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Startup eSeries: Not All Babies Turn Out So Well

Entrepreneurship
Mar 23, 2016

Startup eSeries: Not All Babies Turn Out So Well 

'Don't be surprised if the era we live in is remembered as Startup Revolution in the decades to come...just like the Industrial Revolution or the Renaissance,' VD says to me.

Vasundhara - or VD - as friends call her, is a business analyst. Working with an angel investors' network, she screens startups and analyses them...to validate them for investment.

Vasundhara and I sit on a large couch sprawled in her plush drawing room. I have known her half of my life. Our friendship dates back to school time. It is a Sunday evening and, while munching on waffles and reminiscing childhood days, our conversation diverts to startups and investments.

'It is indeed a revolution. These startups are everywhere, just everywhere', I second her.

'I know right!' She continues. 'We evaluate so many startups every week.'

'Umm... I don't really know about angel investors. Never heard of them before. Who are they?' I get curious.

Vasundhara starts off with basics and gives a clear explanation.

'When a business is in its early stages, it gets funded by relatives and friends. This is “seed funding”. Then comes a time when the business proves its concept... But seldom does it grow further because it lacks big funds. Now it looks for investment from outside. An angel investor provides capital to such startups.'

An "angel network" does exactly that. They are a group of angel investors who have come together to collectively invest in start-ups.

'Hmm okay! How do you analyse an idea? Where do you start? For instance, if I decide to start my own venture in the next few years, how could I ensure funding?' I prod her eagerly.

Vasundhara pauses for a moment, and then continues - 'Innovation is the first catch, dude! But making a highly innovative idea commercially viable is a challenge! For which the team must have a strong and sharp business model. Any pitch that comes to us is analysed on the basis of two things: the idea and the team. Both the strengths have to go hand in hand.'

'Every idea seems good. But just good ideas aren't enough. They should be commercially viable and have enough strength to compete in the market and survive,' Vasundhara adds.

She goes on to point out a common mistake by entrepreneurs: Their inability to comprehend customer psychology and an evolving market...

'Let's not introduce products and try to fit them in the market. Yes, many products have been introduced by entrepreneurs and have gone on to create a demand. They have captured markets in a big way...and today they're a massive success story. But you can't always introduce a product and create a demand. The demand has to exist in the market, whether acknowledged or not.'

'What is a good startup idea then?' I ask.

She took a deep breath and this time with a bit more energy said, 'Many people these days are like - "I always wanted to be an entrepreneur, so I became one." But this is a fallacy. This startup bubble is giving birth to futile entrepreneurs. The right approach for a startup is to have a genuine business idea in mind - which you believe in and are eager to build.'

'And what places confidence in investors? How do they make a decision to invest?' I ask, now jittery about the startup idea I had harboured for so long. In my mind, I'm going through my idea all over again!

'Investors get impressed if you are able to prove your concept. They are fine if you are in loss due to lack of funds. But the team has to be impeccably clear about their startup route and in their demands. We see startups pitching for huge funds when they really don't require that kind of funding at all... Many of them don't even have the bandwidth to absorb funds. Besides, they would work more efficiently and effectively if they were provided with 20% of what they want. Investors appreciate cost efficient teams that optimise their resources in the best possible way. It's an art of a businessman. Investors look for good businessmen, to be frank!'

VD takes my fears away and gives me hope with her startup tips:

'An entrepreneur should't be vague. Weekly, we get 20-22 startups to evaluate. Let's say eight of them are rejected straightaway. One should research the market properly. Also, analyse and evaluate your idea. We know that your idea is your baby. You love it no matter what, but you have to understand that not all babies turn out so well. Once you are convinced, make a good pitch, use guidelines available online, and email it to angel networks.'

 
 

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2 Responses to "Startup eSeries: Not All Babies Turn Out So Well"

Nem Chandra Singhal

27 Mar, 2016

It is a very informative article in the form of interview. It need to be discussed and developed further. As far as the individuals are concerned, it is ok but whether the society benefit from such start ups is not know widely. It will be better to discuss that issue too please. Thanks. Nem Chandra Singhal, Gandhinagar, Gujarat.

Arijit Mondal

25 Mar, 2016

The article was very knowledgeable as we are a startup company dealing primarily in office furniture.

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