The Startup Journey

Kamla Bhatt has a two part audio interview with Quentin Staes-Polet, the Belgian CEO of Kreeda Games, the Bombay-based online multiplayer gaming start-up funded by IDG Ventures India and SoftBank. Quentin has some interesting points on why the firm chose not to disclose the amount of funding it raised, interplay between social networking and gaming, experience of an "foreigner" starting a business in India, etc. Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has a profile of a Delhi-based company that makes Lassi making machines. ...an enterprising young man called Sultan did the next best thing. He perfected a lassi-churning device. He sold his first machines to the numerous lassi shops and restaurants in the crowded lanes around Delhi’s Jama Masjid area. The devices ran on electricity, worked for hours on end, needed little maintenance and almost never broke down. That was the 1950s. Fifteen years after starting out, Sultan passed away. His son Mohammed Usman, barely 20 then, took over. Usman decided to name the devices ‘Sultan’ in memory of his father. He moved the workshop to Daryaganj in 1992 and also set up a factory in Wazirabad, which employs 25 workers and engineers, to meet the growing demand for his father’s machines. He called the business Raja & Co. — a nickname given to him by friends and loyal customers. Usman’s sons have helped add a modern touch to the 50-year-old family business. Orders from outside D...

While I was reading a profile of M. Mahadevan of Oriental Cuisines in The Hindu , I realized that he seemed to own almost every restaurant that I'd enjoyed eating at in Chennai. (And, I had always associated his name mainly with "Hot Breads" - which I don't frequent at all!) The gentleman indeed seems to be a very fascinating entrepreneur - one that is sure to be besieged by offers from Private Equity firms. Along the way, Mahadevan, the restless man that he is, launched a whole slew of fast food and restaurant brands for every segment of consumers – Benjarong, the Thai restaurant, Wang’s Kitchen and Noodle House for Chinese, Don Pepe for Mexican, Zara, the Spanish Tavern and the byword in food courts – PlanetYumm. Not being content with India operations, Mahadevan ventured into foreign shores – he took Hot Breads to France and Italy, tied up with Saravana Bhavan to take the brand to US and opened a string of bakeries in the Gulf region. “But India is still my explo...

The young founder-CEO of a young but profitable Rs 30 crore company believed it should capitalize on what it saw as immense market opportunity. He believed his company should and could grow by tem times to Rs 300 crore over the next 5 years. He wanted his company to be recognized as the number one player in its area by far on various parameters. Finance wasn’t a constraint as the company was generating sufficient cash flows with external funding being a viable option as well. The issue lay in getting management talent into a largely unknown company and in motivating them to enough to help generate and manage the incredible growth envisaged by the CEO. The company was now run by young but very bright and talented people. Would it be able to attract and manage executives that would be senior to them in age and experience? What kind of a person should the CEO hire and what should be offered to such a person? Should an external recruiter be hired to find the talent or should perso...

An irate customer sends an email to a startup company “….am disgusted with the quality of your service. I was referred to your company by my friend and I’ve just had the most unhappy time ……” The customer support department does not forward the mail (& others like it) to the executive leadership. Response to the board of directors from a CEO of a VC backed startup “…we’re doing fine. I’m confident we’ll hit and perhaps even exceed this month’s targets…..” Of course, the board didn’t know that the two top customers of the startup were pulling out of contracts with the startup. The CEO knew but was scared to tell the board. Board member writes a letter to the CEO of the company “….you seem to be stressed out lately. Why don’t you get more senior executive help around you to help reduce the pressure?” The CEO replies “…Thanks for your concern. Am doing fine actually. Am wondering if you had any other objective in suggesting that I surround myself with senior executive help?” The CEO w...

Social anthropologists have determined that the impact of a dominant culture on a constrained (either self-imposed or externally imposed or a combination) culture is such that over time the dominant culture so subsumes the other culture leaving it as a poor carbon copy version of itself. Indian culture too has been constrained and inhibited for several generations for reasons of history and bad policy. In the India of the 21st century, there’s rapidly growing self-esteem and great opportunity ahead- critical ingredients for original thinking and innovation. One of the most critical attributes of an entrepreneur’s personality is self-esteem. The desire to achieve, the ambition, confidence, and drive all flow from this core personality trait. People with a manic desire to prove to themselves and to the world that they “can do it” are the ones who can weather storms, deal with crises and plug away at making their aspirations come alive. All great entrepreneurs are people with high self-e...

The Outlook Business edition dated September 20th, 2007 had a coverage on the emerging Onsite catering opportunity and the experience of those already in the game. Some excerpts: Says Vohra (Gurpreet Vohra, CEO of Tulip Caterers): "I serve 20,000 meals a day and the cost of each varies between Rs. 25 and Rs. 50. It is very important to check the price and quality of the raw materials each day. This business is all about high volumes and low margins. Says Asitava Sen, Senior Vice President at Technopak Advisors, a global management consulting firm: "Onsite catering has now become an attractive business proposition. The draws are captive customers, young employees in the payroll, scope for up-gradation of traditional canteen facilities and better economies of scale." Says Sunil Nayak, Radhakrishna Hospitality Services: "It makes sense to invest in onsite business. We make an initial investment of between Rs. 60 Lakh to Rs. 1 Crore and serve a meal for Rs. 50-Rs. 75. W...

N. Sriram interviewed Bob Kondamoori, Founding Managing Director of Sandalwood Partners for the US-IVCA/Venture Intelligence quarterly report . Some extracts: What differentiates Sandalwood Partners from other VCs? We are focusing on early stage investments. Most of the VCs we see here are doing later stage investments where valuations are very rich and competition fierce. We are looking at investing in companies at product development stage so that we can help them tune the product to the world market. Secondly, we are also more product-centric than service-centric. We are not going after IT Services companies or BPOs. Are you looking at India and China together as one block for investments? We are really India-centric. But since we are product-centric company and one of our partners is in China, we look at China for support in manufacturing, until Indian manufacturing takes off. What are the revenue requirements for a company to seek support from you? Out first investment was based...

Fred Wilson has an obviously popular post arguing why it is it’s "rubbish" for VCs to put forth the usual argument that "in order to compensate a venture firm for all the time and energy they are going to put into a particular investment, they need to own at least 20% of the company and ideally 30%". I have made vastly more money on companies where our firm owned 15% than on companies where our firm owned 20% or more. To some extent the desire to own large chunks of companies is related to the size of the funds that many venture firms manage. A $120 million position in a recently IPO'd company might not be that interesting to a fund that is managing billions of dollars of investor's capital. But it sure is interesting to me. One of the things we are doing in the venture capital business by raising ever larger fund sizes and amassing larger pools of capital under management is creating problems and then making them the entrepreneur's problem. And so we t...

A friend narrated this to me this morning. He was on a business trip to Taiwan and bumped into a colleague from a much larger division of the same company at Taipei airport. After exchanging some chit-chat, the colleague told my friend that he was likely to be now based out of Taipei as it was an important part of the division’s “China strategy”. On further enquiry it transpired that instead of long distance phone calls and faxes and emails to Taiwanese vendors and partners from Bangalore, he would now be able to visit them and make local phone calls and send local faxes and email! Ostensibly, this would result in enhanced relationships leading to furtherance of the division’s “China strategy”. One of the banes of our times has been the gross trivialization of word meanings. Words like “innovation” and “strategy” have been almost trivialized into banality - almost every trivial act of improvement or approach is either an innovation or a strategy. There’s this almost manic desire to bei...

Last week I had two very different experiences while visiting two well known global companies. Experiences that made an impact on me and experiences that every startup company can learn from. I arrived at the fist company a little before my 10am appointment and walked into the reception area. There was pandemonium there with a large number of visitors huddled around the reception desk. The long desk in turn was “manned” by about 6 or 7 smartly dressed men and women and had 3-4 computers on it. I mentioned the name of the person I’d come to visit to one of these persons and I received a blank stare. I repeated the name and was asked if I had the extension number of the person. I did not. I repeated the name again as well as the designation of the person. Finally, the name and a mobile number was located. The mobile number turned out to be an old one. The staff were running around without any clue as to who my host was. The cell phone number I had for the person didn’t work either. I was...

It is often said that in India, as in some other Asian countries, entrepreneurs tend to be extremely control oriented, tend to be very focused on retaining generational ownership of the company, and view investors as necessary evils and not as partners in creating value. Investors usually tend to be viewed as lenders or project financiers and generally receive the same callous treatment as did banks of yore. However, as more and more private equity capital (including venture capital) flows into companies to satisfy the entrepreneurial aspirations of globalization, scale, and market value, the realization that good governance, transparency, investing in business growth and professional management lead to value creation has gained strong currency. For startups therefore it is important to appreciate the role of investors as stakeholders and partners in the creation of a successful and valuable business. And part of the appreciation should manifest itself in the realization that investo...

In a posting on the rising popularity of VC Rating site thefunded.com , Jeff Bussgang explains why. Why are VCs often arrogant? Is that what they teach us at VC breeding schools? I think some of it is just the nature of the business. As I mentioned in my post “Dr. Seuss and The Land of No”, VCs have the job of saying “no” hundreds of times for every “yes” that they fund. To be efficient, they are trained to say “no” quickly and not waste time on projects they simply don’t like or don’t believe in. Whether you believe in a project or not is such a subjective standard, that it can always be open for debate and argument. But VCs can’t afford to have debates and arguments about projects they don’t like, they must quickly, unemotionally move on to the next one. Entrepreneurs, on the other hand, are emotionally attached to their projects and wired to believe that what they are working on is the absolute best thing going on – after all, they chose to work on it at the expense of every ...

Extracts from the press release: TiE-ISB Connect is back with its highly successful business plan competition. Entrepreneurs are invited to submit a maximum of 5 page abstract of their business idea to TiE-ISB Connect Committee to qualify for an elevator pitch with leading Venture Capitalists in November. Applications for the 2007 business plan competition are available at www.tie-isbconnect.com . The last date for submission of Business Plans is 31st August 2007 . The competition is designed to encourage entrepreneurs in the creation, start-up and early-growth stages of businesses. Participants have a chance to win face to face interaction with leading VCs and Business Leaders for finding capital and strike business alliances that will help them launch and grow their businesses. The TiE-ISB Connect '07 conference, organized by the TiE-Hyderabad Chapter and the Wadhwani Centre for Entrepreneurship Development at ISB , will be held at the ISB Campus on November 14-16, 2007. Arun N...

Venture Intelligence featured an interview with Vijay Shekhar Sharma, Founder & Managing Director of One97 Communications as part of the July issue of the US-IVCA / Venture Intelligence India VC report . One97 is one of the pioneering start-ups in the Indian Mobile VAS space and recently raised its first round of funding led by SAIF Partners. Some extracts from the interview: VI: How were you funding the company until now? VSS: We were the first company to put a revenue sharing model in place with operators. That gave us recurring revenue and made the company cash positive. VI: What were your challenges in fund raising? VSS: Two challenges: first, deciding on the network the fund could provide and second, the kind of size commitment they can make for future investments. A third factor was the comfort with the VC: what kind of team it was, the chemistry between team members, the kind of person who will come onto our board. The VC on the board becomes your everyday business part...

Fred Wilson has a nice post , based on his experience with three of his investee companies, on how start-ups often take several years to fulfil their potential. Time works for you if you have the patience to stay focused on the opportunity in front of you, if you have the tenacity to work through the inevitable hurdles you’ll face, and if you have the right kind of financial backers. Time allows you to recover from misteps, to build a team, to generate revenues, and even earnings. And when you've done all that, you'll have the wearwithal to choose when and how you want to exit from the business because you'll be selling a business instead of a team or a product or a feature. So, if you are starting a company, prepare for a marathon, not a sprint. Take a deep breath. Commit yourself to the long haul. Let time work for you. Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Ven...

Businessfund.com has a post on the "Top 25 Alternatives To Venture Capital". Venture capital is not for everybody. For starters, venture capitalists tend to be very picky about where they invest. They are looking for something to dump a lot of money into (usually no less than $1 million) that will pour even more money right back at them in a short amount of time (typically 3-7 years). You may be planning for a steady growth rate as opposed to the booming, overnight success that venture capitalists tend to gravitate toward. You may not be able to turn around as large of a profit as they are looking for in quick enough time. You may not need the amount of money that they offer or your business may simply not be big enough. Simply put, venture capital is not the right fit for your business and there are plenty of other options available when it comes to finding capital. Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and netw...

Deepak Shenoy has put up a very useful post on the process of starting a private limited company in India - with a specific focus on creating a company that plans to have external investors. He also links to a World Bank resource - doingbusiness.org - that summarizes the procedures and costs associated with setting up a business in various parts of the world. Here are the Bangalore and Chennai pages. Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.

The 23rd July edition of Business World has a piece by Rashmi Bansal that showcases the various startups that MBAs of top B-schools of India are promoting. A few excerpts: ....Prakash Mundhra is enjoying giving them a high. His company, Sacred Moments, makes ‘puja kits’ for Diwali, an idea he conceived as a student at Symbiosis Centre for Management and Human Resource Development (SCMHRD) in Pune. “My marketing professor, Shivram Apte, rejected the idea totally,” says Mundhra. “We had long arguments — he didn’t think there was a market for it.” Prof. Apte was wrong. In its first Diwali season — October 2006 — Sacred Moments sold more than 10,000 puja kits and achieved a turnover of Rs 35 lakh. “I took a risk,” grins Prakash. “But it has worked out.” ....... Yet, he was in a dilemma. He went through the placement process and accepted an offer from ICICI Prudential. “In the meantime, I entered six business plan contests and won five,” he says. “I became more and more convinced about my i...

Early last year, I met a startup team that was building the next great mobile application. They had built a system that could offer mobile social networking to end consumers. The team had great technologists including a few successful entrepreneurs among them. They were convinced that their system would be the next great thing for consumers; they were supremely confident (bordering on overconfidence) about the uniqueness of their offering. This company was trying to build a company focused on the end-consumer as their customer. This meant that they had to build a brand, build a system that would be ridiculously easy for consumers to use, have a mechanism that would keep attracting people back to them, and figure out a way to make money. Of course, companies like Google and MySpace were their role models. The team had enormous expertise in building and running systems for businesses, selling and marketing to businesses and supporting business customers. They however had no experience in...