startup india

How ShopClues set up its standard in Indian e-commerce industry

The idea of ShopClues was born at California in March 2011 when Radhika and Sandeep Aggarwal met with Sethi.

The idea of ShopClues was born at California in March 2011 when Radhika and Sandeep Aggarwal met with Sanjay Sethi. How they met in California is also an interesting factor to know. Aggarwal’s son and Sethi’s daughter went to the same school in Fremont. Sethi was working with eBay, while Radhika Aggarwal worked for Nordstrom, an American fashion retailer. Both saw a huge opportunity in the Indian marketplace for masses, as “Back then everybody in India was doing an inventory model business”.

There was a single marketplace eBay but no one was taking it seriously. So these two people decided to implement themselves in Indian e-commerce market. The day when Sethi first landed in Delhi, was very much surprised when he saw the airport full of Snapdeal postures and Television were advertising only Jabong and Myntra.

Going in past and talking about the initial days of their journey, it was 2nd August 2011 when Sanjay Sethi was at the Elephant Bar in San Jose, California, in the middle of his farewell speech to colleagues at eBay Inc. when he received a call from his friend Radhika Aggarwal who had promised them $5 million for their new venture.

Now, Sethi, Aggarwal and their respective families were to move out from California to India to start ShopClues, a marketplace for the masses.

All stuffs were packed and ready to be shipped. Sethi, Radhika Aggarwal and her husband Sandeep Aggarwal, and Mrinal Chatterjee decided to have a few beers that evening. “The next morning they woke up and called everyone whom they knew in the community and within just three days, they had $1.8 million in their bank account from 12 angel investors.

More than three years later, on the night of 19 January 2015, Tiger Global Management led a $100 million funding round for ShopClues.com. Let’s tell you that Tiger Global Management had also invested in India’s largest online firm Flipkart.com and China’s Alibaba Group.

Shopclues started focusing on the unstructured categories. With the latest round of funding of $100 million from Tiger Global and two other investors, Shopclues current valuation has reached to $500 million. Earlier, in March 2013, ShopClues raised $10 million in third round of funding led by Helion Venture Partners and Nexus Venture Partners. Nexus Venture Partners had previously led the Series A round of funding in the company in Feb 2012.

On the first side, ShopClues had to face controversy while dealing for the investment. Investors feel nervous while making an investment for ShopClues. The reasons for the nervousness of the investors were competitors like Flipkart, Snapdeal and Amazon that had already built the market a tough war to survive.

And on the second side, company was surviving with the shock of its CEO Sandeep Aggarwal being arrested for insider trading in the US in mid-2013.

Year 2014 had been very punitive for the company. The company had hopeful orders and a larger seller base than earlier, but they had hardly any money in their bank account. The future of the company was unclear. But the remaining 4 co-founders didn’t lose hope. Sethi and Radhika Aggarwal refused to give up. They hunted investors, set in whatever money they had, and finally raised an undisclosed amount from existing shareholders in the middle of 2014.

Related Post: Fundamentals of running a successful and profitable startup

What differentiates ShopClues from Flipkart, Snapdeal and Amazon?

The fact that made Tiger Global to invest in ShopClues was the fact that the business model of ShopClues was different from that of Flipkart and Snapdeal and that the company was largely focused on taking unstructured categories online.

Companies such as Flipkart, Snapdeal and Amazon get a wider piece of their business from selling the items that can be itemized under the structured retail channel. For illustration, companies like Flipkart get 30-35% of their business from selling branded mobile phones. For ShopClues, it is small brands and categories such as home and kitchen ware, fashion, and mobile and electronics accessories which work quite well. According to the company, out of the 7500 brands that ShopClues sells, 6500 are regional.

Marketing Strategies

With an ever-increasing customer base, its community of over 150k merchants is its biggest strength, which enables Shopclues to offer over 19 million products across 5000+ categories at attractive prices.

The Sunday Flea Market and Jaw Dropping Deal are its best performing deal so far. Shopclues has successfully built this deal property through innovative marketing promotions and by offering something new and exciting to customers in every edition

• Email marketing: Even though email marketing was considered dead, the brand’s Senior Marketing Director, Mr. Nitin Agarwal stood strong with the email marketing. Nitin started off by introducing his brand and the statistics related to it from email marketing perspective. He stated that ShopClues.com has 50 million visits every month, which is more than other travel e-commerce portals. Besides this, they have more than 50k brands on their catalogue. Looking at these whooping numbers, that is where bulk email marketing came into account and he stated that Gmail is one of the major areas amongst them. The results were tremendously far better than before. People started to engage more through emails and make the transactions. Also, mobile experience was made much better then yielding better results.

• Affiliate Marketing: ShopClues used affiliate marketing to add advantage to their business with many affiliate networks in India. This ensured ShopClues getting around 50 thousand members only with affiliate marketing.

• Blog Posting: FNY also regularly posted interesting articles on their blogs to increase the awareness and engagement.

• SEO Marketing: For any brand, search engine marketing plays an imperative role and ShopClues promoted itself well on Google using SEO, Adwords and PPC advertising.

• Facebook Marketing: Gaining on its popularity, FNY utilized Facebook marketing opportunity very well. Prior to the launch of the web portal, ShopClues kept on selling its products through Facebook and at the time of their website launching, ShopClues crossed over 1 lacs fan on their fan page.

Currently on a net basis, the company is losing money. Basically, on an operating basis, the company is able to recover all the fixed costs and some more and will become cash flow positive soon.

TheCityFans: For every t-shirt sold, this start-up donates a t-shirt to a poor kid

For every t-shirt you buy, a t-shirt is donated to a poor kid. It is a one of a kind concept where the buyer is given an opportunity to hand over a t-shirt to one kid of the few million who survives extreme temperatures without any clothing.

Based out of Kota, Rajasthan, TheCityFans.com is a unique, one of a kind e-commerce website which focuses on apparel which are city and state-based. They aim to target a niche audience who aren’t shy to express their remarkable love regarding something. Available, in six cities, Mumbai, Surat, Ahmadabad, Bangalore, Delhi and Jaipur, the T-shirt designs are quirky and for the ones looking to make a statement. State oriented t-shirts from Gujarat, Rajasthan and Punjab are very urban yet authentic. The website has also come up with customised apparel for a few colleges and schools such as IIT, Sophia and Mody.

What sets this e-commerce site from others in the motto they thrive upon- One For You, One From You. For every t-shirt you buy, a t-shirt is donated to a poor kid. It is a one of a kind concept where the buyer is given an opportunity to hand over a t-shirt to one kid of the few million who survives extreme temperatures without any clothing. The smiles on the kids’ faces are priceless on receiving something they believed was out of their reach.

TCF has also made a short video on the same hoping out to help more children with their noble and unique e-commerce model.

Check out the website: www.Thecityfans.com

Ninjacart: An idea that changed the face of farmers and fresh produce

We connect farmers, manufactures and brands to retailers directly through our lean and connected supply chain.

The vegetable market in India is expected to be buzzing with farm-fresh veggies and fruits. But, in reality, the vegetables aren’t as fresh as displayed in travel guides and brochures. Sharat Logathanathan, an alumnus of IIM Kozhikode made a visit to the “subzi mandi” and discovered the truth for himself. He recalls being shocked at the amount of produce being dumped as waste.

Sharat stated:

“When we went to the market, we discovered that the market was in total chaos. A lot of vegetables were lying as waste, and people trampled over them.”

In a third world country like ours where people don’t have food, wastage is unacceptable but then, it is harsh reality.

Thirukumaran Nagaranjan, also an IIM-Kozhikode alumnus who was accompanying Sharath stated:

“Inefficiencies could be seen in almost every aspect. There were a lot of middlemen involved, there was no price transparency whatsoever. The produce of the farmers exchanged a lot of hands before reaching the eventual consumer, which resulted in farmers hardly making any money in this whole scenario. We felt this is a market which has huge potential, has tremendous scope of development and is literally untapped. We almost instantly realised there is a lot of value addition that can be done in this space by bringing technological and operational efficiencies.”

That visit gave birth to the idea of Ninjacart which sources farm fresh vegetables and fruits from the farmers and delivers them to the customer. This was the inception of a model from which everyone would benefit.

Ninjacart.in states in its homepage: We connect farmers, manufactures and brands to retailers directly through our lean and connected supply chain.

The success story:

As of June 2016, Ninjacart has a customer base of over 400 retail stores and restaurants in Bangalore. The average monthly tonnage is about 1.4k tons and monthly revenue of around Rs 4 crores.

According to Vasudevan, Ninjacart is the only player in this space that delivers quality goods in a span as short as eight hours. They also guarantee daily supply, easy management and absolutely fresh produce.

Ninjacart got a massive funding of 20 crores from Accel which is the country’s leading VC. Other VCs are Qualcomm ventures and Zop.

Ninjacart caters to many villages in and around Bangalore and deliver the produce to some big names like Whitefield, Marathalli, Indiranagar and many more.

The unique model from which everyone benefits:

Farmers:

The best part as discussed above is that farmers can benefit hugely as they don’t lose out on the money paid to the middlemen. They are also insured from price fluctuations. Through a simple method(free of cost), the farmers load their produce onto Ninjacart vehicles which are sent to deliver produce to the customers. They receive their payment through NEFT.

Ninjacart has also gone one step ahead and hosts farmer seminar programs called “Rythu abhivrudhi karyakrama” which educated the farmers about fair pricing and the market.

Customers:

Customers (shopkeepers, households, restaurants) benefit as they receive good-quality, fresh vegetables and fruits delivered at reasonable prices.

Ninjacart developers:

They’ve faced threats in the past to stop their ways of dealing, however, they believe it is a good initiative and continue with it. The makers are reaping profits as high as 4 crores every month and manage to secure the livelihood of farmers in and around Bangalore. The recent fundings establish Ninjacart’s existence in the market.

With its techie idea, this Indian startup offers to provide free wifi in 1000 temples of India

Pujashoppe.com offers complete solutions by offering access to religious festivals and pujas all across the country both online and its chain of religious stores keeping in mind the purity and utmost quality in every product and services we offer.

Free Wi-Fi is the dream of every youngster nowadays. The first thing that they do whenever they go out or check into a new restaurant or hotel, is to check about the Wi-Fi services provided by them. Banking on this enthusiasm about Wi-Fi, an Indian start-up has come up with a unique way to facilitate devotees to have ease of performing puja.

How the temple would be benefitted

Pujashoppe.com would design a web page specially for the temple and promote it through its popular portal and other media thus making it reach its global devotees.
The devotees visiting temple can log into the temple webpage free of cost while visiting the temple.
Devotees can also gather dynamic information about the temple as temple authorities would have complete access to the webpage.

Related Post: Q&A with Samar Singla, founder of Jugnoo

How one can use it

User will simply enable his mobile device in temples where they will see Pujashoppe free wi-fi signs.
Once it is connected to Pujashoppe Wi-Fi, He/she can open his web browser and search from any website which will redirect you to the login page.
User will just have to fill his required details (Name and mobile number) and submit, he would immediately receive a onetime password (OTP) on his smart phone. Once logged in he can use it to visit the temple webpage along with other websites of his choice. Maximum time for free use is 30 minutes.

The main objective of the proposed venture is to create a business out of a large market of puja related products and services, which has so far remained unorganized and try creating a brand. The venture is also aimed at facilitating devotees to have ease of performing puja.

Allegiance to religion has grown in the past few decades in India and worldwide and the market of puja materials and services have grown exponentially in the process. As per The Times of India the annual market of spiritual business in India is a US$ 15 Billion which translates to a whopping Rs. 1,90,000 Crore. The opportunity of this venture lies in the fact that the entire market is being catered by unorganised and small local operators.

In order to achieve this goal a business idea has been conceptualized to offer these products and services online through a portal named PujaShoppe.com. The business is based on a simple idea that almost every Hindu wants to perform various pujas depending upon his allegiance and inclination; however many of them avoid doing for reasons such as lack of faith on the priests, their availability and expertise, lack of standardization and unscientific puja processes and poor quality of available puja materials in the market. Thus there exists a gap which can be addressed by creating a business to facilitate availability of premium quality of puja materials and allied services.

It has been observed in many a time that finding a priest with proper knowledge of the subject is a time consuming and rigorous task. Most often than not it is found that the priest may not be a trained one and does not have the requisite expertise. It has also been found that different priests do the same puja in different ways which means there are no standard protocols or practices that are followed. Thus there is a need of ‘standardization of puja processes’ and formulation of ‘best practices’ which would eventually give rise to a large market for a business. A corollary can be drawn from the fact that people prefer going to trained doctors rather than to quacks for their medical needs shelling out premium fees. Likewise the well informed devotees would prefer branded premium quality of puja materials and well trained priests with adequate expertise to unbranded poor quality products and untrained priests.

Challenges faced by the team so far

Diversity: The same puja is performed in different ways and different puja materials are used in various parts of the country. Thus a detailed research has to be carried out to cover every part of the country and knowledgeable priests have to be put on roll.
Database creation: Collection of the database of the priests and validating the data will be a rigorous task.
Large no of products handling and its logistics management.
Sourcing of quality raw materials.
Promotion and marketing.
Creation of distribution channel

Proposed products and services of PujaShoppe.com

Premium quality puja materials with quality certifications
Self Puja (Do it yourself puja kits which would also include complete stepwise puja process)
Personalized puja planner
Special puja for remedies of astrological malefic effects
Priest services
Divine gifts for every occasion
Corporate puja/ HNI puja
Puja management services / Turnkey puja: From pandal (tent) to idol to everything
Online puja / Puja in absentia for NRIs using video streaming
Remote pujas in famous temples of the country
Overseas supply of priests
Exports of puja materials
Arranging of religious group tours

Business Model

PujaShoppe.com follows a unique hybrid model where in a customer can buy products and services through online, telephone or just by walking in our stores to be located at vantage points all over the country.

Achievement so far

PujaShoppe.com in a span of just six months has become the most popular website with the national Alexa rating of 7500.
It’s has already opened more than 15 stores in states like Delhi, Haryana, Jharkhand, Karnataka, West Bengal and Chattisgarh.
The ‘Art of Living’ organization of Shri Shri Ravi Shankar has entered into a strategic alliance with the organization for cross branding and cross merchandising.
The company is opening its first overseas store in Dubai in April and has plans to open stores in Singapore, UK, Malyasia and USA.

Future

Dr.Amushree, co-founder says, Pujashoppe.com has plans to establish as a global leader in the spiritual space.

6 reasons why India needs more entrepreneur

India is a country with the third largest number of start-ups in the world. However, we need more entrepreneurs to come forth as the Indian market is constantly evolving and the opportunities need to be tapped.

That aside, here are a few reasons why India needs more entrepreneur:

1. New innovations

Image credit: www.totalcommstraining.com

Indians are often not very comfortable with taking charge. However, in the recent times, we’ve observed the growth of entrepreneurs in the country due to a boom of innovative ideas. Companies like OYO rooms, FoodPanda, Zomato have also managed to spread their wings into the international markets. However, what India needs is not a copy paste of ideas from the West but an array of completely new ideas because the markets they are catering to are completely different.

2. New ideas make life simpler

With a huge variety of new idea cropping up; we can only fathom how much easier our life gets. If one needs to book a cab, Ola is the way to go; one can easily check restaurant listings on Zomato while booking tickets through BookMyShow is super convenient and only made the lives of people more organised. Also, companies like Flipkart and Snapdeal have sorted the e-commerce scene in the country. Hence, with more innovations by entrepreneurs in various fields, the public benefits greatly.

3. Huge number of VCs wanting to invest

There are a huge number of Venture Capitalists who want to invest in start-ups but because of the lack of a completely original idea, they fail to find one. The world of investors see potential in our country and we need to use all the attention coming our way in a positive way. Recently, Zoomcar received funding worth $8 million from Sequoia capital where as OYO is funded by Sequoia Capital, SoftBank and GreenOaks capital which are foreign based investors.

4. Fill gaps in growth and development in the country

The Prime Minister, Narendra Modi believes that start-ups are essential to bridge the gaps to enhance growth and development of the country on various fronts. New start-up innovations cropping up are steady sources of income for the entrepreneur and an addition to the GDP of the country. Hence, the government aspires to boost digital start-ups at grass root levels by allotting around INR 2000 crores for this initiative.

5. Government initiatives

The Prime Minister is highly excited about the Start-up India project which has almost 2000 crore INR allotted to the cause. Along with that, the Government also plans to provide budding entrepreneurs with perks such as legal support for filing patents at free of cost and 80% reduction in filing patent fee. If the Government eases taxation for start-ups, it’ll be a great boost to empower the aspiring entrepreneurs who should definitely grab the opportunity and start more companies in India.

6. Healthy competition

Image credit: www.theleadershipnotebook.com

More number of entrepreneurs means more competition which saves the country from monopoly in any one field. This will force companies to come up with newer and more cost-effective ideas in order to secure profit margins and build a base which are beneficial to the customer.

For instance, Zomato was almost a monopoly until close players like FoodPanda and Swiggy ventured into the restaurant business increasing competition in a healthy way and providing the customers with more choices.

Kishore Biyani, CEO Future Group, reboots for the digital era

As the lines between offline and online retail blur, India’s retail king is tweaking his strategy to stay ahead of the competition.

Fabfurnish.com, the online furniture retailer acquired by Kishore-Biyani-led Future Group, was relaunched with a fresh campaign and a slew of deals. It marks a new chapter in the evolution of the group, which is best known for kicking off the modern retail revolution in India a decade ago.

However, when Biyani, 54, laid his hands on the Rocket-Internet-promoted company last month, it did come as a surprise. The Marwari businessman has been a fierce critic of the e-commerce business model in India, saying it is designed to lure consumers with discounts with little focus on profits.

That moment appears to have arrived. Fabfurnish is his first acquisition but more such deals could be in the offing. “I am not closed to the idea,” he says. “I will do it selectively and ensure our investments make money,” he adds.

It is clear the lines between physical and virtual shopping are blurring for him. He said he plans to merge the group’s home furnishings business under HomeTown with Fabfurnish and subsequently de-merge it from flagship Future Retail.

The goal is to unlock value and make his home furnishings business a stronger enterprise in the face of increased competition. Once the online and offline arms are merged, HomeTown is likely to reach a turnover of Rs 1,000 crore within a year. It closed the last financial year with revenues of around Rs 750 crore.

The driving force

Biyani’s hybrid business model, also called omni-channel retail in industry parlance, is a compulsion, say analysts. With consumers today spread far and wide, brick-and-mortar retailers have been left with no option but to add an online leg to their offline operations in a bid to reach as many customers as possible, and quickly.

Biyani has been at work on an omni-channel presence for a year now, trying to create a seamless and consistent brand experience across his group’s retail channels: bigbazaardirect, futurebazaar.com and offine stores. Other retailers, including Reliance Retail, Aditya Birla Retail and Shoppers Stop, have also been working on creating an omni-channel presence in recent months.

“The endeavour is to reach more consumer touchpoints and ensure you are there while the action is on. The ultimate objective is customer acquisition. That will mean that you have to go where he or she is,” says Devangshu Dutta, chief executive, Third Eyesight, a consultancy firm.

A recent study by the Retailers Association of India and Mumbai-based data analytics firm Hansa Cequity says that nearly 74 per cent Indians shop across all channels including neighbourhood stores, modern trade outlets and online platforms.

The study also notes that a significant number of these consumers still prefer to touch and feel products before buying, implying therefore that an online-only model is not enough.

Domestic e-tailers have picked up this cue. The top three e-commerce majors -Flipkart, Snapdeal and Amazon – have all gone offline in the last six to eight months to ensure the “touch and feel” experience is provided to consumers.

Flipkart, for instance, has tied-up with brick-and-mortar retailer Spice Hotspot to provide access to its exclusive range of phones offline. Its fashion arm Myntra is in advanced talks to acquire brick-and-mortar chain Forever 21, which will allow it to stock its online catalogue offline.

The same goes for rival Snapdeal, which has initiated tie-ups with The Mobile Store and Shoppers Stop for mobiles and apparel, respectively. Amazon, too, is tying up with small retailers across the country in a bid to allow consumers with no internet access to shop online in these outlets. It is also setting up Amazon-branded stores offline.

Additionally, the top three e-tailers have pick-up stores offline where consumers who’ve purchased products online can get delivery of their goods.

Dutta says the online-offline retail marriage follows global trends. “E-tailers abroad such as Amazon, Birchbox and Bonobos in the US, Spartoo in France, Astley Clarke in the UK have all opened physical retail stores in recent years. This completes the picture in a sense and plugs gaps if any,” he says.

Social media to retail

Hybrid business models are not restricted to retail alone. Social media giant Facebook recently entered hyper-local services in India, offering everything from medical and repair to business and personal services. Apart from letting users to browse for these services, the initiative also allows them to leave reviews so that other consumers can make the right choice.

Tech giant Google, too, is on a similar adventure. In recent years, it has ventured into making wearable tech devices, mobile phones and is now piloting driver-less cars. This even as it strengthens its presence online with a suite of services from basic search to online advertising, email, chat, browsing and software for phones.

Harish HV, partner (India leadership team), Grant Thornton India, says that hybrid business models for these companies is a way to ring-fence themselves from competition by marking their presence in virtually every space.

This online-offline merger, he says, will mean that these firms will get stronger as they enter new areas. The world is indeed shrinking.

This article was originally published in Business Standard

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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.

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:

Customer is being trained to expect a discount every time he books a service/buys a product from you.
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.
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.

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.

Image credit: www.techwire.net

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

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Deep discounts not a viable business model for start-ups, says Raghuram Rajan

With concerns being raised about cash-burn in burgeoning e-commerce sector, RBI governor Raghuram Rajan today made it clear that getting revenues through deep discounting is not a viable business model for start-ups. “If the only reason you are getting revenues, not profit, is because you are selling based on 50 per cent discount, it can’t be viable in the long run,” he said. Rajan was speaking after delivering the YB Chavan memorial
lecture at state secretariat.

He was quick to acknowledge that many businesses are in different stages of their life-cycle with some trying to
establish the viability. “All these businesses are trying to establish viability, some are still being financed in a big way,” he said, adding that it is natural for some of them not to work which will lead to shutting down the business.

The remarks come amid dwindling valuations of some successful Indian start-ups, which are being partly attributed to the high stress on discounting in the business model.

Many of the start-ups depend on capital injections from venture capital funds and some have also closed down. “I think this (shut down) is a natural process and we should not stand in the way and lament too much,” Rajan said, making a strong case for policies which will make it easier for startups to exit so that resources can be used productively.

Given the competitive nature of things, it is also essential to have safety covers including health insurance,
unemployment insurance and pensions, he said, adding that such nets can ensure “social peace”. Welcoming that it has become “reputable” for being an entrepreneur, Rajan made a plea for being resilient, saying “the enterprise started by an entrepreneur can fail, the people should not fail”.

He said the conditions for starting up are improving by the day on the back of interventions by the government and regulators which have upped the infrastructure and logistics support. However, there is a lot which needs to be done, he said, flagging skilled talent as a key prerequisite for the country. There are many other soon to be introduced aspects which will help the startup ecosystem, Rajan said, pointing out to Bankruptcy Code which he expects to be introduced in the current session of the Parliament, and also the introduction of the Small Finance Banks.

Rajan also said that the bankers while dealing with stressed loans with small businesses should also understand that the smaller firms do not have the same mettle to take every case to a court as a big business does. “I said easy exit (for startups) but it should not be unfair exit. With respect to small firms, creditors often have draconian powers which large firms can limit in courts. Something like Sarfaesi. A large firm has a better way of dealing with it in the court than a small firm has.

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

“The banker may have much more power over the small firm with Sarfaesi than it has over large firms. Because we want to get the money back from the large firms, we continue to make the power harder. So, we have to be a little careful. Balance it out. The small firm should not be put out of business too fast while large firms stay in business too long simply because the large firm has easier access to good lawyers.

Rajan said the credit to micro enterprises has gone up to 7.5 per cent of the loans from the earlier 6.5 per cent.

The central bank governor also welcomed the strides of Dalit entrepreneurs, underlining that none of these successful businessmen hail from reputed business or technology schools. Making a strong case creating the enabling environment, Rajan said it is not government programmes but a favourable business environment which has helped such entrepreneurs succeed.

This article was originally published in FirstPost

Entrepreneurship & Venture Capital to launch $50Mn early-stage investment fund for Indian startups

EVC is launching its maiden India focused $50 million fund that will look to back enterprise software, internet and mobile-focused startups.

US Based Investor Entrepreneurship & Venture Capital (EVC) to launch early-stage investment fund for Indian Startups. EVC is launching its maiden India focused $50 million fund that will look to back enterprise software, internet and mobile-focused startups.

Serial entrepreneur and investor Anjli Jain, will lead this venture firm & will primarily focus on startups operating in the education sector, and will also look at backing early-stage ventures in the internet of things, ad-tech, ecommerce, wearables and gaming segments.

“India has emerged as one of the most assuring entrepreneurial landscapes globally, and we have launched the fund looking at opportunities that the country’s ecosystem has to offer, and the gap that we can bridge by supporting new businesses,” said Anjli Jain, managing partner of EVC.

The fund will typically invest $100,000-$5 million in startups, while its accelerator could invest $5,000-$100,000 in exchange for equity in the ventures.

“We look forward to working with some passionate entrepreneurs and bring forth ground-breaking ideas alive,” Jain said, adding that the venture capital firm is considering registering the fund under markets regulator Securities and Exchange Board’s Alternative Investment Fund regulations.

The venture capital firm also operates an accelerator programme in Gurgaon that provides physical and virtual co-working space and operational mentorship to ventures. It operates a second accelerator in Cleveland, Ohio.

Prior to launching the fund, India-born, Columbia University educated Jain had founded and invested in Kryptos Mobile, a cloudbased, self-service mobile app development and publishing platform, LookingGlass Platform, a provider of an integrated, software-as-a-service enterprise apps, portal and content management systems, and BlackbeltHelp, an information technology helpdesk and student services provider, among others.

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Government launches portal, mobile app for startups

The Department of Industrial Policy and Promotion(DIPP) on Thursday launched a portal and mobile app through which start-ups can gather all latest updates on various notifications, circulars issued by various departments and different funding agencies.

Secretary in the DIPP, Ramesh Abhishek said the portal and app were launched as an integral component of an action plan.

He said it would also provide information regarding incubators and funding agencies recognised for the purpose of recommending startups as part of startup recognition application.

He also said that the ‘Startup India Hub’, which has been established within Invest India, will be a single point of contact for the entire start-up ecosystem which would enable exchange of knowledge.

“The hub will work in a hub and spoke model with governments, VCs, angel funds, incubators, mentors. It will assist startups through their lifecycle, on all aspects, such as providing mentorship, incubator facilities, IPR support, funding,” he said.

Abhishek said a real-time recognition certificate will be available for download upon completion of the application process. Similarly, small and medium enterprises and start-ups, especially in the communications technology sector, would be able to take advantage of the IPR portal.

Start-ups will also be able to find information regarding various notifications issued by government ministries and information about incubators and funding agencies.

Entities that fulfil the criteria as per the definition of startup and are incorporated/registered in India, can obtain recognition as a startup to avail various benefits listed in the Startup India Action Plan.

“Start-ups have to pay only statutory fees, which is minuscule,” he said, adding the hub would start working from Friday. He added that while the fund was already declared in the Budget and accordingly Rs 2,500 crore each year would be released over next four years to SIDBI. All the tax benefits will be extended to budding entrepreneurs after the passage of the Finance Bill.

“The process of recognition is simple and user friendly and involves a single page application form that a user can fill either through a web interface or through mobile app.

Formats of the recommendation/support letters that need to be attached as part of the application form have been published on the portal and mobile app,” he told reporters here.

Abhishek said that a real time recognition certificate is provided to startups on completion of the application process.

“A digital version of the final certificate of recognition is available for download, through the portal and mobile app. A request for certificate of eligibility for tax exemptions from Inter-ministerial Board will be made simultaneously by selection of a simple option,” he added.

DIPP has also set up an Inter-Ministerial Board to verify the eligibility of startups opting to avail tax and IPR related benefits and to provide a certificate of eligibility to innovative startups.

“The board will not take much time to verify. It will happen at a faster pace,” he said.

The board would meet every week. The DIPP is also holding consultations with the Ministry of Corporate Affairs regarding digital signatures.

According to the FAQs of the DIPP, where a recommendation is issued by an incubator without proper examination or without itself satisfying about the innovative nature of the business it shall be “blacklisted” from giving any future recommendation or receiving any benefit from government

This article was originally published in knowstartup.com

Image credit: bigstartups.in

Missed out startup essentials of the week? Here is a roundup

Last week was the roller coaster for startup and eCommerce industry. At one end we saw massive funds following in, whereas on the other hand government policy grab the eye balls of the readers.

Last week was the roller coaster for startup and eCommerce industry. At one end we saw massive funds following in, whereas on the other hand government policy grab the eye balls of the readers. Our Start Up Your Day recaps is here to keep you posted every week.

Government Policy

The Indian government has allowed 100% Foreign Direct Investment (FDI) in online retail consumer businesses that operate as marketplaces, The Department of Industrial Policy and Promotion said in a notice on March 29. Marketplace model means the companies act as a facilitator between buyers and sellers by providing a technology platform, and not really owning them entirely.

Funds Rolling In:

Picsdream, a marketplace for photography lovers has raised angel funding led by Raman Roy, CMD, Quatrro and Co-founder of Indian Angel Network. Other prominent investors include Ankit Nagori, Ex-CBO Flipkart and Harish Natarajan, Former CEO Bausch & Lomb India. Ankit and Harish have also joined the company’s Board of Directors.

A matchmaking app for South Asian expatriates, Dil Mil has raised $2.7 million (around Rs 18 crore) in pre-Series A funding from Nelstone Ventures, Transmedia Capital, Maiden Lane Ventures, CSC Upshot and a bunch of angel investors.

Gurgaon-based Process Nine Technologies Private Limited has raised an undisclosed amount in a pre-Series A round of funding. Startup offers online translation and transliteration from English to Indian languages via a cloud-based application programming interface (API).

They’re Acquiring

Flipkart, eCommerce giant has acquired Bangalore-based mobile payments company PhonePe. It is its third acquisition in the payments solution space.

It’s time:

Former vice president and head of the seller business at Flipkart, Manish Maheshwari has joined Mukesh Ambani-owned Network18 Media and Investments Ltd. Maheshwari has been appointed as the CEO of Web18, the mobile and Internet arm of Network18 group.

It’s Not a Joke

Indians no more wait for Tesla Motors’ compact four-door sedan Model 3 as Tesla said the car is open for pre-ordering from India too in a glitzy ceremony in California on Thursday.

This article was originally published in Entrepreneur.com

Image credit: http://knowstartup.com/

How to start a business in India successfully

Are you interested in doing business in India? Do you want to start a business in India? If yes, there you have it; the steps you would need to follow if you want to start a business in India.

India is the next big business flash point after China. Why? The reason is because of rapidly growing economy and a massive population; which is second only to China. Are you interested in doing business in India? Do you want to start a business in India? If yes, there you have it; the steps you would need to follow if you want to start a business in India.

Choose an Industry: If you want to start your business in India, the first thing that is expected of you to do is to choose an industry where you would want to build a business in. There are several highly thriving industries in India and it is expected that you decide on the industry to build your business based on your area of strength. For example, the I.T. industry is one of the thriving industries in India and there are countless numbers of business opportunities available in the industry.

Conduct Your Feasibility Studies: Once you are able to make up your mind on the industry to build your business, the next step that you are expected to take is to conduct feasibility studies. India is a unique country when it comes to setting up businesses; a business that can thrive in one region will likely fail big time in another region. So, you are expected to conduct your own feasibility studies in the region you intend starting your own business.

Write Your Business Plan: Irrespective of what part of the world you intend starting your business, the norm is that you are expected to write a workable business plan before launching the business. Consequently, if you are starting a business in India, you are also required to write a business plan. The truth is that without a good business plan in place, you are likely going to struggle to build a business from the scratch in India. The competition amongst entrepreneur is much in India; every business owner would want to outsmart their competitors. That is the reason why you need to draft a workable business plan that has unique business strategies.

Register Your Business: As it is required in most countries of the world, you cannot legally operate a business in India without registering the business with the government. If you run a business that is not registered, there is a limit to the height the business can grow to. The ministry of corporate affairs is in charge of registering business in India, so you are expected to visit their office to make enquiry of the requirements needed if you want to register a new business in India. Basically there are four categories of company registration in India you will be required to choose from any of them when you want to register a new business in India. The categories are: Indian Company, Part 1 Company, Section 8 Company and Foreign Company. The various application forms are available for free download in the official website of the Ministry of Corporate Affairs, India.

Join Professional Networks: One of the means you would need to survive as startup in India is to join professional networks. Any business built in isolation will struggle to survive in India that is the reason why people look for professional organizations and enroll as a member. The benefits you stand to gain when you join a professional network in your industry are unlimited. Thus, ensure that you look for relevant professional organizations to join once you start your business in India.

Create a Professional Website for Your Business: The average Indians are internet savvy, so if you intend starting a business in India, you must ensure that you open a professional website for the business. When you have a professional website for your business, it makes it easier for people searching online for businesses to locate your businesses. It is also important to create a platform where people can purchase your goods online. E – Commerce is in vogue in India and if you must do pretty well with your business in India, you must create room for people to purchase your goods online and get it delivered to them.

Also read: 10 Things Entrepreneurs Must Avoid While Starting Their Ventures In India

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5 Lessons entrepreneurs can learn from football coaches

If you want to make yourself a better entrepreneur, look how some of football’s greatest coaches have led their teams to victory, and apply those lessons to your own startup.

One of the most important roles of an entrepreneur tends to get buried among all the others – the role of coach. Yes, entrepreneurs are leaders, decision makers and idea generators. All those roles are important, but without a well-assembled, motivated team to carry out your orders, all those awesome ideas falter.

Just like a football coach’s own direction and motivation can win or lose a game, an entrepreneur can make a startup succeed or fail. If you want to make yourself a better entrepreneur, look how some of football’s greatest coaches have led their teams to victory, and apply those lessons to your own startup:

1. You have to understand the competition.

Football and entrepreneurship are both competitive ventures. Successful coaches know that beating the competition is about more than just being as good as you can. You have to understand the psychology and makeup of the competition. If they have a weak defense, you need to take advantage of it. If they rely on one key player to win, you have to stop that player.

Key opportunities like these are critical in deciding the outcome of games, and the burden of effort lies with coaches to hunt them down. In the entrepreneurship world, competition is equally intimidating. It’s not enough to lead your company by “being really good.” You have to understand what drives your competitors, why people continue to buy from them and learn key weaknesses that your brand can use as differentiating factors. Without that understanding, you might end up with a good product but the “other team” will always have an edge.

2. Good players don’t automatically make a team.

The power of teamwork can’t be understated. Good coaches know that building a good team takes more than just finding good players. It’s better to have 11 decent players that work well together than 11 outstanding players who have no synergy.

Successful coaches like Joe Paterno worked to build this team bond by making the team do everything together, from practicing to cleaning the stadium. As an entrepreneur, you’ll need to keep this in mind as well. Don’t hire talented team members only because they’re talented, or you’ll wind up with a group of indifferent and selfish, yet skilled, workers who can never quite get on the same page. Create a culture before making hires. Always work to integrate new members into the welcoming whole of the team. Better teamwork means better communication, more positive environments and more efficient work.

3. Emotion and motivation go hand in hand.

In football and in a business, if you want a team to work hard and strive for success, you need to inspire them. You need to build confidence, invest in a team mentality, and help them find passion in their work. Emotion is at the root of motivation, and as an entrepreneur, you’ll be faced with a similar role. Get your team members to truly believe in your brand, enjoy their work, and take pride in your group accomplishments, and nothing will be able to slow them down.

4. Incremental and long-term goals are necessary for success.

A coach can make a long-term goal to improve offensive performance in the second half, and build up to that with short-term goals like doing extra drills every day to build up endurance. Every coach, even those completely new to the game, succeeds or fails because of their short-term and long-term goals.

As an entrepreneur, you’ll have to make long-term and short-term goals for your business. Where do you want to be in five years? How are you going to get there? What goals can you accomplish right now to get you moving in that direction? If you can establish these goals, and get your entire team is on board with them, you’ll have no issue making steady progress to your eventual destination.

5. Setbacks are inevitable but usually temporary.

When a football team loses a game, they don’t immediately give up, never to play football again. Good coaches will use the loss as motivation to try even harder next time. They know setbacks are unavoidable, but almost every setback is temporary. There will always be another game, and another opportunity to succeed.

Successful entrepreneurs are equally patient. When a competitor outbids them, they don’t sweat it. They just move on to the next opportunity. When they miss a deadline, they focus on what they can do now instead of dwelling on the past. Patience is key to overcoming those hurdles.

A coach’s responsibility don’t end with creating the plays, setting the goals or making all the decisions. He’s also responsible for bringing the team together and giving them all the resources they need to get the job done. Sometimes that comes as direction, sometimes it’s motivation. Sometimes, it’s just as a collaborator.

To succeed as an entrepreneur, adopt the coaching mindset. Your team can help you take your idea to the next level or drive yourself to financial ruin. It’s up to you which direction you take them.

This article was originally published in Entrepreneur.com

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