Category Archives: India

Funding, India, Other

Reverse Pitch 22nd Mar, Fri in Delhi, where Investors pitch entrepreneurs

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If you are an entrepreneur, you know how difficult it is to keep refining your pitch and answer difficult questions about your market, differentiation, target customer, etc.

Now you get to play jury and judge, in Delhi, to investors both seed and VC.

After 3 successful editions of the Reverse pitch, in Bangalore and other locations, we are now bringing it to the NCR region.

The structure of the event would be 5 minutes demo/pitch by investors and 5 minutes Q&A. The pitch would include Operational Experience, Ticket Size, Sectors, Investment Thesis and Portfolio. The pitch sessions will be followed by networking with investors.
Date: Friday, 22nd March 
Time: 3:00p to 7:00p
Venue: 91springboard, B-1/H-3A, Basement, Mohan Cooperative Industrial Estate, Mathura Road, New Delhi – 110 044, India.
 
Please feel free to reach out to Apurv if you have any questions. You can reach him at (+91) 88006 04703. 

 

Confirmed investors include Saif partners, Lightspeed, Seedfund, Microsoft Accelerator, IAN, Blume, Helion and the Hatch.

India, Mentors

You think you are good at something only to find out you are not

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There are a ton of people who have written about lack of quality mentorship as one of the main problems in the early stages at Indian startups. In fact, many accelerators and incubators are primarily focused on space and mentorship as the primary offerings as part of their portfolio of services.

Personally over the last 4 years in India, I have helped (I am going to avoid using the word mentor) over 50 entrepreneurs at a superficial level (day long or 2 days of my time) and 6-8 of them to a greater degree with monthly sessions on sales and go to market. Of those entrepreneurs, I financial backed only 6 of them, meaning I funded only 6 companies who needed my money and mentorship. The others I only provided my guidance.

All along, I have heard from the entrepreneurs that I was adding value and addressing their top 3 areas of concern – How to build a go to market plan, how to build a strong sales discipline at their company and helping them by opening doors to key people they wanted connections to. Turns out they were possibly being nice, to me at best.

So I generated a false sense of confidence in being good at something I was not.

I got a hard reality check a few days ago.

Over the last few months I have been helping many entrepreneurs on these exact areas, but without actually putting money in their company.

For most of them, I invested an enormous amount of time (many of them weekly) to help them understand their customers, go to market strategy and for some I helped with a complete re-positioning toward a large adjacent market. For others it was guiding them through funding options, calling a few investors who could be interested etc.

Turns out most of them (not all) only valued advice if they got funded. Else it was “gyan”.

In fact one of them mentioned that they whole point of working with me was to gain access to funding alone. Everything else was gravy.

I have written about this before based on my experience a few weeks ago.

You think you are good at something, only to find out, maybe you were wrong all along.

So, I called and asked a few entrepreneurs who they consider as high quality mentors in India. Surprisingly, only those folks that wrote checks figured on the list for many (again, not all) of them.

Rest were considered as folks who did not have “skin in the game” to help mentor, so they were detached from the outcome or the results of their advice.

There still is a need for high quality mentorship in India is my belief. I am not sure I belong in the high quality category though.

India, Research

A meetup of Indian accelerators

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I had mentioned a few weeks ago that we at Microsoft are putting together a meetup of the top accelerators in India so we can all learn from each other and help each other get better to help the entrepreneur community. Here are more details.

The meetup is going to be held on Feb 1st at the Accelerator and the agenda is driven by the accelerators themselves. It is a closed door event with only invited guests participating and a few members from the VC and entrepreneur community. They are there primarily to help us all learn how we can serve entrepreneurs better.

If you run an accelerator and want to be invited, please drop me an email. There are 40+ people attending from all over India. It will be a day long event with moderated sessions. It is free to anyone that’s running an accelerator or incubator.

Be a force of good.

India, Marketing, Mobile, Research, Tips

The 99-0.9-0.1 rule for Indian Startups

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Jakob Nielsen is given credit for the 90-9-1 rule of Internet participation.

The “90–9–1” version of this rule states that 1% of people create content, 9% edit or modify that content, and 90% view the content without contributing.

In the last 6 months, I have gotten 21 Indian web and mobile consumer applications data on visitors, engagement and contribution.

In India the numbers are closer to the 99%, 0.9% and 0.1% in terms of lurkers, participants and contributors of any consumer application.

This explains a lot of things, including the 2-speed nature of Indian market adoption.

Its not that we don’t have early adopters, its that most people (99%) are really laggard adopters.

The difference between 1% and 0.1% is dramatic for startups who need the early contributors to get the community going.

To give you an example. Lets take a mobile application which has 3 competitors in India. Each of the 3 products has been in the market for about 6 months and still they total about 140K total downloads.

In the 1% scenario they would total 1.4 Million downloads. This assumes 140M total Internet users for both mobile and web. In reality there are only about 50-80 Million real broadband users.

Is it cultural? I have heard many folks blame (yet again) our Indian culture & education system which values listening to others than voicing our opinions. I don’t quite agree with that though.

I don’t know why exactly we have only 0.1% of people contributing.

This however has dramatic implications for “traction” among startups.

If you are going to show traction and have between 20K to 50K users or downloads, then you should realize that the 99, 0.9 and 0.1 % rule applies again to your users.

Only 0.1% of those who download will actually be contributors (such as check-in to locations if you are Location based service).

So the engagement metrics will be consistent but woefully low compared to what our US counterparts are seeing.

Traction among Indian consumer startups is not really “traction” in other markets.

P.S. I am still trying to see if this is the same for ecommerce startups. I am hesitant to think it will be the same, but among new and smaller (lesser known) ecommerce companies, these numbers are in the range. However, among established companies, the US engagement (or purchase) numbers are probably more valid.

Funding, India

What’s getting funded by Indian seed investors? Winter 2012 edition

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I am going to write some quick posts each quarter (let me know in the comments if it needs to be more frequent) on the patterns I am noticing on companies / ideas getting funded in the seed stage. These are particular to India, and are based on a) interactions with entrepreneurs b) discussions with investors (angels, angel networks and seed stage investors) and c) database of investments from all types of companies.

How can you use it? My first reaction is ignore it.

Businesses are built not with financing alone, but with passionate entrepreneurs and eager customers.

Then why am I writing it you ask?

This might help you position your company differently with investors if you are seeking funding. The same company focused on a B2B market vs. B2C market comes out looking dramatically different even though the core “idea” might be the same. If you are a company that’s in the “not getting funded right now” list, take heart, sometimes it may be good to swim against the tide.

So here’s what getting funded or moved along in the funding stages with investors.

1. SaaS companies focused on marketing & targeting the US market. The mega trend is Marketing automation is going to be a large market.

2. Payments & payment enablers that help reduce costs for eCommerce companies in India. The mega trend is reducing costs for over 60+ eCommerce companies that have been funded over the last 3 years.

3. Software companies that build apps to help consumers take control of their health. The mega trend is the slow ageing population the world over and especially the unhealthy lifestyles creeping into India as well.

So whats taking longer to get funding or getting passed quickly?

1. eCommerce companies for physical delivery of products or niche eCommerce companies. Most (or all) are running into strong headwinds in trying to raise their Series B.

2. Consumer Internet companies focused on the India market with limited downloads or traction.

3. All kinds of education software companies – there’s a general pause I hear from investors since they are trying to figure out where in the value chain of education will there be money made.

P.S. I would love to name companies as examples for each, but I get so much hate mail from company founders I have funded myself on why they dont want the “unwanted” attention to their companies or their fund raising efforts.

Entrepreneurship, India, Marketing, Sales

Always be an individual contributor as well

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Most of the entrepreneurs I meet and share thoughts with, tend not to be engineers. Or at least not practicing developers, marketers, sales people or business development individuals. This is consistent with the anatomy of the Indian technology entrepreneur, who is typically male, between the ages of 29 and 40, has about 2-10+ years of experience and had been an individual contributor “several years ago”.

I read the quotes by multiple folks in the piece shelf life of an engineer in technology . They consistent theme is one of constant learning, which most of us are probably aware of. Ignore the age bias that’s blatantly obvious in the piece for a few minutes, which is what most of the 250+ comments are focused on.

Two things stand out: (1) Ferose’s quote on “I can’t be just a manager, I have to be technically hands-on.” and

Ravi ” In the first five years, the employee is a technical contributor. In the next five, he or she moves on to become a team leader or an architect , understanding the P&L (profit & loss) requirements of the company. Subsequently , the employee takes on much stronger leadership responsibilities”.

From what I have learned, there’ no choice but for every level of individual to be “hands-on” and play the role of an individual contributor as well at a startup.

If you are an engineer, you cant just be focused on hiring and managing your engineering team (however small or large it is). You have to pick up a few pieces of the puzzle and solve them yourself. Which might mean deploying, developing and shipping parts of your software.

If you are a marketer, then not copy writing or doing your own SEO, or running your ad campaigns is a disaster in the making.

If you are a sales person, and if you are not doing cold calls or opening new doors to customers each week, you will find it extremely hard to direct and motivate the team.

Most founders who come from larger companies have not been been doing any individual contributor roles for several years. So the reorientation is very hard on them. They find it hard to do things they did a few years ago and since in most every area the specifics have changed so dramatically over the last few years, the adjustments are hard.

The best way to do this is to keep 30% of your time each week to have a personal accomplishment.

What I have found is the the FIRST thing I do each Monday on my weekly to-do list is to identify one deliverable that I will work on to complete without anyone else’s help.

Over the last few weeks  it was working on website copy and mockups for the new design. Over the next few weeks it is cold calling multiple prospects for making some inroads for a few of our startups. The weeks of Dec 15-30 is mostly going to be spent on writing new pieces of our Borg’s UI using Twitter bootstrap (which is surprisingly easy to pickup).

So on your quest to be a leader and entrepreneur dont forget to be a doer as well.

Community, India, Learning

What makes a great conference? Thoughts on NASSCOM product conclave

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Fresh from the recently concluded NASSCOM product conclave, I was giving some thought to what makes a great conference. Having been at many over the years both at the US and India, there’s just one word that differentiates the approach and type of conference.

Production.

American conferences are produced.

Indian conferences (and events) are curated.

What is production?

The ability to define a delegate, speaker and sponsor experience that seeks to maximize the benefit to them all by defining a purpose of how they should feel post the event.

What is curation?

Putting together good content with great speakers, having enough attendees that are interested in the topic with sponsors that are willing to pay for their logo to be attached to the event.

NPC 2012 was a good event by most measures. Top notch ratings for over 50% of the session (80%+ Net promoter score), great camaraderie and networking and finally a packed set of sessions that were curated by a dedicated set of volunteers.

We need more produced events.

1. Production means getting speakers to have rehearsals before the event. If Steve Jobs can rehearse a presentation, everyone else can. No exceptions.

No rehearsals means people that take 45 minutes when they were allotted 15, non-engaging & dry content.

2. Production means understanding & setting aside enough time for both ad hoc and managed networking and fostering a “we’re all in this together” feeling.

No networking focus means many people trying to get some time with key speakers after and before the event, only to find that they (speakers) had allocated only 2 hours to be at the event.

3. Production means ensuring sponsors are actively adding value by looking to build content and engaging demos which benefits the attendees.

No engaging experiences means a 2 minute ad at the beginning of the event that 90% of people forget after day 1 of the session.

I think we need production quality experience so people feel wowed, get energized, learn lots, network to grow their business. Here’s looking forward to more produced events in India.

India, Learning

Why me? Or why every Indian startup founder thinks they are the only ones with “bad luck”?

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Its very hard to explain to an entrepreneur why another company got funded and they did not.

Or why they might not, even though they have “many boxes checked”.

It might seem fairly random. Correction – it is probably fairly random.

Raise your hand if you have read a techcrunch post that mentions a startup that raised an obscene amount of money and after reading the post 3 times you are still not sure why they got that much money?

Raise your other hand if you have read about a startup in the US Silicon Valley that is working on “pretty much” the “same idea” as your company is and you are schlepping code for 18 months and they have 45K daily users in less than 6 months (and funding to boot).

Now clap both your hands above your head. <Whatever>.

Most Indian entrepreneurs (in the technology space) consider themselves fairly unlucky.

They are baffled that Indian angel investors ask for revenue and monetization plans when the company is 3-6 months old.

The only comfort I have to offer is that its the same deal outside the valley.

Ask the Boston entrepreneur, or the New York entrepreneur. They also claim that companies there “suffocate” because the local investor ecosystem is fairly risk averse.

The second piece of knowledge I will share is that for every techcrunch post that mentions a funding for a startup, there are at least 25 failed funding stories that do not get published in the same space and general “idea”.

What then separates the funded versus the ones that did not get funded?

This is the point in the discussion when the entrepreneur blames their “luck”.

There are a few things I’d say that are easy to spot among the funded companies versus ones that dont get funding in the same “space”.

1. They usually tell a story dramatically different from that mentioned on TechCrunch or Pluggd.In or any other startup blog. The story the media publishes about dropbox is file sync across multiple devices. The story the VC’s bought is document virtualization.

“That’s just positioning” is your claim. I agree. It is. Storytelling is an art. Learn it well.

2. The founders are very credible, have a lot of background in the space and understand their customers / users very well.

3. They product shows the most amount of traction in the shortest period of time.

Thanks to angel list you can now target and get funded by Silicon Valley investors in India. If you have the same 3 elements – credibility, a great story and traction, you dont need to depend on luck any more.

Angel investing, Entrepreneurship, India

One person can change the world – How Dave McClure being in US is disrupting Indian early stage investing

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Last week over dinner with 4 top Venture Capitalists in India, the thoughts turned to early stage funding in India. As most entrepreneurs will tell you, seed stage investments in India are hit or miss. Entrepreneurs struggle to get angel and seed stage investors to move quickly. Most AA rounds take 3-4 months to close. Early stage (Series A) takes 6 months. There are angel networks that take longer.

I have been privy to several discussions that entrepreneurs have with their investors and its hard to help them close faster because many Indian angel networks and investors believe they want risk-free investments.

That all is about to change to a large extent.

The VC’s initially told me they were thrilled Dave was making these $50-$100K bets in Indian companies, since it gives them a bigger pool of good startups to fund.

Little do they know that most of the Indian entrepreneurs have different ideas.

Over the last week 500 has announced over 10 investments in the India (in less than 6 months), have hired Pankaj Jain full time to invest in Indian entrepreneurs and have publicly declared their intent to invest in 50 startups in 2013.

Just so we can all understand the magnitude of this commitment:

In all of 2011 angel and early stage investments went to 52 companies in India in the technology sector.

500 will match that in less than 1 year and will possibly do more than all other “angel networks” and individual angel investors in India – COMBINED.

I have talked to all the 19 company founders, who have received money from 500, yCombinator, TechStars, Startup Chile.

They have no intent to come to Indian VC’s to raise their series A.

They have access to US investors who move quickly, respect their time and are willing to make decisions with very little information.

Does that mean Indian VC’s are done for?

No.

It means a big chunk of the best and brightest who want to build global, scale-ready and capital efficient companies in Cloud, SaaS, Mobile and consumer Internet will go abroad and get money from investors in the US.

And Boom – just like that, Dave, Paul and Pankaj have changed the equation for Indian startups.

Sitting largely in the US.

Yes, that Pankaj is in Delhi is not lost on me.

One person can change the world – Believe you can do it and get it done.

Entrepreneurship, India

Should we aim for quantity or quality in Indian startups?

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I had a very good discussion with 2 folks over the last week about the current state of technology entrepreneurship in India. The rough estimates from multiple sources indicate a varied number from 250 (low estimate) to 1000 (high estimate) technology product startups each year in India. Compared to that, the US produces tens of thousands and even Israel beats India by having 3-4 times that number.

There are a few folks in the ecosystem that suggest that we should focus on fewer but better quality startups in the technology space. They have some strong points in their argument which include a) the total amount of funding available in the system will only support 50-100 companies annually b) if more companies were to be started, more will fail, which will deter more folks from becoming entrepreneurs and c) there are not too many experienced entrepreneurs & seasoned executives who can tackle issues of scale yet.

I fall on the other camp and my focus is to get more people to buy into the religion. I agree with the premise that most startups fail and that’s the nature of the beast. That has not changed much (or at all) with the number of accelerators or incubators in the last few years. Startups die for multiple reasons and many of them are not easy to fix.

The main reason I think we should focus on quantity first is so we can increase the pool of risk-takers in India. Entrepreneurs take the most amount of risk in the ecosystem. We need more of them, in fact more than the system can really handle. So how do we address the arguments from the “Quality first” side?

1. Most product entrepreneurs I meet in India (I meet a new batch of 5 EVERY week) dont really want to build a company to exit. They would prefer to build strong profitable companies and run time for a long time. They do need some funding initially when they are ready to test a few of their hypothesis. Many build products that take a few pivots to get right and most operate in markets that take long to mature. So what if the ecosystem can only support 50-100 currently? We should be able to find ways to get the not so successful ones to pick up, dust-off and get on the horse again. The other point I make that we really have a lot of money sitting on the sidelines in India, with a fairly immature angel investment ecosystem. Each week I meet one new person interested in investing in technology companies, usually a technology executive at a large software company like Microsoft, SAP or VMware. They are enough to get our entrepreneurs started and build good companies.

2. If the percentage of startups that succeed is fairly constant, then the argument for more startups is even stronger. If we increase the pool of startups and the failure rate is still a constant, we should get more successful startups. The failure rate has not dramatically increased or decreased over the last 5 years, so if we have 2000 startups and a 99% failure rate we will still have 20 successes vs. 250 startups and 95% failure rate.

3. The best way to have “serial” entrepreneurs is to have more people go through the experience once. Regardless of whether they failed at their first startup, the success rate of a repeat entrepreneur is dramatically higher. They are more experienced, seasoned and more willing to understand the importance of persistence.

I believe that we need more, not less technology startups overall to help our ecosystem grow dramatically.