How to make your Startup attractive to investors?

Introduction

In this Blog, I am going to write about my learning from attending a seminar on the topic “Make your StartUp attractive to Investors” in the Nasscom start-up Centre at Salt Lake, organised by Headstart. Usually, Headstart conducts events at ICCR, opposite American Consulate, but this time, they have changed the venue.

Events Details

Topic:- Make your startup attractive to investors

Speaker:- Maan Singh, Rana Dutta, Abhishek Bajaj, and Dipanjan Purkayastha,

Venue:- NASSCOM startup Warehouse, Salt Lake, Sector V, Kolkata

Timing:- 2 PM to 6 PM

Maan Singh – Deputy VP Bandhan Bank

Mr. Maan Singh is the Deputy VP in Bandhan Bank. He has more than 2-decades of experience in Banking sector. He has worked abroad in countries like USA, Oman, Singapore & Dubai. He has rich experience in understanding policy governance, Credit management, trade finance, and credit appraisal. He is an alumnus of IIM Ahmedabad.

He said that leadership is critical for startup, and You should have a clear vision & strategy.

He advised young Entrepreneur to have a solid team, and always give preference to integrity over skills because skill can be acquired or learned, but integrity cannot.

He said that leaders must build culture, and walk the talk. He quoted CISCO example, where the CEO knows the family of the entire workforce. If any family member of an employee falls sick, then he would call to inquire about their health.

A good leader must have excellent communication skill. He must be able to communicate his vision to all employees and customer.

A good leader must have excellent communication skill. He must be able to communicate his vision to all employees and customer.

Metrics to measure Leadership

• Ability to outline a bold vision and make it happen.
• The Culture – is the priority differentiator for attracting talent and image in the eye of the customer.
• Quality of team.

Challenges to keep in mind

• 70% of Startup fails. Learn to deal with Setback.
• Missing market transition – Nowadays the rate of disruption is very high. A growing Company can become a Great Company, whereas a poor performing company may extinct.

Funding Options to Raise Capital

• Bootstrapped:– It is always advisable to start a business from own savings. As you are not answerable to anyone, nor you have to pay any interest on that money.
• Crowdfunding:- Two or more founder can pool money from their saving and start Business, or they may approach their close family and relatives.
• Angel investing:- This investor comes at the beginning to fund the Business but offers tiny amount for a large chunk of share. It is a high-risk investor.
• Private Equity:- This comes at a later stage of Business, low-risk taker, but offers high investment. It looks for established Business and scale of operation.
• Bank Loan:- You may take working capital to run a business on a daily basis or Term loan for buying Building, Machinery, and other assets.
• Funding from Business incubator:- There are now many Business incubation centers like Nasscom 10000 startup, which provides funding & support to startup.
• NBFC:- It is similar to Banks, but give a loan at a higher rate than Banks. Examples:- Indiabulls, Tata capital, India Infoline, Bajaj capital, etc.
• Government Plan for Startup:- There are various plans like Startup India, Standup India, Mudra Bank, etc. to encourage startup.
• NSE Emerge Platform:- For Company having paid up capital – not exceed 25 Crore. Track record of at least 3 years. Positive cash accrual.

The attractiveness of Industry – Porter 5 forces mode

Porter 5 forces mode include 3 horizontal forces like the threat of substitute products or services, threat of established Big player, the risk of new entrants peeping in to enter the market and other 2 vertical forces are Bargaining power of suppliers and Bargaining power of customers.

Any investor will look into all the above criteria, before making any investments. Some other factors include as they may consider

• Background of promoter
• Management team
• Revenue Model
• Scalability of Business
• Professional Business Practise
• Corporate Governance

Rana Dutta, CEO Aha Biryani

Rana Dutta is the CEO of Kolkata based Company Aha Biryani. He has more than 2 decades of experience in Technology & Business. His previous venture Tiyo, a health-tech was ranked among top 15 startup. He has raised multiple rounds of funding from Angel investor. He is a foodie and a proud Bong Entrepreneur, who had lived in Bangalore, Dubai and returned to its root in Kolkata.

He said that the year 2008, was a year of #MeTooBusiness. Any and every business, having little or no value got funding. VC and Angel investor were chasing behind Business with money.

All one needed to be a copycat of some successful business in the USA, or India to start Business and pitch before VC, to get funded and party with that money, and later shut down the company.

He said that in any sector, we only remember No. 1 and No. 2 Names of Business, others, we do not remember.

He asked the audience about, which is No.1 and No.2 Mobility Company in India? Everyone responded with Ola and Uber.

Then he asked which is No. 3 Mobility Company in India ? The audience was tongue-tied.

He said that nobody remembers No.3. Either, eye for No. 1 or No.2 position only.

Advice to Young Entrepreneur

• Create minimum value product (MVP)
• Solve pain points of customer
• Develop real product, sell to the real customer, test in the real market.
• Business should be scalable
• Choose your team wisely
• First employee is most important.
• Cofounder should bring complementary skills on board
• Don’t ask – don’t get
• Ask always, am I being seen or heard? The company should not make noise, but the market should make noise.

Don’t ask – don’t get.

Mr. Rana Dutta, is trying to disrupt Biryani market in Kolkata, by bringing different variants of Biryani.

Abhishek Bajaj, Founder Zeroinfy

He is the Founder of Zeroinfy, an edutech based startup, which provides coaching for CA, CS, CFA, FRM, and IIT-JEE on its website.

He is a qualified Chartered Accountant. While he was working as an intern at Deloitte, he got this idea to start online learning platform for CA, and bring best teachers on board to provide coaching. Recently, they have received funding CAN(Calcutta Angel Network).

Learning from his seminar

• He told that Airbnb started during a Recession in the USA. People initially were skeptical of renting their living rooms to strangers, but since it was a recession, people needed money to pay their bills and Airbnb had perfect timing to grow.
• An idea may sometimes fail, because it may be too ahead or behind the market trends.
• A statistics revealed that 42% startup became successful because of timing.
• Shamelessly network with people.
• He once chanced upon to meet B.L Mittal, founder SastaSundar, he advised him to start EMI facility for students, and enrolment have increased.
• When you have the option to have an investor in your company, look for what values he can bring on board.
• Be unique in your Business Idea. Do not be a copycat.

5 factor based on investor decides to invest in a Business

• Who has funded your Business?
• Team
• Product
• Business Model
• Timing matters

Shamelessly network with people.

Dipanjan Purkayastha, Founder HyperXchange & TYGR

He has more than 2-decade experience of working in Tech domain across India and USA. He founded a company named HyperXchange, which is a refurbished mobile reseller. It operates in both online and offline medium. He had previously worked at Tech Mahindra and had played a vital role during the merger of Satyam and Tech Mahindra. He is also a guest faculty at an esteemed institution like IIM-C and IIT-Delhi.

He also runs an incubation centre called Lets venture, where he provides mentoring and funding to the young entrepreneur.

He is a co-founder in TYGR Apps and investor in A2Zapps.com

He has other business interest in the Hotel and Entertainment sector.

Some of the learning from Dipanjan Purkayastha

• Ideas will never be funded, only when executed, can be funded.
• Sales of business should increase month on month.
• Indians are used to spoonfed.
• It is essential for an Entrepreneur to bring one person to become part of their initial journey.
• Remove ego from the entrepreneurial drive.
• Learn to ask – learn to say, SIR.
• The team is the most important part.
• The entrepreneur should never have a backup plan. Attitude is everything.
• The attitude of the founder is the most essential ingredients to success.
• Softness should not be mistaken for weakness.
• Unique Idea is not essential, uniquely executing Business is essential.
• An investor likes to see the company having a co-founder with complementary skills.

Remove ego from your entrepreneurial journey.

Concluding Remarks:

This seminar organised by Headstart was exciting and new to me. This helped me get an idea about what different channel are available for funding a startup.

Mann Singh explained the entire avenues available before a startup to seek funding and what key points, and they should keep in mind.

Rana Dutta very nicely said that, unless you ask, you will never get. Become shameless in requesting funding for your enterprise.

Abhisekh bajaj explained the importance of industry networking. One can easily attain so much learning if you can network with the right people.

Dipanjan Purkayastha said that you should leave aside your ego, once you are into entrepreneurship. He said that sometime, you would have to do odds job also, during initial days.

Over to my reader, write below in comments and do share on social media.