Venture Capital – Dutch Uncles

Impressing Venture Capitalists? Lessons to learn from Bicycle Startup 91

Shalmoli Sarkar — Tue, 08 Feb 2022 08:37:42 +0000

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.

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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.

The post Impressing Venture Capitalists? Lessons to learn from Bicycle Startup 91 appeared first on Dutch Uncles.

Meteor Venture, Fostering a Culture of Innovation for Start-ups

Aakash Sharma — Wed, 21 Jul 2021 12:30:09 +0000

Everyone needs support. Support is, in fact, one of the primal needs of all beings and entities that exist. From creeper plants that grow with the help of sticks and poles to human beings who have perfected their support systems over thousands of years for the ideal growth environment, a significant support push is needed for all sorts of existence. In this light, the modern drivers of business and entrepreneurship – start-ups – are no exception when it comes to needing support and aid – support for taking off from the ground to hitting markets with the aims of impacting people’s lives.

And providing this backbone of support is where the role of venture capital players becomes significant. Venture capital is the money invested in small businesses or those that exist as an initial stage start-up but have enormous potential to grow. The people who fund this money are known as venture capitalists. This story is about a new age venture capital firm, an accelerator and an angel network for modern era start-ups that is bringing new methods to the segment; this is the story of Meteor Venture.

About Meteor Venture

Meteor Venture is a seed fund and incubation firm focused on tech start-ups in India and South Asia. It empowers entrepreneurs through its range of accelerator programs such as Raise Capital, Idea to Product, Grow Your Business and Financial Coach.

But before delving into the functions of this venture firm and the significance of its programmes, let’s delve into the story behind its making. The highly young venture capital and start-up incubation firm found its start when Mr. Arpit Chundawat, Co-founder of Meteor Venture, along with his other two co-founders – Ms. Sonal Agarwal and Mr. Vipin Verma- began the journey to create an accelerator and investor network that works with disruptive start-ups across various sectors and geographies.

Mr. Chundawat has often described his professional journey as one that is relatively unusual and unconventional. He has been drawn towards purpose-driven projects that have exposed him to new and extensive experiences, and aided him in launching and scaling P&Ls of various business models. His stint includes running a joint venture in Bali, Indonesia called Dragoon Yachts. He sold the venture last year due to COVID induced challenges, and has since moved on to a marketplace model.

After this move of Mr. Chundawat, Meteor Venture found life with the help, entrepreneurial efforts, and expertise of co-founders Sonal Agarwal and Vipin Verma. Ms. Sonal has been around and working in the start-up community for over a decade now. She is a veteran finance official who has worked for Unicorns such as OYO and has a demonstrated background in financing unique business ideas and projects.

Mr. Vipin Verma, who is considered as one of the pioneers of affiliate marketing in India, has perfected the art to generate vetted and solid leads for businesses and is a key driving force at Meteor Venture. Since its incorporation, Meteor Venture has provided national and international start-ups access to better technology, talent, mentors, customers, corporations and investors.

Meteor Venture – Vision for an Innovative Start-up Space

While the start-up space in India has been on an upward trajectory for quite some time now, the country still has a higher rate of start-up failures than many other economically similar nations. A 2018 report by IBM Institute for Business Value and Oxford Economics found that 90 per cent of Indian start-ups crumble and fail within the first five years, primarily due to the lack of innovation and scalable models.

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Meteor Venture aims to change the failing nature of a majority of start-ups as it strives to empower an ecosystem hungry for innovation.

Regarding this issue, company founders have often outlined that while not all start-ups become Unicorns, mentors can set many of them on the path to earning decent profits, given that they are incubated and appropriately guided. Meteor Venture, as a venture firm, is set on enabling and empowering an ecosystem driven by budding entrepreneurs and start-ups which are hungry for innovation.

It aims to achieve these goals by driving start-ups to scale up faster and create business value. By elevating innovation for companies and transforming their business models for the profitable stakes, it provides growth hack marketing and business development services that keep the businesses leagues ahead of the competition.

Mentoring Purpose-Driven Start-ups by Meteor Venture

Meteor Venture was founded in 2020 and is based out of Gurugram, Haryana. The firm provides four programmes for start-ups who seek help and support in different areas of their business journey.

It is well known that a start-up has to cover an arduous journey and spend a considerable amount of time perfecting the basics and dotting all the I’s before reaching a somewhat stable mode. On similar lines, Meteor Venture conducted deep research using their own expertise in the field, and came up with programs that specifically suit the needs of developing and growing start-ups.

This is a look into Meteor Venture’s research-based programmes.

Raise Capital

The Rise Capital programme helps start-ups raise the money needed for their business most efficiently by dedicating a ‘seasoned team’ to the cause. The firm ensures everything – from pitch deck perfection, grooming, and being investor-ready for the journey, all nuances are paid heed to. The group includes industry experts who contact angel investors and venture capitalists for the specific needs of companies, be it debt equity, or venture debt fund, among others.

Grow Your Business

Meteor Venture’s growth and scaling programme – Grow Your Business – helps start-ups acquire new customers at a fraction of the cost. It also opens gates for start-ups to enter new markets, increase sales and revenues, reach new customers, and accelerate business growth. The firm offers affiliate marketing through its large network, digital growth hack, and B2B alliances- all at an affordable cost.

Idea to Product

Its ‘Idea to Product’ programme helps first-time entrepreneurs start their businesses and build their products efficiently. It also helps them in creating and improving pitch decks, business plans, and financial forecasts. The firm’s in-house team of coders, developers, and go-to-market experts ensure the best output at all stages.

Financial Coach

In the “Financial Coach” programme, Meteor Venture works closely with tech-based start-ups and companies to understand and formulate specific action plans. Accelerating growth is key to catching investors and entrepreneurs’ interest and taking the business to the next level. The company pledges to help manage cash flow, keep investors happy, and create a strong base of efficiencies in the operations and business processes.

These programs help start-ups at different stages – from creating an MVP to acquiring new customers to increasing overall revenue, giving them financial mentorship and actionable resources. Meteor Venture helps start-ups cover various aspects from developing business plans to financial advisory, administrative work, marketing, etc. Having an intensive network, the firm also helps revenue-generating start-ups find new partners and enables their growth to new highs.

Meteor Venture’s Growth Trajectory

Meteor Venture empowers start-ups to scale faster and create business value. The following numbers speak for themselves.

14 Start-ups Impacted
Rs. 11 crore Funding raised
21 Exclusive Tie-ups
19758 Vetted Leads Generated

Collaborating With Start-ups, how does Meteor Venture do it?

Meteor Venture nurtures innovation through the guidance of mentors and in-house growth hackers who are trusted industry leaders. The firm forms collaborations with various start-ups in a seemingly organic manner as each onboarding is ‘unique’ for the company’s portfolio, depending upon the customer needs and requirements.

The collaboration process, which is different for start-ups looking for help and investors looking to invest via the ‘Submit Your Pitch’ and ‘Invest with Us’ portals, respectively, is as easy as it gets.

The ‘Meteor Venture – Submit Your Pitch’ portal uses the simple Google Form for start-ups to sign up and make the initial pitch details for the firm to work on. The form asks basic details like the start-up name, website, person’s name and role, a brief about the start-up in less than 20 words, what problem they are solving, and how their solution is unique, among other questions. This process takes 10 minutes to finish, and then the founding members of Meteor Venture analyse it and arrange for an introductory call.

The entire process is seamless, rapid and easy to comply with for start-ups. The ‘Meteor Venture: Investor Form’ operates on a similar method and asks basic details from potential investors about their background and interest in collaborating with Meteor Venture.

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Meteor Venture helps start-ups become investor-ready and helps them get funded through their extensive network of angel investors/VCs.

At Meteor Venture, support programmes are set up for each start-up expressly. Since a majority of start-ups strive to raise capital, the firm helps start-ups with evaluation and product validation of their products in the market, examining customer base and looking into revenue generation processes. They add the start-up with promising reports to their Raise Capital programme. If the results are not conclusive to growth parameters, they move the start-up into the Grow Your Start-up programme, where they further mentor the start-up and give them free leads to monitor their growth.

As per its website, following are the working strategies and action plan of Meteor Venture for easing the lift-off of new ideas and start-ups from the ground.

Curated Playbooks: Meteor Venture assists businesses to accelerate their entrepreneurial journey with tailor-made playbooks.

Market Access: It provides a solid platform and growth hack services for entrepreneurs to increase turnover and attract investments.

Networking Opportunities: The vast network of Meteor Venture connects start-ups with distinguished industry leaders, investors, partners and service providers.

Idea-To-Product: The firm and its team help businesses and ideas in building a practical go-to business plan, validating the concept, building the MVP, and charting the path to scalability.

Meteor Venture’s Recent Undertakings and Support for Start-ups

In recent times, Meteor Venture has actively expanded its portfolio and horizon to impact the Indian start-up space. It has recently partnered with HSBC and the Women’s Indian Chamber of Commerce & Industry (WICCI) Council to empower women entrepreneurs. Meteor Venture has helped raise funds for various start-ups, including Classroom, Ezyschooling and various other new entrepreneurial projects.

Meteor Venture is also creating numerous unique and market-changing ideas such as an Uber-like service for ambulances, Cashback websites and many more such innovative plans for its portfolio start-ups to bank upon. It has helped its start-ups scale 10x in revenue through the growth hack services, which are a great value add for new businesses. They offer a 35% discount to all registered start-ups.

Future Plans

As the overall entrepreneurial graph seems to be going up in a seemingly post-COVID world, venture capital firms and incubators like Meteor Venture will have jam-packed business days shortly. As goes with an expanding business, Meteor Venture also has expansive plans for the firm’s future. The company is aiming to add fresh members to its business development and marketing teams. The trio- of co-founders need all the hands on-board for catering to the growing network of start-ups that seek their support.

As for the investors on its board, Meteor Venture is open to having new faces and industry experts, investors and mentors to guide the new businesses. According to information available in the public domain, Meteor Venture has had 25% foreign investors and 75% Indian investors connected to them.

The future of this online incubator, accelerator, and service provider for early-stage start-ups looks bright, and the firm is on a path of steady growth. With some of the best prospective start-ups in key segments already in its work portfolio, the company will have a busy future with progressive results and a distinctive impact on the start-up space of India.

For more inspiring stories like this, read our Inspire Section!

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Indian Angel Network – Money, Mentoring and Market Access

Anju Nambiar — Wed, 14 Jul 2021 08:48:11 +0000

Start-ups rarely get chosen by angel investors for funding. However, a lot of Venture Capitalists (VCs) and micro-VCs are emerging specifically for idea stage start-ups in India. The Indian Angel Network (IAN) has been actively investing in promising early-stage start-ups especially in the technology space and supporting them with mentoring and market access along with money.

However, getting shortlisted by IAN requires start-up founders to be very precocious and start-up ideas to be very promising. Shortlisted start-ups can enjoy value-add by IAN and even get introduced to other investors by the latter.

Who is Indian Angel Network?

IAN is a network of angel investors in India comprising hundreds of investors across multiple countries who are primarily interested in funding early-stage start-ups. It is Asia’s largest network of Angel Investors and includes highly successful CEOs and entrepreneurs based in India and elsewhere.

Why was IAN formed?

IAN was initially formed to discover, cross-refer and link start-ups in Asian countries mainly in India and Bangladesh. IAN was also formed with a vision to create an environment conducive for venture investing in the start-up ecosystems of these regions.

The founding team of IAN

The founding team of IAN includes Padamaja Ruparel, Raman Roy and Saurabh Srivastava. Raman Roy is well known as the pioneer of the Indian BPO industry and Saurabh Srivastava is one of India’s leading entrepreneurs and investors.

Padmaja Ruparel

Padmaja Ruparel is the co-founder and President of the IAN Fund, an early-stage investment fund by the Indian Angel Network. She is recognised as an authority figure in the Indian entrepreneurial ecosystem.

Successful start-up funding and sectors covered by IAN

IAN has covered a wide variety of industry sectors including manufacturing, cyber security, ed-tech, hospitality and new-age technology like AI (Artificial Intelligence) and drone technology. Start-ups funded by IAN that made it big include high value companies like Kwench, LBB, TagBox, Propelld, FabAlley, MySpinny, Wow! Momo, Box8, Uniphore and Native Special.

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Start-ups funded by IAN that made it big include high value companies like Kwench, LBB, TagBox, Propelld, FabAlley, MySpinny, Wow! Momo, Box8, Uniphore, and Native Special.

What’s in it for me?

IAN’s portfolio is large and diverse. From Agri-Tech to Travel, they have touched every segment and they have a number of strategic investments in their kitty. They have invested in companies at different growth stages including idea and prototype stage, Early revenue, and Revenue Generating Growth. At each stage, your company needs to exhibit certain traits and characteristics to attract funding from IAN.

Idea and prototype stage companies

Idea and early-stage start-ups by first-time entrepreneurs can raise angel funding by bringing the right talent to the table. Although young companies come under the ‘high risk asset class’ for angel investors like IAN, it’s natural that only a select few idea stage start-ups will be chosen.

It is imperative that you are well prepared before meeting with the angel investor. You need to thoroughly think through the process and know the business model of your start-up like the back of your hand. For prototype stage companies, if you don’t yet have a product, you must at least have an endorsement or proposition of the product.

At the idea stage, your start-up needs to be clear on its cash rules for approaching angel investors. You need to study your target market carefully, have a strong customer acquisition and price strategy, a great team, a robust product delivery model and transparency about company expenses. Have all revenue related information in a single place. Also ensure that your pitch is well rehearsed and your pitch deck is pinpoint precise.

Early Revenue – Use case

Oliveboard, an EdTech start-up raised INR 23 Cr. in Pre-Series A fundraising led by IAN. They were funded by IAN at the early revenue stage since they have ventured into the government job preparation industry in India which is a lucrative market estimated to be worth INR 400 B. This market has strong growth drivers for two reasons:

- The closure of offline coaching centres
- The strong internet penetration in Tier 2 and 3 cities

Revenue Generating Growth – Use case

goSTOPS, a Backpacker Hostel Brand targeting the GenZ population recently raised Pre-Series A funding led by IAN. goSTOPS is currently at the revenue generation growth stage and was chosen by IAN due to their strong market standing and innovative business model. Start-ups and entrepreneurs can be funded by IAN if they have the potential to be at the forefront of a particular industry segment or market.

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Family Offices Mushrooms as India Gives Birth to Billionaires Every Year

DU Desk — Fri, 09 Jul 2021 10:35:05 +0000

When the entrepreneurial goals of a mega rich family or a seasoned entrepreneur are done and dusted, they are left with ample time and resources to venture into new businesses. When we say ‘mega rich family’, picture the likes of Ambani, Tata, Birla, and other empires. Also picture well-known uber-rich celebrities, and NRI businessmen wanting to set foot in the Indian start-up and business ecosystem. To realise their vision of being on par with new-age businesses, family offices are set up to fund companies in sectors like technology, neo banking, etc.

What is a family office?

A family office is a personal investment office/vehicle which is operated by billionaires or mega HNIs (High Net-Worth Individuals). These individuals usually pump their personal fortunes into promising new companies that may be start-ups, VCs or PE funds that demonstrate growth capabilities. They in turn give rise to more billionaires through their high valued funding sprees. Family offices thrive in ecosystems with growing investment opportunities. They are traditional business families that play the role of a Venture Capitalist or Private Equity fund. But unlike VCs, family offices attach their portfolios to traditional assets like stocks, real estate, or gold. A family office utilises private wealth of business leaders, celebrities, NRIS, multi-generational entrepreneurs for investing in other businesses. They are wealth management services aimed at preserving and growing the money of the rich.

150+ family offices launched last decade

In just the past decade more than 150 family offices have sprung up. What’s interesting is that the very same start-ups that received family office investments have risen to the unicorn status in the past decade. This is testimony to India’s growing billionaire club.

Prominent family offices in India

A lot of celebrities also own family offices like Yuvraj Singh’s YouWeCan ventures. NRIs have family offices based out of India like Abhinav Jhunjhunwala’s AJ Capital in Singapore, Satveer Singh Thakral’s SGAN, Satpal Khattar’s Khattar Family Holdings, and S Ramakrishnan’s Transworld Group Family Office based in UAE. Among family offices with mature portfolios in India, noteworthy are Mohandas Pai’s Aarin Inspired Capital, Salisbury Investments by Aditya Puri, Former MD and CEO of HDFC Bank, Ratan Tata’s RNT Associates, NR Narayana Murthy’s Catamaran Ventures, Burman Family Holdings, Harsh Mariwala’s Sharrp Ventures, PremjiInvest by Wipro’s Azim Premji, Damani Group’s Artha India Ventures, Rana Kapoor’s The Three Sisters (run by Kapoor’s three daughters – Radha, Raakhe and Roshini), Ronnie Screwvala’s Unilazer Ventures, and Pratithi Family Office by Kris Gopalakrishna, co-founder of Infosys.

Associating with marquee brands

The prominent family offices have been quick to associate themselves with marquee brands the likes of which include Flipkart, Snapdeal, OYO Rooms, Ola, and Udemy. All these brands are technology companies which goes to show that Family Offices are swiftly progressing in the technology direction. The Three Sisters Family Office had associated with the brand ‘Businessworld’ back in 2014 including all its marquee events and conferences.

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A family office is a personal investment office/vehicle which is operated by billionaires or mega HNIs (High Net-Worth Individuals).

What’s in it for me?

For ultra-high net worth individuals (UHNIs), venture capital has emerged as a means of generating superior financial returns. The fact that the returns keep coming even during a pandemic or a similar crisis has been revelatory for family offices in India. Currently, the VC and PE asset makes up for 20% of their portfolio allocation while contributing to 30% of their portfolio returns.

Technology investments have emerged as a profitable investment for wealthy families. However, they find it difficult to gain exposure to these high growth portfolios. As such, family offices rely on professional Venture Capitalists to get the opportunity.

As new billionaires are emerging with each passing year, the number of Family Offices that cater to them is also growing rapidly. The total wealth held by Indian HNIs is growing and is set to touch $700 B in the year 2024.

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Seed Fund Opportunity for Early Stage Agri-tech Start-ups

Anju Nambiar — Tue, 06 Jul 2021 08:35:06 +0000

EGreens, an investment firm headquartered in Delhi focuses specifically on Agri-tech start-ups. They have launched a seed fund valued at $2.1 M (INR 15 Cr) for early-stage investments into agri-tech start-ups.

Eligibility Criteria for Start-ups

Early stage Agri-tech start-ups in India are eligible beneficiaries for funding.
Start-ups that operate on disruptive business models spread across the end-to-end value chain of food production, storage and transportations can be at the receiving end of the funding.
Start-ups who are providers of market linkages are eligible.
Start-ups who leverage technologies like AI (Artificial Intelligence) and ML (Machine Learning) in farming practices are eligible.
Start-ups who implement IoT (Internet of Things) across the supply chain also come within the scope of benefits.

The Objective

The objective behind EGreens is to identify and invest in start-ups that are offering last-mile delivery solutions in the agriculture sector. EGreens is interested in utilising valuable opportunities to fund Agri-tech start-ups that will address the fragmented agricultural supply chain in India.

With the inception of this new fund, EGreens wants to make a move into food distribution and retail from the FMCG sector. EGreens is also a ‘people first retail company’ alongside its investment firm and has amassed decades worth of experience in the FMCG sector.

Start-up funding success

EGreens has made its maiden investment of INR 15 Cr ($2.1 M) in its in-house brand VegEase. VegEase is a food retail brand which delivers fresh fruits and vegetables to customers’ homes through its ‘cart-at-home’ model.

After being bootstrapped by its parent company, VegEase acquired a user base of over 5000 customers within a span of 3 months. It has also reported a volume of 200 orders per month. They have also established two warehouses in two cities Delhi and Gurugram, each spanning 9000 sq. ft. in total area. They have also achieved a turnover of INR 7 M and reported a return rate of 0.25% in their sales which is tremendous given the average industry return rate in this segment is 2-3%.

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The objective behind EGreens is to identify and invest in start-ups that are offering last-mile delivery solutions in the agriculture sector.

What’s in it for me?

EGreens is prioritising its future investments for Agri-tech firms that can create forward and backward integration with its own venture ‘VegEase’. EGreens will surely fund Agri-tech start-ups in India which will help both EGreens and VegEase diversify their market footprints from B2C to B2B and B2B2C.

There are several Agri-tech focused investors in India alongside EGreens like Omnivore, Nabvebtures, India Quotient, Accion Venture Labs, Aavishkaar, WEH Ventures and Ankur Capital to name a few with similar investment philosophies. WEH Ventures, a Venture Capital firm based in Mumbai has already launched its second seed fund of INR 100 Cr after the successful launch of its first seed fund corpus of INR 40 Cr for Agri-tech start-ups in India.

EGreens wants to invest in companies that are focused on consumer insights since these are the firms that will drive assured growth.

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It’s not the Lion, it’s Tiger Global King of the Jungle

Anju Nambiar — Thu, 01 Jul 2021 10:30:28 +0000

Tiger Global’s aggression in Indian Start-ups is keeping the fat pay checks coming, but the impact of this aggression is yet to be gauged in the long run. The Indian Start-up Ecosystem is abuzz with talks about Tiger Global. They have been showing their bullishness in India and are set to play a pivotal role in the next generation of Indian start-ups.

The No. 1 Investor in Start-ups this year

Tiger Global is currently the top investor in Indian start-ups, especially in unicorn start-ups. It has ousted ‘Sequoia Capital’ from its position to assume the title of being the top investor in 2021. This year, they have already participated in 15 start-up funding deals. Among these deals, 9 of them were unicorn start-ups funded by Tiger in the first half of this year. The Unicorn league in the Indian start-up ecosystem has about 52 start-ups, out of 25 have received funding from Tiger making it a 50% shareholder in the unicorn club.

Start-ups funded by Tiger Global since 2020

Freshly funded by Tiger this year are GoMechanic (car services platform), ClassPlus (a B2B ed-tech start-up headquartered in Noida), and Kutumb, a Community Platform and Social Networking App. Not too long ago Plum (health insurance start-up) also bagged investment led by Tiger Global. Tiger Global’s portfolio mainly comprises Unicorns and Soonicorns (soon to be unicorns) in India. Other start-ups which received funding this year by Tiger Global include:

Innovaccer (health tech)
Infra.Market (real estate tech)
Groww (fintech)
ShareChat (regional language social media)
ChargeBee (enterprise SaaS)
Zomato (food tech)
Urban Company (online marketplace)
Gupshup (messaging services)
Moglix (B2B commerce)
CRED (fintech)
Koo (social networking)
ProgCap (fintech) and
Apna (professional networking)

In the year 2020, Tiger has invested in 13 Indian start-ups.

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Tiger Global is currently the top investor in Indian start-ups, especially in unicorn start-ups.

What’s in it for me?

It’s a fact that Tiger Global is interested mainly in later stage start-ups and in post Initial Public Offering (IPO) deals. Although the investment rounds and the valuations look fabulous on paper, the truth is that Tiger makes ‘structured investments with exclusive rights for downside protection’. It may seem on the surface that Tiger is placing bets instead of making strategic investments. But if truth be told, they are making informed choices and choosing deals with ‘momentum in diverse sectors’ which have ‘volume scale’.

In the recent past, Tiger has maintained diversity in the sectors which start-ups belong to and the stage they are in while investing. As a case study, if we look at the sectors which Tiger Global has invested in since the pandemic began (ed-tech, job tech and fintech), these are the industries which have been successful during the pandemic. These are the most promising industries which will receive future investments from Tiger. D2C companies with pan India presence and global market opportunities have a high chance of gaining Tiger Global’s interest.

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Money, the Bloodline of any Business

Anju Nambiar — Fri, 18 Jun 2021 02:35:02 +0000

Start-ups have become the most valuable asset of the country. But what’s backing the unprecedented growth of some of the highest valued unicorn, IPO, and pre-IPO stage start-ups in India? Money, of course! A downpour of funding from private equity firms, M&As (Mergers & Acquisitions) and some good old VC deals. Money is thus the bloodline of the Indian start-up ecosystem but with all the funding pouring in, start-ups naturally have questions they need answered.

Giving up shares for deserving stakeholders.

When a number of investors come on board, it’s a tough call to decide about dilution of shares. But it’s important for start-ups to be in tune with the goals of the business to understand what’s best. If you’re a team of co-founders or if you plan to give up shares to your employees, make the decision based on who has the best interests of the company at heart. A number of start-ups are giving up small percentages of their company to employees via Stock Appreciation Rights (SARs). By giving stakes in your company to the core team, you know your company is in the right hands.

How to raise start-up funding without losing equity

The worry about having to give up full or partial ownership of your business to fulfil your operating capital needs shouldn’t keep you up at night. Funding often leads to loss of equity but there are ways to ensure that you have full ownership of your start-up. Bootstrapping is surely the best method to keep your equity. If you are a start-up with low capital expenditures, you are at an advantage because you can become a fully bootstrapped start-up (reliant purely on your existing revenue). The next best way to keep equity is to go for business loans. There are a ton of start-up and MSME loan options that you can avail now that the Government is actively supporting the start-up community.

How to get Funding

Getting start-up funding has become relatively easy. If your idea is based on a ground-breaking technological revolution, you can pitch to Angel Investors, Incubators/Accelerators or Venture Capitalists. You can also apply for the Start-up Seed Fund scheme, The Atal Innovation Mission, and look into other Governmental Grants and schemes to get funding for your start-up.

Which Funding option suits me?

The biggest Angel Investors are generally scouring for unicorns to add to their portfolio. On the other hand, Venture Capitalists rarely take a second look at pitches that don’t excite them right off the bat. So how will you know which funding option is best suited for your start-up? Irrespective of the industry you belong to, you can always choose to crowdfund your start-up, approach an incubator/accelerator as an early-stage start-up, or apply with a micro-VC (they usually pitch into pre-seed and seed funding rounds). You can always approach NBFCs (Non-Banking Financial Corporations) who are microfinanciers that are much more flexible than traditional banks. Bank loans are also an option but one that’s not highly recommended for start-ups that are scaling up. Unless you are confident of your ability for timely paybacks. There’s also always a degree of risk involved in bank loans.

The best funding option for all start-ups in India is to seek capital from Government programs. There are several new programmes launched like the 10,000 Crore Start-up Fund, the Bank of Ideas and Innovations Program (a program to share your innovation in exchange for capital). There is also the ‘Pradhan Mantri Micro Units Development and Refinance Agency Limited’ (MUDRA) which is funding SMEs. There are also several state level programs dedicated for small businesses. You can also approach SIDBI (Small Industries Development Bank of India) which is dedicated to offering loans for MSMEs.

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A downpour of funding from private equity firms, M&As (Mergers & Acquisitions) and some good old VC deals. Money is thus the bloodline of the Indian start-up ecosystem.

As a start-up, getting a solid funding source is the backbone in any business. Obtaining external funding is critical if you want to scale-up. However, choosing the best suited funding option is important if you want to go past the fledgling stage. Nevertheless, the environment is conducive for start-ups in India. Making the right choice in money matters will determine if your start-up can survive the market.

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Six Myths about Venture Capitalists

Anju Nambiar — Fri, 07 May 2021 03:30:11 +0000

Venture Capitalists are seen as the bigwigs of any industry. With all the funding and investments rushing into start-ups, it’s no surprise that every new business aspires and dreams of being singled out by a VC. But does the start-up community truly understand the role of VCs or have we succumbed to a number of myths that prevent us from getting the best from them? The below myths about VCs will allow you to change your perspective and see Venture Capitalists in a new light:

Myth 1: VCs are the go-to funding source for all new businesses and start-ups.

VCs are not the be-all and end-all of start-up funding. In fact, most start-ups source their initial funds from a number of different sources like business loans, money lenders, angel investors, and even through crowdfunding initiatives. Even friends and family pitch in on several occasions. VCs invest in start-ups with a viable business idea after careful analysis of their professionally presented pitches.

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The financial health of a VC is rarely affected by the success or failure of an investee.

Myth 2: The success or failure of an investee will affect the financial health of a VC.

The financial health of a VC is rarely affected by the success or failure of an investee. If anything, they make profits if the investee scales up. In the event of loss, the VC’s bet on a start-up is proven false. Most often VCs do not put their own money into a start-up. They raise capital for funds and the money from their own pocket accounts for less than 1% of the investment.

Myth 3: VCs are putting their own money and betting on a start-up.

While it’s true that Venture Capitalists take a certain degree of risk while investing in a start-up, their decision making is often backed by in-depth analysis into the business model of a start-up. They also have deep knowledge on the industry and market. So, they don’t place wild bets and rarely put their own money into funding a start-up.

Myth 4: A start-up is completely dependent on the VC.

While it’s true that start-ups receive funds from a VC, they are not completely reliant and need to fall back on their own business acumen to ensure success. Identifying and tapping into the right market opportunities, and informed decision making determine business success which VCs have little to do with.

Myth 5: VC investment guarantees the success of a start-up.

No, it doesn’t. VC investment is merely a support for a start-up and doesn’t guarantee the success or failure of a start-up. It’s more important to focus on making the investment worthwhile and determining how and when it will pay off instead of being laid back just because you have a VC on board.

Myth 6: Getting funding from big VCs is like hitting the jackpot.

Since more start-ups are receiving funding from big VCs, it’s easy to assume that getting a huge amount of investment from big VCs is like hitting the jackpot for your start-up. Oftentimes, these fundings come with a number of conditions and restrictions. Your decision making is often restricted with huge VCs on board, and oftentimes, other investors tend to backout or refuse due to the looming presence of a big VC.

What’s in it for me?

Investor behaviour has been very active and rampant in recent times. This trend is predicted to continue. VCs will continue to pump money into start-ups with added vigour. If you are ready to take your pitch to a VC, do thorough research on their experience while working on innovations in your own start-up. But most importantly, forget everything you think you know or have perceived about VCs because chances are that we believe a number of myths without realising.

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What Is the Brutal Truth About Venture Capitalists?

Anju Nambiar — Thu, 22 Apr 2021 05:35:05 +0000

Before pitching your start-up idea to a Venture Capitalist (VC), it’s important to understand how they function. We can even let you in on a few brutal truths about VCs that you should know about..

Unicorns don’t impress a VC

Even with the Unicorn explosion currently ensuing, venture capitalists are not too ecstatic when a start-up turns into a unicorn. Mainly because they are more interested in companies that can ‘endure’. According to VCs, a start-up may turn into a billion-dollar company but that does not imply that the endurance level of the company is high.

A VC always checks the competition for a potential investee

Whenever a start-up approaches, VCs will first see if it belongs to a less-crowded segment. If the company has too many competitors, it is seen as a challenge and a VC is less keen on investing in such start-ups.

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For most traditional VCs in India, profitability takes centrestage and is the deciding factor in most, if not all their investments.

Start-ups with unique offerings are preferred

A VC prefers companies with unique offerings in their products/services. If the company is differentiated with one-of-a-kind products/services, it will be prioritised.

VCs are also on the lookout for positive outcomes for the user of a product/service. Start-ups that offer value or solve a problem for the target user can find favour with VCs.

VC strategy is independent of their portfolio

Irrespective of what kind of portfolio a VC has to show, their strategy is most probably determined by other internal factors like the experience of the sponsors, management teams and directors. In reality, you can’t conclude about their investing strategy just by looking at their portfolio.

Profitability takes centre stage

For most traditional VCs in India, profitability takes centre stage and is the deciding factor in most, if not all their investments. Modern investors are now beginning to look beyond profitability to see what the start-up has to offer. But most of the traditional VCs in India still view potential investees from the profit/loss scenario.

Start-up founders’ time is not valued

Most VCs do not value the time of a start-up founder seeking investment. Since there is still no efficient process among VCs to ensure that start-ups seeking investments receive quick response, they are generally made to wait.

Proposal rejections take time

The next brutal truth about a VC is that they reject a lot of investment proposals, but even these rejections take time. Having to wait around for an investment rejection is very frustrating, but it’s the brutal truth.

Oftentimes investment terms are not fair

In the event of an investment, generally the terms laid down by a VC are not very fair to the start-up founder. A lot of investees are taken by surprise by the terms, especially after the exclusivity signing and during the negotiation of definitive documents. Investment terms are not always transparent and upfront.

Seed Funding is not preferred

VCs do not usually like to invest in the seed stage. This is because the company is still in the ideation stage and investing in such a start-up is like taking a wild chance. There is nothing to show that it’s a wise move. Getting seed funding from a VC is hardest because it is viewed as very high risk. In the event that a VC invests in the seed stage, they see themselves as partners and not as investors in the start-up.

What’s in it for me?

VCs have become very brutal in this year alone. For instance, Tiger Global is aggressively writing checks. While this is definitely good news, this kind of aggression may hinder other investors. When aggressive VCs like Tiger Global invest in your start-up, the investment level is often very high and cannot be matched by other VCs. In the event of an exit by Tiger Global, other VCs may not be ready to back you, leaving you stranded. This is one scenario that you need to be careful about in the current VC funding frenzy.

But the fact of the matter is that more technology start-ups will become unicorns. NASSCOM and TiE are also taking on the aggression towards the Indian start-up ecosystem’s growth. The brutal truth now is that this is the right time for start-ups to get investments. It’s brutal, but it’s good and true. By 2025, India will have 100 unicorns and your start-up better make a place on that list.

The post What Is the Brutal Truth About Venture Capitalists? appeared first on Dutch Uncles.

Is it Better to Be an Entrepreneur Or a Venture Capitalist?

Anju Nambiar — Tue, 20 Apr 2021 05:30:08 +0000

The Indian start-up ecosystem is booming post 2020. Despite a raging pandemic, start-ups managed to break all odds and touched an absolute new high. New start-ups are cropping up and venture capitalists are also taking centre stage along with them.

India recorded 6 new unicorns in just first week in April. The total number of unicorns currently in 2021 is 10 and April is being hailed as the unicorn month.

In India, what is happening in the start-up world is very bizarre and very amazing at the same time. There are start-up unicorns in every corner of India right now.

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New-age start-ups and micro-VCs are a match made in heaven. It’s your choice what side you want to be on because both are the right choices currently.

Why you should become an Entrepreneur.

A healthy and productive exchange is occurring between entrepreneurs and VCs currently where entrepreneurs are communicating ideas very well and are getting immense funding from Venture Capitalists. A trickle-down effect is happening for the start-up community where investors are increasingly interested in seed and series A funding rounds.

2021 is the year of fundraising for entrepreneurs and this is the right time to look for early-stage Venture Capitalists since they have become more accessible.

There is a funding gold rush happening and as an entrepreneur, this is the opportunity to jump in and seize funding with just a solid idea.

It’s the right time to become a micro-Venture Capitalist.

In the investor space, a lot of angel investors are opening micro funds to support early-stage start-ups. As an investor, these micro funds are putting their money in the right place where the potential is high. That place is the Indian start-up ecosystem.

The number of micro-Venture Capitalist funds in India are drastically increasing because of the kind of start-ups coming out of the Indian start-up ecosystem. They are all new age start-ups, and they have products which are very cost effective but technologically powerful and advanced. These start-ups are targeting global markets worth billions.

Set up a fund with a corpus below $30 M and invest in pre-seed and seed stage start-ups.

Investing beyond seed funding like series A will be tough as a new Venture Capitalist because there is currently a lot of aggression in the market. Big corporate VCs are investing heavily in start-ups and the competition is very high.

In the last 3 years, micro-VC’s have invested a total of $341 M in the Indian start-up ecosystem. This money has gone to 566 start-ups and a total of 730 deals have been closed.

Even if you can’t afford a lot of capital, you can help and guide bubbling start-ups by supporting them and offering them valuable resources like unconditional network access, expert guidance, and by assisting in fundraising from other Venture Capotalistss.

In the Indian investors’ landscape, micro-VCs are new age VC’s, a perfect match for new age start-ups.

They are providing risk capital which bigger VCs possibly cannot provide.

Big Venture Capitalists are investing a lot of money. But fledgling start-ups are not eligible for such large funding. Also, the founders are probably very raw, they don’t have the right knowledge. Most probably their pitches get rejected. These start-ups are considered high risk but promise high returns since they are backed by new age, enthusiastic, solid ideas in the tech domain.

Micros VCs seed funding these start-ups have high possibility of good returns because it is the season of unicorns. Your capital will be small, but you will be writing seed fund checks for the next generation of innovative start-up owners. There is a high chance that your checks are going to a worthy place.

As an example, iSeed is a Micro Venture Capitalist fund started by Utsav Somani who was a part of AngelList. iSeed recently got its second fund, 50M $. Which will be invested in the Indian start-up ecosystem.

What’s in it for me?

There is tremendous funding opportunity for entrepreneurs in 2021. Also, the next 10 years will be the years for India’s tech entrepreneurs. So, if you want to become an entrepreneur, the tech domain is most lucrative at the moment.

If you want to become a Venture Capitalist, the time is right to become a micro-VC. As a micro-VC investor, you can invest in start-ups who are in the absolute fledgling stage. You could also act as a mentor or first investor. Capital will be low to invest in this stage.

New-age start-ups and micro-VCs are a match made in heaven. Its your choice which sides you want to be on because both are the right choices at the moment.

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