investment

Flipkart and Amazon prepare for sales in May, Soon After Lockdown

Flipkart and Amazon have asked their partnered brands and sellers to stock up for the post lockdown sales. They are expecting that many people are waiting to buy non-essential goods post lockdown. The demand for these non-essential goods is immensely high at the moment.

To cope up with the economic loss during the nationwide COVID-19 lockdown, Flipkart and Amazon have decided to put up mega online sales in May.

To avail the maximum benefit and recover from the loss of lockdown, they are planning to reduce the discounts.

Brands now know that, after the quarantine, customers will be looking for the availability of products rather than discounts. The new sales will not be based on cuts rather than they will be based on high demand.

Due to the Coronavirus pandemic, people are shifting to online platforms for buying groceries and other things. Therefore, a significant boost in E-commerce growth is expected.

Avneet Singh, chief executive of SPPL, which makes Kodak and Thomson smart televisions, said that e-commerce marketplaces have witnessed new consumers in the age group of mid-thirties are ordering products online for the first time. Singh believes that these new consumers will help boost online sales after the restrictions are lifted.

So far, Odisha is the state to allow all e-commerce platforms, such as Flipkart, Amazon, BigBasket, Grofers, Swiggy and Zomato, along with their third-party logistics partners, to resume operations during the second phase of the lockdown. Learning from Odisha, other states and central authorities are expected to take similar actions.

To invest or repay debt – Which should you do first?

Both options have their pros and cons.

Many people are deciding whether they should invest their money or pay off their debt. Both options have their pros and cons.

Investing allows you to build a nest egg that can make you and your family more financially stable. It can also provide you with passive income. When you invest early, you can save up enough money to retire in comfort.

On the other hand, repaying all your debt reduces your stress and help you tolerate personal emergencies in the future. You can easily weather out depression or recession. It also provides you flexibility with your finances.

The question is what you should do first. The answer depends on two factors. You should consider the after-tax interest rate of your debt, as well as the benefits Return-On-Investment (ROI) of the MONEY. Moreover, you can borrow money from a lending company and find a viable solution that helps you sail both boats!

If you are going to get a higher return through your investment than the rate of your debt, you should choose to invest. If it is the opposite, then pay off your financial obligations first. A good example of someone doing this properly and with great results would be Warren Buffett. He didn’t pay off the mortgage on his home first. Instead, he used his money to improve his investment portfolio first.

However, this is not usually the case. There are instances in which you should think of other factors when making the decision.

Types of Debts

One thing to keep in mind is that not all debts are the same. The type of loan you have plays an important role in your financial decision. As stated earlier, you should compare the after-tax return of the investment and the after-tax cost of the obligation. You should also look into the tax benefits of your interest payments. This may sound complicated, but it’s not.

Student loans are tax-deductible, and help you save money over time. You can deduct the amount you paid for your college debt or $2,500, whichever the lesser amount.

If you have a portfolio that contains a variety of investments, your return on your investment after taxes is probably more than the cost of your debt. If you are an owner of a new business, it is also advisable to invest in your venture first instead of paying back your obligations.

However, you should choose to get rid of your debts first if you have only a few years left before you reach retirement age. If you have a conservative investment portfolio that doesn’t grow quickly, you should repay the debts you owe first.

Look at Your Financial Situation

If you have high credit card balances, then you should pay them off first. That way, you will save money and improve your credit rating. You should repay your obligations if you are having a hard time balancing between improving your rating and making monthly payments.

If you enjoy low-interest rates and the balance is manageable, though, try investing your money. Experts suggest putting your money in long-term investment plans to enjoy lower risks.

Before you make any decision, you should establish an emergency fund first. Funds that you set aside in an investment are hard to access for a certain period. If you do withdraw the funds early from some types of investments like IRAs or 401Ks, you will be charged with penalties that can eat up your returns.

Why Investing is Better

There are many reasons why you should consider investing your money instead of paying back your loans taken from short-term lender which you found via credit matching service like nation21loans.com. The first reason is that earnings from an investment like a CD are compounded. You should not compare the percentage you earn in the first year of investment to the costs of your financial obligation.

It doesn’t matter what year you start investing; you will always get your first-year earnings. The only thing that will change is when you are going to get it. That’s why it is important that you start investing early.

When you start a year late, you don’t earn the potential earnings from the previous year. If you wait for two years, then you lose the potential earnings from the last two years.

Retirement funds are often connected to the calendar. Once you go past a specific date, you can’t go contribute. If you managed to put money in before the date, the money becomes part of the compounding for that year. However, not contributing before the date means you missed out adding the compounding for the entire year.

To get the full benefit of the returns, you need to contribute regularly. Most retirement investment funds don’t allow catch-up contributions. You can only get the contributions you made for the current year. Some do, though.

Research this before deciding

If your employer provides a match to your 401 (k) plans, then you should grab the opportunity and max out the match. The match is free money that you can’t get anywhere else. You should take full advantage of it before making other investments or getting rid of your debts.

On the other hand, there’s no limit on how much debt you pay off at any given time. You can repay 20 or 30 years’ worth if you can afford it. While it is not guaranteed that you will end up with a huge sum in your lifetime, but you will be in better financial condition if you choose to invest your money wisely. You can use any extra income to pay back the money you borrowed.

You can’t achieve financial freedom unless you start investing. Even if your investment doesn’t make a lot of money, it is the best way to grow your wealth. Make sure that you generate passive income so that you gain more money to can use to pay your financial burdens in the future.

Ideal Situation

In the ideal world, you don’t have any debt, and you invest your money. However, not everyone can be that lucky. There’s no one-size-fits-all solution to the problem. Investing is the best choice as long as your income source is secure.

Your financial situation will dictate whether investing or paying off debts is the better choice. Whatever your choice might be, however, make sure that the decision aligns with your long-term plans.

Five things every investor looks for in a startup

Here are a few things investors seek in start-ups while taking the decision of investing.

For an investor, it is important to know what he’s getting into while taking a decision of investing in a company. No one wants to invest in a business which isn’t profitable and viable in the future.

Here are a few things investors seek in start-ups while taking the decision of investing:

A strong team

An investor looks at a start-up as a team which works together and not as a one-man show. The management team’s capabilities and history is very crucial for an investor because it helps him assess what the team is capable of doing in the future.

You might portray a very colourful image of your team but if an investor can break through the rosy portrayal and see the rifts and lack of unity in the team, he might not invest in your start-up even though he liked the idea.

Hence, it is crucial to have a strong founding team in which everyone is sure about their roles and responsibilities.

Related Post: How to form the right startup team

The business plan

The investor doesn’t know everything about your business so you need to let him know about the most important things like the break-even point, financial plan and the marketing and sales plan through your business plan. Because your business plan is a major factor the investor judges you upon, make sure it is made properly and consists of all relevant and required details.

Also, try charting milestones so that an investor has a better idea of your business.

Company’s uniqueness

If your idea is the same as the one being offered in the market, an investor will not be interested in investing in your business. He is looking for a unique idea which will appeal to the customers and give him enough profits. VCs often look for competitive advantage and propriety features over the financial structure.

For instance, the most unique ideas are often sponsored in Shark Tank over ideas which are done and dusted with already.

Effective long-term Business Model

A start-up might be doing extremely well in the initial stages and making profits but what is important to judge is whether the business will survive in the future as well. A number of companies are closing down due to mismanagement of finances, low sales, no profits etc.

Amidst cut-throat competition, all an investor wants to know is if your business is likely to withstand the test of time and continue doing well in the future.

Growth potential

It isn’t enough to be a sustainable business; the company must also have growth potential because no one wants to invest in a company which is standard and stagnant in terms of profits. Your company should be able to growth at a fast pace and introduce new products and services to the mix and attract more markets in a short time. A potential market size is a great way of determining the potential growth rate in the future.

Forget unicorns – Investors are looking for ‘cockroach’ startups now

2015 was the year of the “unicorn” – private technology-driven startups that reached a valuation of $1 billion or more.
But tech and startup investment is going to be defined by a very different beast in 2016 – the cockroach.

“Everything is about resiliency now to weather the storm,” says Tim McSweeney, a director at technology-focused merchant bank Restoration Partners. “Unicorn, it’s a mythical beast, whereas a cockroach, it can survive a nuclear war.”

A unicorn is characterised by superfast growth, fuelled by VC money. They’re not profitable but the idea is that the business will reach “scale” first, before concentrating on making a money once it’s won plenty of market share. Uber is a prime example.

Startups that joined the unicorn club last year include TransferWise, Lyft, Zenefits, SoFi, Hellofresh, Prosper, Oscar, and Farfetch, according to venture capital data tracker CB Insights. There were many more.

A cockroach, by contrast, is a business that builds slowly and steadily from the get go, keeping a close eye on revenues and profits. Spending is kept in check so that it can weather any funding storm.

McSweeney says: “For the investment side, it’s minimizing the risk. Let’s find a company that can survive a nuclear war and then come back to fight another day or pivot and do something different – it has the right team, the right customer base etc.”

McSweeney mentioned the concept of a cockroach company to me at the launch of the Virtual Technology Cluster (VTC) Group recently in London and jumped on the phone later on to discuss it.

Restoration Partners doesn’t invest itself but offers banking services to business-focused technology startups. As such, McSweeney and his colleagues have a good view of the investment space.

McSweeney didn’t coin the term cockroach and isn’t the first to highlight it. The investment theory is an old one and Flickr founder Caterina Fake penned a blogpost on the idea last September.

Unicorns are going out of fashion for many investors.

But the idea of the cockroach vs. unicorn captures a widespread mood in the investment community right now. At a recent conference in London on fintech – one of the hottest subsectors of technology that boasts plenty of unicorns – I found investors and bankers worried about “froth” in the market.
McSweeney says: “I think the unicorn element is coming to an end anyway and the bubble in the market is just sloping off.”

McSweeney’s boss, Restoration Partners’ founder Ken Olisa, told me much the same thing. At the VTC Group launch, he said: “There’s a unicorn industry and they can play around with each other but all it will do is end in tears, because it’s not about the customer and it’s not about adding value to anything.”

So why are investors looking for cockroaches rather than unicorns now? The answer is funding.

2015 was characterised by free and easy funding for startups, thanks to record low-interest rates driving more and more cash into venture capital and poor stock market performance encouraging the likes of Fidelity and BlackRock to try their hand at VC investing.

But 2016 got off to a very different start, with venture capital funding drying up amid wobbles for the global economy.

This has revealed problems in the business models of many unicorns and other fast-growing tech businesses, most of which rely on easy VC money to fund their growth. Businesses like Twitter and Birchbox have all been making layoffs and Fortune’s Dan Primack recently noted that both private equity and venture capital performance declined in the first quarter of 2016 for the first time in years. Zenefits, one of the 2015 inductees to the unicorn club, has imploded pretty spectacularly.

McSweeney says: “In terms of chasing growth and growth and growth – it’s not about sustainability. It’s just trying to grow as quickly as you can without looking at the fundamentals of the house. That’s what I feel a unicorn is – chase growth so investors give you money. It’s kind of a reinforcing cycle.

“Google didn’t growth hack, they just provided a service to the internet and build a business around it.”

He adds: “Look at Powa. It’s the bubble – I wouldn’t say it’s bursting, but it’s sloping downwards. There’s frothiness.”

London-based Powa Technologies raised at least $225 million in debt and equity over the last three years and at one point claimed to be worth $2.7 billion. But the payments business went bust in February, with debts of $16.4 million and just $250,000 in the bank.

McSweeney says: “I still think there’s capital out there but the application of it is more judicious. People are looking for smarter businesses to apply their capital to.”

This article was originally published in Business Insider

Image credit: Reuters/Andrew Kelly