Business Development – Dutch Uncles

Why Investors Invest in a Loss-making Company?

Abhilash Bapanasha — Thu, 29 Jul 2021 06:15:09 +0000

Profits are no doubt vital to the growth of any company, but some of the biggest names in business are yet to make money. This being the backdrop, does profit still matter? Well, it does, then why do investors invest in a loss-making company? Chinmay Ananda has elucidated on this question in MentorED, our weekly live 30-minute workshop where industry veterans share their knowledge and experience and discuss topics that are apt and relevant to the start-up and small business fraternity.

Chinmay Ananda is a Financial Educator, Business Storyteller, Speaker, Author and Investor. He has trained and consulted over 950 business owners in Australia, India, China and Indonesia, and teaches in top business schools like the Royal Melbourne Institute of Technology (RMIT), Torrens University, University of New England and Insight Academy of Entrepreneurship in Australia. Ananda also conducts monthly webinars for indianstartups.com that has 100,000+ members. He also mentors start-ups and is active in the Venture Capital ecosystem. In 2016, he was awarded the prestigious Kerrie Nairn Scholarship for his public speaking skills.

Playing the high-risk game

Chinmay Ananda initiated the workshop by asking a question to the audience, “Why do you think investors invest?” Although many may opine different views altogether, it is worthwhile to have a measurable answer. Thereafter from his illustrious story of purchasing his motorcycle which later proved to change his own mindset in investment, he answered, “Investors invest if you make them believe that you can help them make more money with their money than they would have done with their own money.”

‘‘

Investors invest if you make them believe that you can help them make more money with their money than they would have done with their own money.

For any investor, there are multiple avenues to invest in order to get a profit in return. Most frequently, when someone invests, they look for a future prospect even more than considering the present status of the company or sector. They look at startups as a high-risk game. “If at all I have got ten crores to invest, I would probably choose ten startups and invest one crore in each one of them. They know for sure five to six of them might fail miserably which means they may not even get back the money that they have invested. One or two might give them one and a half to two times a return and there might be another that might give two to three times but there might be that one startup that might end up becoming a unicorn which might give them even a hundred times the return.”

Investors are also interested to make sure that the startup eventually passes into the subsequent stages of funding and thereby expanding into similar markets. “They also want to prepare to make sure that they can take you to the next round of funding series B where the big players like the venture capitalists also known as vulture capitalists emerge because they do not just come after the share in the company they also come after the management. So, this is one of the main reasons why investors invest even if a startup is not making profit because they want to make sure that startup is valuable for the next investor who would like to invest.”

Audience Asks

Newbie investors can invest in a loss making company. Don’t you think it is risky for them?

The newbie investors should be asking themselves what is their risk appetite. This is where I usually tell people, please do not take the gambler’s approach. Please do not do it with your own money unless and until you know that you can take that risk for many people. Yes, startups are very risky. As I said, out of ten, they know five, six, seven of them will miserably fail but one has to take that risk. Higher the risk, higher the return, lower the risk, lower the return.

The investor has that mindset that it does not matter even if the company is burning cash – I will invest because when we take that company to the next stage, we know to a great extent that it is going to be valued at least three to four times the money that they have invested.

When a profit-making company merges with a loss making company will there be any benefit in the portfolio of investors of both the companies?

Sometimes it might be a strategy with regards to buying a competitor or it might be simply because they want to create more monopoly. For example, Ola, when they launched, there were many other players who were offering very similar services.

Two founders of two such companies, they were techies. I had met one of the founders so I was listening to their story and they said, we knew Ola was one of our competitors and then it is like – you are playing a cricket match against each other and you really hate them but all of a sudden in IPL you have to play next to them. You have to share the same dressing room, so even the same thing happens in the investment world. When our investors in Ola decided that let’s buy them out, they bought TaxiForSure.

Of course, even Taxi (TaxiForSure) was making a loss for 200 crores, the main reason behind the strategy was to make sure that they are capturing the market and they are kind of creating a monopoly. So, with that perspective, yes, it was definitely a success. Now that does not mean that we can apply the same strategy to every business or industry.

‘‘

The investor has that mindset that it does not matter even if the company is burning cash - I will invest because when we take that company to the next stage, we know to a great extent that it is going to be valued at least three to four times the money that they have invested.

The first customer is the key

For any startup, the difference begins to happen with the first customer. As the mentor opined, “The moment they have that first customer that is like the proof that someone is there to exchange money for the service or the product that they are offering. So, someone is seeing value and they are ready to give money and if more people are giving money because they see value in the problem that the startup is solving then yes you will have more people who will be buying it and if at all it is repetitive, it is going to be even more valuable.” This repetition can create all the difference as the company will now have the monopoly that investors would love to catalyse.

The post Why Investors Invest in a Loss-making Company? appeared first on Dutch Uncles.

All You Need To Know About Tech Supergirl Program

Vaishali Das — Wed, 28 Jul 2021 03:35:13 +0000

What is This Programme?

The largest Tech Design Conference, Tech Supergirl, is empowering, incubating and raising women in the technological space in India. It is a digital virtual assistant for startups and corporations. Along with technical skill building and startup incubation, the programme also serves as a corporate partner to provide assistance in sales, marketing and digital automation.

Being led by over 100 women-led startups, more than 60 women entrepreneurs as nominees, judged by 7 jury members and panellists, with 3 event partners and over 250 event attendees, the event was a major hit for aspiring women entrepreneurs, technology stakeholders and women in business.

Who Has Launched It?

Tech Supergirl Program, the first and largest tech incubation programme, is launched by Indian Women Institution League (IWIL) India in collaboration with SSC NASSCOM, National Skill Development Corporation and Shell E4.

IWIL is a non-profit organisation aiming to incubate and accelerate women entrepreneurs, and strengthen the women-led business ecosystem to create a future inclusive of socially and economically independent women.

‘‘

With a direct mission of supporting the government's vision of Atmairbhar Bharat, the programme aims to foster women entrepreneurship ecosystem in India.

Who Will It Benefit?

Tech Supergirl aims to impact 3 million women in the business field, technology and academia. With the Tech Supergirl Incubation Program, Tech Supergirl IWIL India is offering more than 25,000 women in the technology sector to develop technical skills and digital literacy for smooth business operations.

The platform will cater to the women entrepreneurs and MSMEs in the direction of networking, scaling and startup incubation. It will also assist corporates in their day-to-day synergies and operations.

Direct and Indirect Beneficiaries

With a direct mission of supporting the government’s vision of Atmairbhar Bharat, the programme aims to foster women entrepreneurship ecosystem in India. The programme is intending to impact more than 2.5 women by 2030. It will directly benefit the women in the technological space in India by supporting them to become more self-reliant and capable enough to secure their livelihood.

Talking about the indirect beneficiaries of this programme, it will be boosting India’s GDP by increasing woman’s participation in India’s economy from mere 18% to 50%. With women being more resilient and multi-tasking, Tech Supergirl aims to create 25,000 plus jobs in artificial intelligence, data analysis, LoT, Blockchain, Data science, augmentation, etc. in the tech sector in India.

Suggested Plan of Action

People interested in the Tech Supergirl Incubation Program should register on their official website and submit their entrepreneurial story. The stories will be evaluated and selected on the basis of financial growth, human capital, innovation, international orientation and corporate excellence.

The selected 30 women entrepreneurs will be featured in their portal. Further these 30 entrepreneurs will be provided with funding, networking opportunities and will also be able to access some international grants.

The post All You Need To Know About Tech Supergirl Program appeared first on Dutch Uncles.

Rural Entrepreneurship Incubation Programme

Vaishali Das — Tue, 27 Jul 2021 10:35:09 +0000

Every dream, passion or an innovative idea to start a business initially needs a little support and faith. Incubation programmes are designed to support early stage startups and business ideas. It provides startups, which are in their nascent stage, with mentoring and management. Along with this, these programmes also provide entrepreneurs an access to market resources, giving them networking opportunities and work on their business skill training.

What is Rural Entrepreneurship Incubation Programme?

Nadathur S. Raghavan Centre for Entrepreneurial Learning (NSRCEL), the innovation and entrepreneurship hub of the Indian Institute of Management (IIM) Bangalore in collaboration with Buddha Fellowship Program (BFP) launched an incubation programme, Rural entrepreneurship Incubation Programme. The idea behind this incubation programme is to enhance the entrepreneurship and startup ecosystem of rural India.

The programme aims to engage, enrich and foster young emerging entrepreneurial minds to help in the upliftment of rural India and real time gaps in supply chain management of corporates using an enterprise approach. This will help create a sustainable livelihood and will also create self-employment opportunities.

Who Does It Benefit?

The programme is for young graduates from leading universities who have a passion to work for the country’s upliftment. It is also for those who are wishing to work in the development sector, even if they’re from corporate backgrounds, or early stage entrepreneurs, all are welcome for this programme. The programme will be focusing on three sectors

Rural Livelihoods (Farm, non-farm, off-farm)
Health and Nutrition
Education

With the mission to back entrepreneurs to build ‘Atmanirbhar Bharat’, the programme will benefit the rural and home-grown entrepreneurs. It will transform the development sector by providing knowledge and awareness on scaling, branding, marketing and will support rural professionals to pursue their aspirations to become development entrepreneurs.

‘‘

The programme aims to engage, enrich and foster young emerging entrepreneurial minds to help in the upliftment of rural India.

Programme Highlights

Some of the major highlights of the Rural Entrepreneurship Incubation Programme are:

It will be having top-notch mentors from industry, government, academics and development sector to extend help to the young talents.
It will provide a wide rich ecosystem and networks of NSRCEL and BFP for strategic business technology based partnerships with leading universities like IITs and IIMs. Even the Ministry of Rural Development (MoRD), Rapid Rural Community Response to COVID-19 (RCRC), Tribal Co-operative Marketing Development Federation of India (TRIFED), and Principal Scientific Advisory will also be a part of the extended help.
It will also provide an opportunity to pitch for incubation. This includes 1 month of rural immersion followed by a 9-month incubation period, handholding support aided by quarterly entrepreneurship clinics and one-on-one mentoring.
It will also help in funding and 6 months post incubation support.

What Does it Aim to Achieve?

It aims to back rural entrepreneurs who aspire to build a successful business and in turn build a futuristic India which is inclusive for its less privileged and marginalised communities. The programme also wants to strengthen the business model. The outcomes of this programme will be:

Learning marketing for B2B, B2C, sourcing, grading and packaging
Stabilised and sustainable business with strong team and financial systems.
It will teach entrepreneurs how to pitch to investors and work with the government to avail subsidy.
It will also work on networking and communication skills.

Suggested Plan of Action For Aspiring Entrepreneurs

Startups or entrepreneurs who have a registered enterprise should apply for the programme. This is the best opportunity for those entrepreneurs working in solving the rural problems like agriculture, nutrition, livelihood enhancement, healthcare, education, etc. and who are operational for a minimum of 1 year. Entrepreneurs who have a clear understanding of micro and macro level business should submit their forms.

Applicants with a viable solution to the current problems and potential social or financial impact on rural communities will be shortlisted for the incubation programme.

The post Rural Entrepreneurship Incubation Programme appeared first on Dutch Uncles.

EdTech Apps for Kids, A Glance into the $9.5 Billion Market

Vaishali Das — Mon, 26 Jul 2021 03:35:12 +0000

EdTech Market

The study by venture capital firm Blinc Invest shows that the early childhood care and education sector is booming slowly. It has shown a CAGR of 17% over the last 10 years. With the increase in the usage of gadgets and electronics in our day-to-day lives, the teaching-learning process has taken a modern route.

The Indian education system was estimated at $91.7 billion in 2018. According to KPMG and Google reports, the Indian EdTech market will touch $1.96 billion by 2021. As the K-12 segment continues to grow with innovative start-ups, new companies are emerging in the early learning and childhood education sector as well.

List of EdTech Apps for Kids and What are they Providing?

The EdTech start-ups are covering a wide range of academic as well as social and emotional learning for kids. As childhood, between the ages of 5 and 12, is an active phase of the growth cycle among the kids. The start-ups therefore focus on the overall development and focus on the playful learning model.

DragonBox:

A math learning platform for kids between age 4 to 9 and above. With a gamified learning approach, the app ensures that the kids are engaged throughout their learning process. The app offers different games explaining other topics and making it easier for kids to learn the numbers and linear equations.

Emotix:

Founded by IIT post-graduates, the app created an artificial intelligence-based companion robot- Miko. This robot is capable of educating, entertaining, and engaging children in a playful learning environment. The speciality of this app is that using this robotic technology, it imparts knowledge based on curriculum and talks about interesting facts about the world.

‘‘

Along with academic knowledge, social and emotional knowledge is also important for kids.

Byju’s:

EdTech Unicorn Byju’s recently launched its Disney-Byju’s Early Learn App for children of 6-8 years of age. The app has animated videos, games, stories, and interactive quizzes which makes the learning process interesting. The app also offers personalised feedback for parents to keep a track of their kid’s growth.

ABCMouse:

The app provides a step-by-step learning process for kids between 2-8 years. The app offers 10,000 activities, more than 850 lessons from maths, science, reading and art. This process engages the kids and keeps them motivated in their learning journey.

Prodigy:

A math learning platform using fantasy-based tools, giving a game-like feel while doing maths. The app provides free as well as paid subscriptions for kids from first to eighth grade. The app tests the kids’ knowledge based on which it works on their grey areas.

Stop, Breathe & Think:

Along with academic knowledge, social and emotional knowledge is also important for kids. This app uses the tool of social-emotional learning and helps kids in regulating and managing their emotions. The app offers kids between 5-10 years of age with breathing and meditation exercises. It also provides them with emoticons to express their feelings and then work on them accordingly. This app is very much recommended for kids with ADHD, as it tends to help kids in maintaining their focus.

Stones2Milestones:

The app offers services to help learners of 3-9 years of age to cultivate reading habits. The platform works towards equipping kids with the English language and cultivating learning habits.

Khan Academy Kids:

The platform provides worksheets, planners, schedules, and resources for kids between age 2 to 7. The platform can be accessed in 10 different languages and help kids in the distant learning process.

DuoLingo Kids:

The app built for language learning procedure among kids above 6 years of age. This app allows the kid with games which enhances their basic vocabulary and helps them in sentence formation.

PBS Kids Game:

A popular educational brand offering gamified learning for kids aged between 2 to 8. The interactive games provided by the app allow the kids to play alongside their favourite characters and learn the basics of maths, science and creativity along with the process.

Learning For Start-ups in This Market

There is a huge market opportunity for learning start-ups focusing especially on languages, coding, and math skills. EdTech start-ups have received $80 million in funding so far that makes them the market king with $9.5 billion. The process of studying smart and not in the conventional way has taken a toll on the GenZ and therefore parents are inclined towards these kinds of apps more for their kids’ overall development.

The post EdTech Apps for Kids, A Glance into the $9.5 Billion Market appeared first on Dutch Uncles.

Marketing Mis-steps that Entrepreneurs Should Watch Out For

Saurabh Bajaj — Sun, 25 Jul 2021 10:35:12 +0000

The term unicorn was coined in 2013, by Aileen Lee, founder of Cowboy Ventures, to refer to technology start-ups with valuations over US $1 billion. At that time there were 39 unicorns in the US and none in India. India today has a total of 50 plus unicorns, the third largest number in the world after the US and China. However, firms like Ola, Flipkart, Lenskart, Nykaa, UrbanClap, Paytm and Zomoto make the journey look easy. There are a number of firms that have struggled to scale-up the founder’s visions or the market’s expectations.

Let’s study the journey of some of these companies, each of which have done many things right, but have taken a few marketing missteps that they have then had to pivot to recover. As we investigate these stories, perhaps there are learnings for other entrepreneurs to learn as they navigate their own passion projects.

‘‘

The legend goes that the inspiration for Paper Boat came from the flask of Aam Panna, Suhas Misra's mother would pack for him every day.

Hector Beverages

Paper boat is one of the companies that have caught the imagination of consumers and investors alike. They have had years that have been extremely successful and a few in which the market questioned if the growth story has come to an end.

Hector Beverages was founded in 2009 by Neeraj Kakkar, Suhas Misra, Neeraj Biyani and James Nuttall. Today Neeraj Kakkar and Neeraj Biyani run the show after Suhas and James decide to exit the company.

The company started operations with Frissia (protein water) and later Tzinga (energy drinks) but later smartly pivoted to their third venture Paper Boat. The legend goes that the inspiration for Paper Boat came from the flask of Aam Panna, Suhas Misra’s mother would pack for him every day.

The company started its operations through the Manesar Plant and subsequently roped in its first investors in 2011 including Catamaran and Foot print. The next reached out to Elephant Design that helped them both with the naming as well as pack design leading to the launch of ‘Paper Boat’ in 2013.

The Brand saw strong initial success and they quickly expanded to a second factory in 2014, which was their Mysore plant with a speed of 380 bottles/minute versus 80 bottles/minute in the Manesar Plant, along with the capabilities for coconut water and sugar cane juice.

From 15-16 to 17-18 the Brand kept its focus on three key levers of growth:

Brand Building: They launched Paper Boat with a novel purpose of trying to preserve traditional recipes that go back thousands of years, and were handed down from one generation to another, in a modern form. On this Brand core they invested aggressively in digital engagement and also launched a TVC on main line television.
Innovation: They launched a slew of products including more than 11 types of ethnic drinks and juices: Jal jeera, aam panna, aam ras, alphonso aam, jamun kala khatta, chilli guava, nimbu pani, kokum, neer more, kanji, sugarcane juice, lychee ras, apple and orange.
Distribution Expansion: They also partnered with the Japanese food giant Indo Nissan Foods to strengthen its distribution and brand presence in tier II cities and rural markets.

However, while all three strategies are based on sound business fundamentals, their premium pricing of Rs 30 for 200 ml proved to be an impediment to scale growth and their turnover appeared to stagnate at under 100 Cr.

As a result, the analysis, started to question if the product and packaging novelty has worn off and has the impact of competition in the form of Daburs Hajmola Yoodley, B Naturals Zero Concentrate Promise and the entry of Coke and Pepsi into healthier beverages started to make its impact on the major.

The company pivoted smartly again and has launched a mega push in the last couple of years into several mainstream categories:

Paper Boat Swing at much affordable prices of Rs 10 for 150 ml
Juices in Tetra Pack at Rs 130 for 1 Ltr
Dairy Beverages like Lassi, Thandai etc

Their largest gamble to date is the entry into traditional Indian snack-based products like Peanut Chikki, Banana chips, Aam papad, Bakarwadi, Namak para, Gur para and Shakar para.

The key challenge that the expansion of such a wide portfolio would be Brand stretch. However, what appears to be helping the majority is the fact that the Brand has been based on an emotional promise of ‘nostalgia’, rather than a functional promise and that appears to be assisting them, despite sharp reduction in advertising investments every subsequent year. And the second is distribution expansion where the partnership with Indo Nissan foods only took them to 100,000 outlets. They have now started investing in their own field force to expand to 250,000 outlets and are now targeting 350,000 outlets.

The key thing on the mind of the founders now appears to be an IPO to continue to fund their expansion as they make steady steps towards profitability.

‘‘

Mounting losses, restless investors and the pandemic eventually led to the firm being acquired by Wingreens Farms. Raw Pressery business has picked up substantially post the acquisition by Wingreens Farms.

Raw Pressery

Raw Pressery and Wingreens Farms are two Sequoia Capital backed food start-ups which have boasted of innovative food products capturing the imagination of the growing millennial audience. Interestingly the learnings that we take from the challenges these firms have faced very closely mirror what Paper Boat taught us. Let’s now investigate their journey.

Raw Pressery was founded by Anuj Rakyan in 2013-14, with the dream of preparing cold pressed juices at a shared kitchen in Mumbai. He wanted to deliver these juices directly to the customer daily, by utilizing spare time of Mumbai’s daddawalas.

The original insight for the Brand emerged when Anuj Rakyan suffered a back injury playing football. He wanted to heal himself naturally without surgery through rest and nutrition. He made juices at home, but realised that something equally good was not available on shelves. He realised that there was an opportunity for a clean label product with only goodness inside and nothing else.

It was indeed an inspiring vision, and enabled him to take the brand across 15 cities in the country.

This allowed the brand to scale-up to a business of 65 Cr 2020 however they retained very high operational expenses and hence a loss of almost 60 Cr. In chasing their vision, the company made several logical pivots. The first was the realisation that while a few core consumers may take subscriptions, a large part of the business is going to remain offline. So, despite a very premium product, the online share of the business in 19-20 was only 10%, however the bulk of their business came from airports (30-35%) and organized modern trade stores like Food Hall and Reliance (50%).

Next, the group believed that the product should do the talking for them and they kept their advertising expenses persistently low at 30% in the initial years and under 10-15% by 2020. Their biggest challenge with the low shelf life of the products and the very expensive cost of refrigerated logistics. Though investments in technology were able to expand their shelf life quite substantially, logistics remained a persistent challenge. The softer challenge that the organization was not able to solve was the high cost of employees which accounted for as much as 40% of their top line. The equivalent numbers in scale firms are between 4-5%. These challenges could only be solved by expanding their range into products with a more affordable entry price and a range which holds its core promise of goodness but can move into the non-refrigerated aisle. And hence in Oct’18 the company expanded into Almond Milk at a pricing of Rs 80 – Rs 200. By Nov’19 they launched Coconut water with a pricing of Rs 50- Rs 60 and by Dec’20 into High Protein Smoothie.

By 2020, the contribution of these businesses was 40% for Cold Pressed Juice, 10% for Dairy, 35% for Coconut Water & 15% for Almond Milk. However, these initiatives only increased the dependence of the company towards offline channels and as the pandemic hit the company could only increase their business contribution from D2C to 15% and modern retail then accounted for 80% of their business. The lucrative Airport channel which was the backbone of their business could only account for 5% of their business. Mounting losses, restless investors and the pandemic eventually led to the firm being acquired by Wingreens Farms. Raw Pressery business has picked up substantially post the acquisition by Wingreens Farms. Let’s understand Wingreens business model a bit more to understand the synergies that have kicked in for both the companies.

Wingreen Farms

Wingreens Farms was incorporated in 2011 by Anju Srivastava and Arjun Srivastava. The products of the firm include dips, spreads, sauces and bakery products. The couple was working in the US for several years advertising and marketing and decided to return to India. They were taken aback by the condition of farmers in the country and the company was originally christened as WIN (Women Initiative Network) in Gurugram in 2008 with a capital of Rs 10 Lakh.

The initial idea was to work with farmers who had land but no money. The business model was to rent out land and pay the farmers the same both for renting the land and also as salaries for the women working in the company. In 2008, Anju started growing potted herbs in a half acre of farmland that she rented from the farmers in Tauru village, Haryana. She grew varieties of basil, thyme, oregano, peppermint, and other herbs for sale. However, she struggled in the initial years due to the extreme weather conditions in northern India.

She finally tasted some success in 2011, when Anju made pesto out of the basil she grew, and approached Spencer’s in MGF Megacity Mall, in Gurugram. The plan was to allow customers to taste the pesto, however they didn’t have any pasta and hence used chips. To their surprise customers showed good acceptance for the product as a dip. Following the successful launch of pesto as a dip, WIN was rebranded as Wingreens Farms, and the company then went on to launch 150 variants in 50 SKUs including, chipotle sauce, fiery desert mustard dip, dill tzatziki, peri peri hummus, rosemary hummus, peppermint with green tea leaves dip, etc.

Within a span of 8 years, the brand has built a presence in 1300 Modern trade stores and 9,000 general trade stores across 140 cities across India. The company has plans to expand its distribution network to over 200 cities, over 2000 modern trade stores and over 1 lakh general trade stores over the next year. They also plan to extend their portfolio to 220 products across the range of dips, spreads, sauces and bakery products.

Despite accessing good funding from the market Wingreens has managed to deliver a far more sustainable business model. The pandemic has been an issue and an opportunity for the company. At one end the cost of business escalated, on the other the consumer was actually drawn to better cooking because of the rise of in-home dining.

However, all in all the acquisition of Raw Pressery has been a big opportunity towards the sustainability of both companies due to the following reasons:

Raw Pressery and Wingreens Farms have a complimentary set of products with little overlaps giving the combined entity the right to build a Holistic Food and Beverage company that is structured as a House of Brands.
Both company portfolios have a presence in the refrigerated isle and the sampling and activation infrastructure of both companies can be synergized.
Further promoters believe that combining both portfolios should help them reduce their logistics and transportation costs by half.
Also, with the enviable portfolios of both companies there is an opportunity to negotiate better with retailers when it comes to shelf space and commissions.
And finally, most importantly, a strong portfolio combined with significant distribution heft is the magic formula for success in the Indian landscape.

There is a lot to learn from the three Brands that we have investigated, Paper Boat, Raw Pressery and Wingreens Farms. However, the key learnings can be gleaned in the form of the following steps and missteps that entrepreneurs should factor in their plans.

First, as entrepreneurs seek to launch innovative offerings in the Indian market, there remains a large role for storytelling and Brand building. This is something Paper Boat did very well. A large part of the allure of their 3rd product after Frissia (protein water) and Tzinga (energy drinks) was Paper Boat. And the platform of Drinks and Memories allowed them an opportunity to charge a premium and hence build a product that can be fuelled with advertising to command a premium. Perhaps this is where Raw Pressery missed a trick. While a clean label positioning is strong. It would have taken a while to catch up with the consumer.

Secondly, entrepreneurship is not for the faint hearted and business pivots are a part and parcel of the game. Hector beverages showed their resilience in reinventing themselves time and time again. This was perhaps something Raw Pressery took a little longer to do.

Thirdly, distribution expansion alone doesn’t ensure top line growth as Hector Beverages learnt the hard way in the period between 15-16 and 17-18. It has to be complimented with an accessible portfolio and the right branding strategy.

Fourthly, it’s critical to marry your business opportunity with consumer expectations, as Wingreens Farms learnt to their delight, almost by accident when they uncovered the opportunity for a dips market.

Fifth, as one discovers a significant business opportunity, it’s critical to make infrastructure investments to improve technology and set up factories; however it’s critical to keep a keen eye on cash burn and operational profitability. Solving for the right supply and logistics costs, employment costs and marketing spends is critical to build confidence with investors as Raw Pressery learnt to their peril.

Lastly, it’s important to start one’s business through a pilot mode across limited markets or channels, however the final path towards profitability in a market such as India, depends on building a robust distribution infrastructure for expansion.

The post Marketing Mis-steps that Entrepreneurs Should Watch Out For appeared first on Dutch Uncles.

Mastercard-Instamojo Partnership Can Help MSME Rapidly Digitise

DU Desk — Fri, 23 Jul 2021 10:30:08 +0000

Instamojo, a Bengaluru-based digital payment solutions provider for small businesses along with custom-tailored business tools helps a business grow on the internet. The platform offers end-to-end solutions to medium, small and micro enterprises with credit facilities, marketing tools, inventory tracking applications and logistics as part of its full-stack digital service.

Mastercard-Instamojo Partnership

In June, Mastercard made a strategic equity investment in payments and online selling platform Instamojo. The partnership aims to empower millions of MSMEs and gig workers in setting up online stores. The initiative also equips these small businesses with digital payment methods to reach out to their customers in a hassle-free manner.

The investment and partnership strengthen the company’s initiative to support gig workers like tutors, electricians, personal trainers and small F&B operators among the lot, to launch, scale and grow their businesses.

Why Did Mastercard Invest In Instamojo?

MSMEs and gig workers are an integral part of Indian economy. With this collaboration and investment, the company aims to digitise the MSME sector.

With the help of Instamojo’s full-stack e-commerce platform for D2C brands and MSMEs, Mastercard aims to extend the company’s evergreen commitment of bringing one billion people and 50 million micro and small businesses into the digital economy sphere by 2025.

‘‘

MSMEs and gig workers are an integral part of Indian economy.

How Will Instamojo Help MSMEs Digitise With This Investment?

Instamojo, started as a digital payments solution for small businesses, has broadened their horizon to provide SMEs with a platform to launch, manage and scale their businesses. The startup is starting with their own e-commerce platform for collecting payments and shipping their products in a seamless manner.

With Instamojo’s quick and easy onboarding process, merchants have readymade access to a fully automated online store with in-built payments, shipping and marketing services. The collaboration with Mastercard aims to work towards providing solutions to enable MSMEs and gig workers to set up online stores and reach out to a larger customer base in an effortless manner.

Insights For Startups

In a few years, the Fintech startup ecosystem has seen some major investment from the Indian as well as Global financial majors. Mastercard invested around Rs 250 crore to support small businesses in India last year. This has opened a new window for the small merchants and payment ecosystem to flourish.

The post Mastercard-Instamojo Partnership Can Help MSME Rapidly Digitise appeared first on Dutch Uncles.

Start-up, A Dream of the Young and Progressive India

Abhilash Bapanasha — Fri, 23 Jul 2021 06:52:16 +0000

Indian youth is oozing out with ideas for businesses and new market concepts. More of them are shifting towards entrepreneurship with the hope to achieve freedom and fulfil their worldly pleasures. The very same reason why India has many start-ups but only a smattering survives. But that doesn’t mean the aspiring start-ups give up, most manage to nurture themselves. 83% of the Indian youth are willing to step into entrepreneurship, the global average being 53%. The number of youths willing to start their business fall between 25 to 34 years of age, followed by the age group 35 to 44.

Dr. Hari Shankar Shyam, a leading educationist and business consultant was the speaker for MentorED, a weekly live 30-minute workshop where industry veterans share their knowledge and experience and discuss topics that are apt and relevant to the start-up and small business fraternity. Dr. Shyam, Educationist and Business Consultant, has counselled more than 10000+ students across the world in his role as start-up mentor. With a Ph.D. in Marketing, an MBA and a Masters in Population Studies, he is currently an Associate Professor of Marketing at Sharda University.

‘‘

Now the question is, why should we not have a dream if the OYO promoter Mr. Agarwal can start at such an early age? It changed the entire hotel and tourism industry of India.

Dr. Hari Shankar Shyam touched on the following points during his thirty-minute workshop which was followed by questions and answers from the live audience:

Why start-ups can be a good career
How one can exploit India’s strong IT infrastructure
How to become agile using digital innovation
How to get support from government, VC and other sources

Addressing the audience comprising mainly youth entrepreneurs and aspiring business minds, Dr. Shyam shared, “We have realised from the last 15-20 years the word startup was coming. And from the last 10 years, it was THE word in a country like India and today for many youngsters we need not tell, they are already aware, but yes, there are a lot of challenges.” Even during the pandemic, many young entrepreneurs have come forward with solutions to problems with the usage of technology as an intervention. He expressed how the pan-Indian mentality of career orientation has changed from getting a good education in medical or engineering followed by getting a good job to envisioning the idea of a startup during graduation and actualising a startup idea into reality.

In his illustrative presentation, Dr. Shyam talked about the success stories of Indian startups established between 2014 and 2019. Unicorns like OYO Rooms, Snapdeal, Ola Cabs, BYJU’s, Delhivery among others are role models for a young population. “In 2015, there was a Fintech boom. One of the Fintech companies, One97 Communications, came with a brand called PayTM and what wonders it did! Today even if you go anywhere, even a vegetable vendor, you see across even the smallest vendor, they are using PayTM. After the pandemic, it is a revolution.”

“Now the question is, why should we not have a dream if the OYO promoter Mr. Agarwal can start at such an early age? It changed the entire hotel and tourism industry of India.” In a country like India, young minds are inculcating high ambitions and are at a lower risk as compared to one generation prior. With a high motivation, passion and a little craziness to stand out of the crowd, an aspiring startup founder can do wonders. Dr. Shyam also underlined the catalytic role of a mentor as for pursuing a startup dream. A mentor can also be someone from the peer group who has failed in his/her venture, but it is equally important to learn from such an individual so as to not repeat the past mistakes.

“Yesterday was the man of finance, today is the man of marketing and tomorrow is the man of HRD.” Many years ago, only those who had money could think about a business venture but in the present scenario, investors come forward to fund. The years ahead, as Dr. Shyam envisions, are that of technology. India has a strong IT infrastructure and has to be exploited to the fullest. Dr. Shyam stressed on how different cities like Bengaluru, Gurgaon, Noida, Pune, Hyderabad, Kochi have emerged as convenient ecosystems for boosting startups and support opportunities have to be utilised in these cities. Apart from that, there is an easy availability of manpower and technical support aided by a supportive supply chain and digital marketing avenues.

‘‘

Yesterday was the man of finance, today is the man of marketing and tomorrow is the man of HRD.

Audience Asks

How feasible is it to launch a startup in a hi-tech city and start to run it from a small town?

Many of the big cities are having this ecosystem but the smaller ones are not having it. The best part is even though that ecosystem is not there, there is internet connection. There are also many digital tools and platforms, you have to join them. There are also many angel funding communities in Chennai, Mumbai – associate with them and become a member. At the same time, take a mentor and you can really start from a small town. For a big town which is already established, the advantages are much more undoubtedly.

What do you suggest: start a business in a new (untouched) industry or in a tried and tested (already booming) industry?

One thing you need to understand is that we are not competing only with an Indian counterpart. You have to see where the scope is. Startup itself is that your idea is unique and innovative. While deciding which area you have to do, I will not say untried or untested areas. First, you have to find an area, an untested and untried area might be a problem for a newcomer, you need to analyse the situation very well. To begin with, you can enter into an area where some work has already been done. Later on, when a focus will be there, you may take a change in your path.

Dr. Shyam concluded by sharing his experience of being to the best Universities of the world and he has felt that Indian students, with a little awareness and guidance, can rub shoulders with students from across the globe. Though young and talented, Indian youth languish due to low dexterity, indiscipline, sense of responsibility and lack of strategic planning. Despite the failure and shut down rates of start-ups, being an entrepreneur is undoubtedly the current dream and aspiration of the millennials.

The post Start-up, A Dream of the Young and Progressive India appeared first on Dutch Uncles.

Ferns N Petals Targeting a Revenue of Rs 1000 Crore in FY22

DU Desk — Sat, 10 Jul 2021 08:35:10 +0000

Ferns N Petals, established in 1994, the company dealt with majorly delivery of flower bouquet. Considering that flowers are exceptionally perishable, FNP toiled with the supply chain, sourcing and logistics to save expenses and fabricate volumes. What started as a premium florist chain has now become India’s Leading flower and gift retailer and one of the largest flower retailers in the world. Having 300 plus outlets across 120 cities the company owns about one-third of the organised flower market in India.

Ferns N Petals Aims to Achieve a Revenue of 1000 crore

Started 27 years ago the firm is ruling over the gifting space in India. The firm is looking forward to doubling its turnover to 1000 crore from 500 crore in the coming years. The company has shown a substantial growth rate without any outside funding. By innovating with their business models and new verticals, FNP has a 35% growth rate on a yearly basis. With the flower market going down in the pandemic, FNP found its silver lining by donning a digital platform to maneuver the crisis and continuing with the business.

By offering a wide range of digital gifting services, the company managed to keep up the sale amidst lockdown and saw an increase in sales by 18%. The company is planning to expand its international business by 35% more. It is also planning for its IPO and expanding beyond their core business of flowers and gifting.

Outlets of Ferns N Petals in India

From having 1 flower shop in Delhi to branching out to 386 stores in 120 cities, Ferns N Petals is planning to scale the services to 15 Tier I and II cities in the coming years. The firm launched 20 new outlets PAN India including Jalgaon, Kota, Tezpur, Goa, etc. It has a strong network of 225 retail outlets across India and cater to a larger customer base through its e-commerce websites.

Along with India, FNP is a big name in the international market as well. Having presence in international markets like the UAE and Singapore, Fern N Petals is planning to expand to Qatar, Saudi Arabia and Indonesia as well.

‘‘

With the flower market going down in the pandemic, FNP found its silver lining by donning a digital platform to maneuver the crisis and continuing with the business.

FNP Portfolio

It has 12 verticals including FNP Retail and Franchising, E-commerce (India and UAE), FNP Cakes ‘N’ More, FNP Gardens, water, media, etc. The firm has enhanced its digital portfolio with fancy services including Violinist on call, fitness on call, poet on call, it has managed to survive in the pandemic.

How to Get a FNP Franchise and at What Cost?

Fern N Petals is present in every nook and corner of the country. In order to get FNP’s franchise one has to fill up a simple form on their website. Franchise investment requirements are:

Required property should be in a commercial or high street
The floor area should be 250-300 sq feet
Well trained and specialised office staff
Proper computer system with internet connection

The investment required to enter the franchise business is around 9 lakhs 40 thousand. The expected return on investment to the franchise is around 20-25%. After achieving break-even within initial 3-6 months franchise businesses can earn from Rs 50,000 to Rs 2 Lakh per month, depending on their city of operation.

Some of the benefits of having FNP Franchise

The company helps entrepreneurs to select locations for their outlet.
It even provides manual help from their trained and skilled workers for the first three months of opening a franchise unit.
FNP provides a detailed training programme wherein all the intricacies of running a business is taught.
It provides FNP merchandise at wholesale price and also helps in infrastructure designing as each store is universal in look and appearance.
Franchise owners get to use the brand name along with FNP website support.

The post Ferns N Petals Targeting a Revenue of Rs 1000 Crore in FY22 appeared first on Dutch Uncles.

Teabox Innovating How Tea is Sold in India

Vaishali Das — Fri, 09 Jul 2021 04:29:39 +0000

The most generally consumed refreshment on the planet close to water, Tea is still to a great extent produced and distributed much as it was two centuries ago, often at the expense of freshness. Teabox, a Siliguri-based startup catering to a worldwide market of tea lovers by bringing the fresh tea leaves straight from the estates to the consumer in no time.

About Teabox and Its Specialty

By fusing tea with technology, Kaushal Dugar, founder and CEO of Teabox, is transforming the practices around tea production and distribution. It brings the freshness of tea leaves straight from the farm to the consumer’s cup within days after it is picked. The startup majorly focuses on providing customers with more approachable ways to explore different varieties, regions, and flavours of tea just like wine.

The startup deals on the vertical integration of sourcing, branding, and distribution of teas. By infusing family’s teachings of the old tea trade with technology and new ways of doing business, Kaushal Dugar created India’s first global tea brand.

Best Quality and Marketing Strategy

Teabox’s major source of producing tea is from Darjeeling, Assam, Nilgiris in Tamilnadu and Nepal. It took the basic idea of using the online platform for selling tea as it is done for coffee and wines. This strategy aimed to reduce the time from production to consumption and hence provides tea in its purest form without any intermediaries. With having over 200 variants of tea including Punjabi masala and Kolkata Street chai, the startup is very famous at an international level, amongst the coffee drinking market.

The startup took the inspiration from the rich and visual history of tea production, including the colonial-era typography that is still very much prevalent in tea crates. The simplicity of the Teabox website lies in its accessibility with easy-to-use format, quickly giving out information about the incredible range of teas. Teabox also provides its consumers with the opportunity to select their own tea combinations by taking up its subscriptions.

‘‘

The simplicity of the Teabox website lies in its accessibility with easy-to-use format, quickly giving out information about the incredible range of teas.

What Differentiates Teabox from the others in the Market?

Teabox is a direct-to-consumer e-commerce tea startup that cuts down the supply chain and makes it a simpler and faster process.

It uses a fairly straightforward model of sourcing the highest quality tea directly from the tea estates and delivering it to the consumers within 5-7 business days.
The startup has an in-built software that maps every step from procurement of tea from the tea estate to delivering it to the customer.
Providing customers with a subscription-based service where they can taste different varieties before settling on their favorites is another great strategy.
They also provide customers with “TeaPacs”, transforming a 50-year-old invention of tea bags. Unlike teabags, TeaPacs are infused with nitrogen gas to keep tea fresh as much as possible.
Its modern and minimalistic packaging includes loose tea leaves well preserved with natural nitrogen flush that locks down the freshness of the leaves.

Insights For Startups in the Tea Selling Space

As the industry has picked up a substantial raise in the lockdown, tea has become the healthier beverage with antiviral properties. The use of a digital platform for selling tea, Teabox, has created a niche for buyers, providing them a brand-new experience of ordering and tasting a variety of teas.

Teabox also educates customers through its platform providing them knowledge about the specialty teas in India and giving the valued customers a chance of ‘experiential’ tea-drinking, a shift from the traditional way of tea consumption.

The post Teabox Innovating How Tea is Sold in India appeared first on Dutch Uncles.

How Investors Read Your Financial Statements, And Why Should You Master Them for Successful Fundraising?

Chayanika Sen — Fri, 02 Jul 2021 14:16:20 +0000

Starting up a business is not easy. And with limited resources and budget, you need to wear several hats throughout the day. You need to manage the day-to-day operations, admin tasks, marketing your products, manage sales, and keep a tab on your finances. As a new business owner, you might not be familiar with keeping accounts of your financial statements. While hiring a professional accountant is always a great idea, it is not so difficult to do it on your own in the initial days. No matter what, remember that you need to keep your accounts clean. The key is to keep accounts of every transaction you made, not just for you to know how your business is performing, but in the long run, if you need to raise funds for the growth of your business, that’s what the investors are going to look at. So, make it a habit of keeping track of your financial records from Day 1. Maintaining proper financial records also ensures that you are compliant with statutory compliance. It enables you to create budgets, financial projections, and better investment decisions.

‘‘

The key is to keep accounts of every transaction you made, not just for you to know how your business is performing, but in the long run, if you need to raise funds for the growth of your business, that’s what the investors are going to look at.

How to master creating financial statements that investors will love:

Start with a business bank account:

No matter how small your business is, always maintain a separate financial record for your business and don’t mix it with your accounts. Establishing a business bank account is a good idea that allows you to keep track of all your business transactions. So, if you’re setting up a business, have a separate bank account for your business as a rule of thumb.

Avoid cash transactions:

Cash transactions may seem to be convenient, especially for small amounts like a food bill or a travel expense for business, but it makes it challenging to keep a tab on the financial transactions of your business. When you deal with cash, you tend to forget the transaction and thus miss out on entering it in your logbook later. Instead, it is recommended to use business credit or debit cards to do any financial transaction. This way, you will have a record trail, and everything will go into your audit book. When you use cash, you could also potentially miss out on taking advantage of write-offs since there won’t be any documentation of the transaction. If there is no other way to deal with a particular transaction other than using cash, use an ATM card to withdraw money, and make a note on the receipt with the purpose of the withdrawal. That way, you will always have a record, and you can put it up in your record book. Needless to say, your future investors will love it when they see how meticulously you have recorded all the data from day 1.

Invest in good accounting software:

At the beginning of your business, you might be sceptical about making investments, but investing in good accounting software is something you would like to ponder. Accounting software can help you access your accounting information anywhere if you have an internet connection. This makes it easier to access your files if you are hiring an accountant. Additionally, accounting software comes with cloud storage, so you don’t need to maintain physical files and tons of paper. An online program will continually back up your files on the cloud as you progress. However, it is recommended that you still maintain a hard copy of all the files, just in case there is an emergency.

Have a schedule:

Managing an account is a time taking task. And you need to be regular and consistent to have your financial statements clean. Thus, it makes a lot of sense to maintain a schedule or a routine to manage your books. For example, the first hour of the morning can be an excellent time to update your accounts when your mind is fresh. Having a schedule makes it easier for you to be consistent and stay on top of things. Your future investors will acknowledge and admire this habit because they know that the amount you are fundraising would have clear spending records. Letting your expenses pile up can become challenging when you have to do year-end tax planning. Also, keep a tab on important deadlines like VAT, insurance premium payment, corporation tax, etc., because late payment can attract heavy penalties, something your future investors wouldn’t like to see on your financial statements. When you keep accounts up-to-date, you will know what you owe and what you need to pay. So, it would be easier to keep track of all your dues.

Leverage the power of data:

Keeping a tab on all your financial records is not just to impress your investors or understand your revenue. An up-to-date financial statement can give you a lot of useful insights if you’re paying close attention to it. The real advantage of maintaining an account record is much more than that. It can give you real insights into how much revenue you are making and how much you are losing, and where your business is going. Accordingly, it can help you tweak your model. And your investors will definitely acknowledge it when they invest in your company.

Training helps:

If you are a first-time business owner, training will help master your financial statement. In your early days, it is worth investing in training so that you can make the most of your accounting software. While most people think that the software can do everything, well, you need the knowledge to operate it to reap maximum benefits.

Ask for help:

Accounting and maintaining books is no easy job. It is not uncommon to feel overwhelmed, especially when you are managing the entire business operations on your own. Reaching out for help from professionals at early stages will always save you from later troubles.

‘‘

It is essential that you keep your financial statements clean and up-to-date from the first day of your business.

Being at par with your tax obligations:

One thing that your future investors would like to see in your financial statement is your tax obligations. This is no brainer that you need to be clear on your debts if you have future plans to fundraise. No one would like to spend money on a business that has bad credits. So be sure to meet all your tax obligations and file your tax returns regularly. Avoid paying penalties for late payment fees. Keep records of all the tax returns. If you have employees on your payroll, you will need to enroll for payroll tax and remit on a monthly basis. If you are dealing in vatable goods, then ensure to fill your value added tax (VAT) returns too. Having reliable accounting software can be a valuable asset, so consider investing in one. It can help you to streamline and automate the business process.

Reconciling your bank statement:

Matching information on your bank account to the transaction history is one of the most crucial parts of maintaining account records and bookkeeping. Automating the process can fully prove that all income and expenditures are accounted for. For example, accounting software can pull your bank statement and tally it against each of the spending. You can see what has been added and whatnot, so you can amend manually. Making it a practice from your early days will definitely help you to maintain a clear account. And when you reach out to investors for fundraising in the future, this will certainly help you win some brownie points.

Don’t miss out on the invoices:

Late payments can affect your cash flows. You need to spend extra time following up on the payment. So, it is critical that you keep constant vigilance on the invoices and follow up if there is a default. It is also a good idea to add a default fee in case of late payments. You can also take advice from your accountant on how to implement these. Having a late fee attached will ensure you stay on top of payment collection against your invoices.

Apart from keeping your financial records up-to-date, your investors may also want to see some documents to verify. Certain documents that you should maintain a record of include:

Invoices and receipts that you provide and receive for your business and service
Invoices for goods, services, or other business purchases for your business
Bank account and credit card statements
Records of stock purchases at the end of the financial year and asset register
Filing of business tax returns proof
All financial statements related to your business. These may include profit and loss statements, and balance sheets
Records of payments made to employees plus payroll source deductions submitted on behalf of employees

What will investors look into?

Apart from maintaining a detailed record of all your transactions, there are some parameters that investors will check before considering you for giving funds. So, keep a tab on the following while growing your business:

Net profit: Net profit is an important parameter to determine the financial health of a company. Investors pay a lot of attention to this. So, ensure you have a stable profit. Losses can be good if you’re on track to profitability as you grow. Ensure to have a good understanding and vision about our net profit.
Sales: No matter how attractive your business model, the one thing your investor will pay attention to is how much sales you have. So, focus on setting up an exemplary sales record before approaching an investor. Remember, investors also like to see sales growth. Are you showing an upward trend, or the initial excitement is going to fizzle out soon? Clear your grounds before making a pitch.
Cash flow is the king: A sign of sustainable operation is free cash flow or the amount of money left in your account after you meet all the overheads. Investors like to see if you have steady cash flow so that you can invest in new opportunities or fight any unannounced problems.
Break event point: Short-term losses are often acceptable by investors, but they would like to see that they can earn a profit by investing in your company. The break-even point would help them understand that. A break-even point can be a sales target that can help you pay all the overheads and make some profit. A break-even point can also be built on other assumptions like increased production, optimised marketing, economies of scale, etc.

While many other factors that an investor may consider, a strong financial statement will help you earn some extra points. Even if you are not considering approaching an investor at the moment, you may want to reconsider it in the long run when you want to grow your business. So, it is essential that you keep your financial statements clean and up-to-date from the first day of your business.

Expert Connect

Chinmay Ananda
Business Storyteller, Financial Educator Finance Academy
Connect with our expert to analyse your financial statements and evaluate the risks and potential of your business

The post How Investors Read Your Financial Statements, And Why Should You Master Them for Successful Fundraising? appeared first on Dutch Uncles.