Impressing Venture Capitalists? Lessons to learn from Bicycle Startup 91

Why is it so hard for a small manufacturing business to impress venture capitalists for funding?

A certain animosity exists in the relationship between venture capitalists and small Indian businesses when the latter begins its hunt for funds. In addition to it, if the business is in the manufacturing space then receiving funds from venture capitalists is a herculean task.

Left with no other funding sources, the small businesses in the manufacturing space rely heavily on bank credit.The VCs generally turn a deaf ear to the funding requests unless the small manufacturing company becomes a ‘product’ company as they are not interested in a simple manufacturing firm.

In an interview, Marc Andreessen founder of venture capital firm Andreessen Horowitz came up with an interesting revelation about the odds of a startup receiving funds from venture capital. According to him, there are approximately 4,000 startups a year that are seeking to raise venture capital funding. Out of the 4000 startups, the venture capitalists (VCs) look for 3000 a year where a majority of them come from inbound interest. From 3000, the consideration breaks down to 200 startups, in the end, they decide to invest in 20 startups each year,the lucky 20 startups. 

But, a bicycle startup- 91 a small manufacturing firm has been an exception to this. Being a small manufacturing firm it has succeeded in receiving funds from venture capitalists. This also sets an example to other small businesses and startups in the manufacturing space when they pitch for funding to venture capitalists.


Out of the 4000 startups, the venture capitalists (VC s) look for 3000 a year where a majority of them come from inbound interest.

What did cycle startup 91 do right to get funded by venture capitalists?

Here are the takeaways from the cycle startup 91 about receiving funds from the venture capitalists:

  • Differentiated product or technology: Small businesses from the manufacturing space should know that a strong product differentiator is the key to attract venture capitalists. Most brands in the Indian manufacturing space assemble parts or outsource half of its product which tends to take away the sheen of being differentiated. 91 manufactures its bicycles in-house that requires hardcore engineering skills and focuses on making the best components to build a lightweight cycle that offers a comfortable ride to users.In the manufacturing space, if the technology is similar to its competitors then chances to get funds to become thin. 

  • Higher entry barriers: While pitching unique selling points to an investor, what encourages them to invest in a business is the difficulty for new or old competitors to foray into the market and replicate a business’s success. If there are low or no barriers to enter then venture capitalists seem reluctant to invest. The major USPs of cycle startup 91 is its low cost of manufacturing and has a manufacturing unit of its own to build cycles for their brand. They also could display their skills of managing the working capital, which produced an impression of a business with clear objectives and goals right from product manufacturing to branding. Having clear objectives and goals sets apart a business and creates high barriers.

  • Not easily replicable: Most manufacturing businesses focuses on first building the brand and then distribution and product development but then there is no manufacturing that takes place in-house. This kind of approach can be easily replicable by any other player. Whereas 91, took a reverse approach where it focused on product engineering then manufacturing, building distribution, and then branding. Such a model is difficult to replicate by other businesses. These businesses aim to dominate the market by becoming the big fish in a small pond, this trait encourages more venture capitalists to invest in small businesses.

Lastly, venture capitalists are likely to invest in startups that have a growing market. With gyms and fitness centres closed, cycle sales are expected to witness fillip as people are becoming conscious about improving their fitness levels.

Shalmoli Sarkar
Shalmoli Sarkar
An MBA in marketing and a BTech in chemical engineering, Shalmoli writes on marketing strategies and business technology for new and aspiring entrepreneurs.

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