers with growth. The thing with growth is that it’s investment dependent and uncertain. So our disruption is supposed to be different from the Silicon Valley. When we hurriedly create companies that are based on successful models of the US firms, we nurture a hope to compete and that too on investor money, often assuming a perennial availability.

The technologies created in the foreign country have significant advantage because their models are not based on phenomenal labor force availability. This gives them efficiency. And when these companies enter India, they demonstrate that efficiency, which means that their survival in the game holds higher chances. But don’t we all know it now.



THE PRESENT: Having witnessed a bubble in 2000s, many experts have warned the investors and entrepreneurs about the possibility of a similar outcome in India. Consequently, all startups now have a single goal, to move from growth to profitability. While it is obvious that this is the right thing to do but it is far tougher than what we can imagine.

Changing a company’s strategy is not just about a change in pricing or mellowing down the discounts. It is far greater. All the business relationships need to be redefined or changed altogether. Employee mindset, company’s culture, business structure, contracts and many other things have to be changed with a focus on the minutest details. Going from growth to efficiency involves working on seven broad aspects. Starting from customer and market reach to fine tuning corporate strategy, a shift in company’s core objectives that too in a short span of time is a tough task.

Especially when all VCs seem to be working in unison and creating a scarcity of available funds that were easy to avail in the recent past. It is time for our startups to learn things from the mature companies and incorporate the best practices that make them successful. The transition is tough but is not impossible. The ones who can make this shift will be the ones who will succeed.

But in this entire episode of an artificial fiscal drought for entrepreneurs few good things have happened. Firstly the likelihood of obviating the conspicuous bubble has been increased. Startups have steered away from ‘growth only’ fallacy on time, at least so it looks like. Secondly startups are now orienting towards actual value creation and streamlining their efforts on creating sustainable businesses, which bodes well for India. Thirdly, this will create a bigger pool of domestic investors, primarily angel and series A which again is a good news for the community.

THE FUTURE: The future of Indian startups is bright, there’re no questions. In the realm of things happening today and that have happened in the past, the fledgling companies that can make a shift to a more operationally efficient model and generate profitability will be the ones that may emerge as leaders of tomorrow. The ones who cannot, might opt out of the game or will be absorbed by some of the stronger players. We will see some consolidation happening.

Starting from technology to operations there’s a lot of interdependency that startups have on each other, so it becomes important for few of the bigger startups to survive otherwise the whole thing may fall like a house of cards in the short term. But there’s a floating sentiment that the prudent investors will save the pivotal companies and the entire ecosystem will thrive.

Once we overcome this phase, there will be a paradigm shift in the startup culture, a shift that’s very good. We will have entrepreneurs focusing on profits, which will ultimately need them to harness the opportunities and potentials that exist in India. Accordingly, we will see innovation in agriculture, healthcare, manufacturing and education too. All these areas, as rightly envisioned by the Startup India plan of our PM, are essential for the long term growth of the country. If Startup India plan sees the light of the day, we will have the right attitude and skills imparted to the youth of the country.

Lastly and most importantly, there are further opportunities that await the entrepreneurs of tomorrow. Starting from the Digital India drive to the success of JAM (Jan Dhan Yogna, Aadhar card, Mobile) there will be myriad opportunities.

As JAM becomes successful we will have a good infrastructure to reach a much higher proportion of population, interact with them and work with them. This will open many doors. Once that happens, money will flow in while startups will be efficient and hence hopefully flourishing.

This article was originally published here



Top 10 Indian Startups and how they took off

Here is a list of top 10 Indian startups that are riding the startup wave, and how they started.

The year 2015 was a definitive year for the Indian internet industry. As the economy continued to grow at a healthy 6-7%, the sluggish Chinese economy meant investors are looking at India with renewed interest. Nobody cashed in bigger than the e-commerce players.

Experts believe that while the Indian e-commerce market is currently pegged at $5 billion, the figure might leap to as much as $40-50 billion by 2020. A 2015 PwC report even states that Tier 2 and 3 cities have seen 30% to 50% rise in transactions.

With the rural and semi-rural markets catching up to the trend, no wonder the likes of internet startups are pulling out all their stocks to acquire customers with hefty discounts and schemes. However, while all this might seem very recent, it all started a while ago.

Here is a list of top 10 Indian startups that are riding the startup wave, and how they started.

1. Flipkart

This Bangalore-based e-commerce company is already registered in Singapore. Sachin and Binny Bansal launched it back in 2007, and the company now has launched its own product range under the brand name ‘DigiFlip’! Flipkart is currently one of India’s largest e-commerce players.

2. Snapdeal

Online marketplace Snapdeal was started by Wharton graduate Kunal Bahl and IIT Delhi guy Rohit Bansal. The company now has top investors like SoftBank onboard and is the biggest local rival to Flipkart.



3. Paytm

This Indian e-commerce company is based in Noida, India. Launched in 2010, Paytm has expanded to mobile recharges and bill payments, e-commerce, bus travel and even online deals. It is giving Flipkart and Snapdeal a run for their money.

4. OlaCabs

OlaCabs, commonly called Ola, is India’s home-grown transport network company. Launched as an online cab aggregator in Mumbai, this Bangalore-based startup is among the fastest growing online businesses currently. It is also India’s answer to global taxi giants like Uber.

5. Oyo Rooms

Touted as India’s largest branded network of hotels, OYO Rooms currently operates in more than 160 Indian cities.

This company, founded by a rather young founder-CEO Ritesh Agarwal, has been branded as one among the next start-up unicorns. It is backed by investors like Softbank Group and Sequoia Capital.

6. Zomato

This restaurant search and discovery service was founded by Deepinder Goyal and Pankaj Chaddah. It also provides cashless payment, online ordering, table reservation, and point-of-sale systems.

Users have access to restaurant contact details, scanned menus and photos sourced by local street teams. User reviews and ratings also help.

It currently operates in 23 countries, including India, Australia and the United States.



7. ShopClues

This online marketplace in currently based in Gurgaon, India. It was founded in California’s Silicon Valley in 2011. It came to India as the 35th entry in the Indian e-commerce space and now has over 12,000 registered merchants, 2,00,000+ products and over 42 million visitors every year across 9500 locations in the country.

8. Practo

Practo is a comprehensive health app. It currently has over 1,00,000 doctors listed from over 310 Indian towns and cities. It has over 1.3 million pageviews and 30,000 appointments booked every month, with traffic growing at 24% month-on-month.

The company has seven offices, in Mumbai, Delhi, Bengaluru, Chennai, Hyderabad, Pune and Singapore.

9. UrbanClap

UrbanClap is an online platform that helps customers find and hire service professionals. The idea is really picking up amongst India’s nuclear families, tanks to the ease it offers.

10. Lenskart

Lenskart is an online eyewear portal founded by Peyush Bansal along with Amit Chaudhary and Sumeet Kapahi. They currently sell prescription eyeglasses, sunglasses and contact lenses.

The company has self owned and franchise stores across India.

This article was originally published in Business Insider India.