The Startup Journey

I recently met a senior executive with a MNC who was contemplating leaving to either start his own company or join a startup. He has over 25years experience, is a respected and recognized technologist with several published articles and books to his credit; he has built several solid technical teams in his various avatars through the years. He had also started his own technology company about 10years ago. The company had to shut down after 2.5 yrs. “I took the decision to shut down the company after a meeting with an official of the Provident Fund authority. The company had not remitted PF on account of its employees though it was making some revenues. I was using cash-inflows to part pay salaries to employees that took care of the immediate situation than to worry about a future pay-out like PF. These employees had been with me at little or no salary for close to 18 months and I just couldn’t let that situation continue. However, the official made me aware of the serious consequences ...

We are delighted to announce a stellar list of speakers for APEX '11, the annual conclave of the Indian Private Equity / Venture Capital industry, scheduled for February 9-10 at Mumbai. Apex'11 Awards (evening of Feb.9) Special Guest: Gurcharan Das, Noted Author and Former-CEO of P&G India P.R. Srinivasan, CEO, Exponentia Capital A.K.Purwar, Chairman, IndiaVenture Vinod Dham, Managing Director, IndoUS Ventures Paresh Vaish, Managing Director, Alvarez & Marsal India Apex'11 Summit (Day long on Feb.10) Private Equity: The Road Ahead Raja Kumar, Founder & CEO, Ascent Capital Alok Gupta, Managing Director - India, Headland Capital K Srinivas, Managing Partner, BTS India* Al Lakhani, Managing Director, Alvarez & Marsal India Vishal Gandhi, Partner, Gandhi & Associates Anu Parthasarathy, CEO, Global Executive Talent Cleantech Panel Dr. Vivek Tandon, Co-Founder, Aloe Private Equity Inderpreet Wadhwa, CEO, Azure Power Vinod Kala, Managing Director, Emergent Ven...

The meeting ended with a list of “to-dos” for each of the startup team members. Everyone appeared charged and excited. Yet one of the members appeared less enthusiastic. Upon having a discussion with him, he said that he had the longest list of to-dos, with almost 15 specific items! More importantly, he felt that most of them would be a waste of his time as he was sure that executing them wouldn’t really benefit the company. A few weeks later at a follow-up meeting where the status of these to-dos were being reviewed, it transpired that only 2 of the 15 items on this individual’s list had been done and that too only in part. He explained that he hadn’t followed through on the execution of the 13 items as “given my earlier experience (in another company), I was sure they wouldn’t work”; But what of the part execution of the 2? Ah, the completion of those items required inputs from others and since those inputs weren’t forthcoming, the work couldn’t be completed in full. When the individ...

Vishwas Patel of Avenues India, the company best known for its online payment gateway service CcAvenue, has related his entrepreneurial journey in The Rodinhoods . Learnings from IT: 1) An average Indian businessman doesn't understand technology; he wants technology to understand his business and do wonders. The businessman just wants a simple, idiot proof solution that saves him time, effort and money. 2) Business is like an inverted triangle. You start from a small dot at the bottom and as you grow your business upwards, the opportunities keep on increasing. This is because you get experience, knowledge, access to funds etc., thats why you find the Ambanis, Tatas, Birlas, Mahindras. etc dabbling in all kinds of diverse businesses (Oil, telecoms, Insurance etc.) and are mostly successful in all their ventures. They build huge capital intensive scalable businesses that it becomes difficult to beat them on price and the way they scale their businesses in double quick time. Now if y...

The CEO had been in conversation with several potential senior hires for his startup. At least 3 recruitment firms were on the job for him. Somehow the “right” candidate hadn’t yet crossed his radar. He was getting, quite naturally, frustrated. If a candidate had the right experience, he didn’t have the right attitude. If another had the right attitude, then the competency was deemed inadequate. If both attitude and competency seemed right, compensation became a stumbling block! Most companies, and especially, startups have an immensely challenging time finding the right talent. India has a large number of people, but a small number of appropriately qualified people. “Qualified” not by way of being able to brandish a degree, but in terms of having the right mix of experience, competencies, skills and attitude. Given that the India growth story is just unfolding across multiple sectors of the economy, it is natural that a critical mass of trained and experienced manpower has yet to emer...

Jason Baptist has an post listing the reasons why some entrepreneurs find it "surprisingly" easy to raise VC funding. There are often fundraising announcements that bewilder entrepreneurs or even plant the seed that “Oh, they raised a ton of money just like that, holy shit, I can too!” Sadly, this is often not the case as there are a good list of reasons why they raised money. These reasons are beyond the usual Brilliant team in a huge market with a killer product. These reasons also apply primarily to the angel round to initial Series A round. If made public, the valuations may also be fairly high. Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. Click Here to learn about Venture Intelligence products that help entrepreneurs reach out effectively to the investing community.

(Reproduced from Alok's blog at http://rodinhood.com/ ) Act 1 – Scene 1 We had established a 30 odd headcount office in Shanghai in early 2001 and were steadily ramping up our operations as Mobile2win, China. Contests2win and Softbank were the original investors and we were operating under strict Mainland China’s government’s guidelines. As the paperwork increased, we began looking around to hire secretarial staff. As soon as we had spread the word, we intriguingly began receiving resumes of many women – all in their twenties, married and well settled. One afternoon, one of our rather talkative and assertive Sales Head took me in confidence and revealed something quite chilling – He said that all those women who had applied were actually pregnant and were applying for jobs, that they could lock into and then claim maternity benefits as per the dictated statutory guidelines. This was a standard ploy of gaining ‘free employment’ and we should be avoid falling into such traps. ...

In the backdrop of the umpteen scandals that’re making news nowadays and when it appears that integrity, principles and ethical behaviour are but quaint niceties from a bygone era, this tale of an entrepreneur’s dilemma is worth telling and discussing because it offers hope especially to us in India. After completing a hard day’s work, our entrepreneur boarded an evening train at Hyderabad en route to Pune. As is the case, the Travelling Ticket Examiner (TTE) showed up sometime later that evening in the compartment. Our entrepreneur handed over this e-ticket and upon being asked for his ID, handed over a photocopy of his driving license. He wasn’t carrying the original. The photocopy wasn’t acceptable and the original was demanded. Our entrepreneur pleaded with the TTE to accept the photocopy but the TTE was unmoved. There were a few others traveling without tickets. The TTE summoned our entrepreneur and the ticket less travelers to the pantry car to discuss their case. In the confines...

Alok Kejriwal has a colorful post exhorting entrepreneurs to have the courage to say ‘Jump’ to anything/anyone that that puts them in a corner in their entrepreneurial journey. Employees, Colleagues, Clients and Co-Partners. All of them have individual aspirations. They partner with you since their vision and yours is the same. However, things change and that’s when you have to be unyielding in your conviction as well as in your beliefs. In each appraisal cycle, we face challenges, when our co-workers expect larger than affordable salaries. You have to have the courage to take the risk of losing them rather than ruining your business. Most of the times when you recommend your colleagues to quit and move on, they stay back. Clients always test the limit to which you will bend, negotiate and yield and will pretend to not be interested in your proposal. But when when you really walk away, trust me, they will come back running. Arun Natarajan is the Founder & CEO of Venture Intelligen...

Vikram of Tenmiles has a nice post on the topic. Extracts (emphasis mine): 6. Do your best to stay within the window of opportunity From the time a customer expresses his/her interest in your product (either via the web or by signing up for a free trial), you can rest assured of swinging a deal in your favor IF you’re able to make a convincing pitch within the critical window of opportunity. By visiting your website and signing up for a trial, your customer has clearly indicated he/she is interested in your product. The next and crucial step is to sustain the customer’s interest level, before it begins to waiver. This typically happens when customer’s are evaluating multiple products or are just unable to see how your product responds to their needs. The difficult part here is establishing how long the window of opportunity is open for, so do your best to seal the customer’s interest right from the beginning. ...8. Always remember to follow through Responses to expressions of interes...

First published in Financial Express. Reproduced with the author's permission. Some time ago, I met with a young entrepreneurial team that had started an e-commerce company. They seemed very excited and gung-ho with the prospects of their company. But there didn’t seem to be any differentiation in their product offering vis-à-vis the many others who too, according to me, were dispensing similar, if not, identical e-commerce services. I therefore asked about their differentiation. I was told that they had not just an online service but also a physical, telephone enabled and mobile versions of their service. The conversation reminded me of my days as a computer salesman in the mid 1980s. In those early days, vendors and customers were both equally knowledgeable or ignorant (depending on how you look at it!) and the IT revolution was yet to take off. Personal computer sales would take place based on features – kind of monitor, size of the monitor, kind of keyboard, number of keys on...

This article originally appeared in the Financial Express. Reproduced with the author's permission. The CEO naturally looked downcast as he pondered the imminent shutting down of his company which had a well known brand and enjoyed a reputation as a maker of high quality, well designed products. The management team seemed energetic and enthusiastic. Yet why had things had come to such a pass? “I think we had too much easy money,” said the CEO. I asked him to explain what he meant. “When we started the company, the team, the concept, the business model and the market opportunity were all very attractive to investors who, flush with capital from freshly raised funds, were eager to make investments. Given this interest, we raised funds at a very attractive valuation in less than 45 days and without having to answer too many questions. We believed we were unstoppable. We set up a great office in a not inexpensive part of town, created a very informal and casual culture with flexi-time...

Catalyzed by new government policies favouring Solar Energy and multiple demand-driven opportunities for water-related companies, Private Equity & Venture Capital firms are focusing keenly on these Cleantech sectors, reveals a new report from research firm Venture Intelligence. Private Equity and Venture Capital surveyed recently by Venture Intelligence, a leading research firm focused on Private Equity and M&A deal activity, selected chose Water & Wastewater Engineering, Energy Efficiency, Waste Management & Recycling, Energy Infrastructure, Pollution Control and Cleantech in Manufacturing/Industrial Environments as among their favourite sectors within the industry. The survey results are published in the in the newly released report from Venture Intelligence titled “Private Equity Pulse on Cleantech”. In addition, expert articles by both PE/VC investors and advisory firms in the report, point to rising investor interest in solar energy. Citing how the accelerated dep...

A German-Croatian friend narrated this incident earlier this morning. On a recent trip to India and upon checking into his hotel (a grand and most well known Indian hotel around the world), he tweeted “checked in and am now at the restaurant waiting for my chicken biryani.” A few hours later, he got a message from the hotel not only enquiring about his experience with the chicken biryani but also informing him (via a message on Facebook) about the various restaurants at the hotel, the chefs and their particular specialities. Needless to say, he was completely floored. The hotel was tracking the responses and explicit experiences of its guests, almost in real time, and making serious efforts to reach out to its guests making the most of new technologies. And this hotel is part of a century plus old staid corporate group. Contrast this with another experience. Some years ago, I had a series of horrible experiences (including being let into a room late at night that was already occupie...

Originally published in the WSJ Blog. Reproduced with author's permission. Early stage venture capital investing in India appears to be the flavour of season. There are funds being set up from $5m to $30m in size. Some are proposed to be set up by angel investors, some by former executives and investment bankers while others by successful entrepreneurs. Some are likely to be supported by government linked institutions, some by international investors and high net worth individuals. I recently had occasion to meet with some fund managers of these proposed funds. Clearly, they had done their homework: on the state of the Indian private equity and VC market, the various participants had been mapped out, the state of the Indian economy, the performance of existing venture backed companies, the valuations, the exit opportunities, the pluses and minuses of existing funds had all been analysed and the inevitable gaps/spaces/blue oceans (choose your favourite jargon!) had been identified. ...

This article appeared originally in The Financial Express July 2010 Issue. Reproduced with permission from the author. The long and detailed presentations were going well. The young CEO was passionately outlining the company’s plans to the board. The rest of the management team was also present and there were several interjections and contributions by them on their functional areas and areas of expertise: Process improvements, employee training and retention, product design, engineering, customer support were earnestly discussed. Terms like efficiency, productivity and growth rates were thrown around. Everything seemed to be going as well as possible till someone asked “All this is fine, but where’s the customer in all of this?” None of the presentations talked of how the customer would be better served by the elaborate discussions on processes and systems. All too often, companies become obsessed with themselves and become inward looking. Are the planned proc...

This article appeared originally in The Wall Street Journal May 2010 Issue. Reproduced with permission from the author. A recent news report ( http://bit.ly/cjChhM ) indicates that the Government is keen on allowing 74% Foreign Direct Investment (FDI) in defence production to enable technology transfer and the bringing in of funds. Let us take a look at some data. India’s defence budget for 2010-11 is over $30billion; India is currently the 2nd largest arms importer (2005-09) behind China. However, according to the SIPRI report, China is well on its way to becoming self-reliant and saw its imports decline to $0.6billion in 2009 from $3.5billion in 2005. During the same period, India increased its defence imports from $1.04billion to $2.1billion. India’s defence imports are currently estimated to be over $8billion. The role of the Indian entrepreneur, thus far, in catering to this huge market is less than negligible. Isn’t there therefore a terrific case for catalyzing entrepreneurship ...

This article appeared originally in The Wall Street Journal. Reproduced with permission from the author. There’s an exercise I sometimes ask students, especially those in business school, to do. On a blank piece of paper, the size of a business card, I ask each of them to first write their name and then their “dream title” in their “dream company” that they’d like to see themselves in. Being business school students, it is no surprise that “Chairman,” “Managing Partner” and “CEO” is the typical dream title they’ve ascribed to themselves in their dream companies, usually the globally most well recognized companies from the worlds of consulting, investment banking and investments. This exercise is usually completed in under a minute. They’re then each asked to turn the paper around and again, write their name on it. This time however, there is no “dream company”. They simply have to give themselves a title, one that describes them to another person. Now this suddenly takes time to comple...

At Venture Intelligence, we recently had a great experience interviewing Hemu Ramaiah, founder of the Landmark bookstore chain (in which the Tatas acquired a majority stake in 2005). For me, the interview (which is part our Entrepreneur Podcast series "Entrevista") served as a confirmation that a customer facing role is the best start to an entrepreneurial career. Other key takeaways from the podcast: * “Make Your Own Mistakes” o Trust Your Gut (based on your understanding of customer needs) o “Don’t let Accountants take over your business” o Examples: Deciding to get software designed by a start-up firm (which made the effort to understand her requirements better), deciding not to charge extra for courier delivery for Internet orders, deciding to buy (rather than rent) space for the stores, etc. * Importance of Growing the Market vs. worrying overly about competition o Amazing story of how she decides overnight to start supplying books to he...

This article appeared originally in Businessworld. Reproduced with permission from the author. A conversation I had late last year with a leading investment banker was telling as it testified to the rise of entrepreneurs from middle India –the India that lives in Tier 2 and Tier 3 towns inhabited by close to 70% of middle class India. He said, “We’re seeing an increasing number of deals outside the metros and we believe growth will come from those places. We’re therefore looking to hire people who can speak local languages fluently, have relationships in smaller towns, aren’t averse to traveling by train and bus and staying in non-5 star hotels!’ He was making an important point – wearing branded suits, speaking in clipped accents and doing business in the lobbies and coffee shops of 5-star hotels in metro India wasn’t where all the action was going to be! India’s secular growth trajectory is being propelled more by domestic consumption than by anything else. In turn, domestic consumpt...