Will The New FDI Guidelines For E-commerce Change The Indian Retail Industry?

The Indian Government announced a policy allowing 100% FDI in online marketplace platforms. But the policy added that e-commerce entities operating in a marketplace model will not directly or indirectly influence the sale price of goods & services and will maintain a level playing field. In effect, this means that e-tailers will now not be able to provide discounts as a business strategy to acquire or retail customers.

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While many in the startup eco-system were critical of the government interfering on how e-commerce companies run their business, many, especially brick & mortar retailers and those who were critical of the deep-discounting strategy, welcomed this move as something that will ensure a level playing field.

While I fully agree with those who want the government to stay out of deciding how companies should run their business and what marketing strategies they should deploy, I find no merit in the argument that this policy will create a level playing field.

Why do brick & mortar retailers feel that the field was not level? What prevented them from raising capital – from banks, VC’s, PE’s or from public markets that some of them have experience in tapping – to follow similar strategies that e-commerce companies deployed. And if they did not want to raise capital because they did not agree that discounting was a sensible business strategy, they should simply follow the strategies that they feel are most suitable for a retail business. Just because I disagree with your strategy does not give me the right to declare it as unfair.

A handful of PE’s and VCs were / are willing to bet big bucks on their conviction that discount will be a more capital-efficient way of acquiring customers faster, and their belief that once a customer is acquired, there will be a way of retaining the customer to benefit from the expected ‘lifetime value’ of that customer. Whether this strategy is prudent of not, only time will tell. It is their money and they are willing to bet it on their conviction and belief. Just because you do not agree with discounting as a prudent business strategy does not give any one, brick & mortar retailers or the government, the right to protest against the strategy or block it.

Those critical of the deep-discounting model also argue that discounting reduces a brand to a commodity. I disagree. A strong brand is something that consumers trust and feel strongly about for the value proposition that it delivers to them. Yes, they may switch to buying it from someone who offers it cheaper. But if they are switching to a cheaper option, to me it just means that the brand connect for the user was not strong enough for the price-value equation to hold. Anyway, no one is forcing any brand to participate in deep-discounting models online or offline. And if e-commerce players were offering discounts on their own, the brand owner should in fact be happier with a healthier price-value equation.

That said, irrespective of whether e-commerce players will find some loopholes to continue to offer discounts, they will need to strengthen the core foundations of their businesses. Customer experience, supply-chain, warehousing, logistics, after-sales services, brand equity, being good places to work at, being responsible corporate citizen, CSR, etc. are some of the building blocks of any strong business. Many of those who started as startups in the recent past have started to develop organizational competencies in some of these areas. But building organizational competencies, including culture and processes and brand equity, is hard work and takes a long time.

E-commerce players too are in the retail business. Some of the rules of the retail businesses will apply to them; and they may redefine some of the rules. But unlike the government’s definition that ‘e-commerce marketplaces’ are ‘information technology platforms’, I would argue that e-commerce companies need to think of themselves as retail companies, with online as their ‘currently’ (and perhaps for a long time) preferred mode of engaging with consumers.

Now, whether consumers who started buying online will switch back to offline if the discounts stop remains to be seen. E-commerce and brick & mortar retail businesses provide a significantly different and differentiated experience for the customer. I like going to shops as much as I enjoy the convenience of buying online. And I may continue doing both. Much like sometimes I order food via an online app, and sometimes I go to a restaurant to eat. Just because the app offers me cheaper options I am not going to stop going to restaurants, and just because the apps stop discounting I am not going to stop ordering from them. Both customer engagement mediums will have to create their customer-delight points differently, and the pressure from each other will drive innovation beyond just discounting. Hopefully. Or should I discount my optimism?

Either way, the government should refrain from suggesting to the industry what business strategies are acceptable and what are not. As long as it is legal, it should be permissible.

This article was originally published Inc42.

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What Makes an Entrepreneur? A Look at Their 5 Die-Hard Traits!

What Makes an Entrepreneur?

Think carefully before you answer. Because, this question is not about distinguishing good entrepreneurs from the bad ones. It’s also not about who among them has a Midas touch and who doesn’t.

Being an entrepreneur is no cakewalk. So, whoever has taken or is planning to take this plunge, take a bow. Success or failure in entrepreneurship is not important. The fact that an entrepreneur dares to take an uncharted path, move out of a comfort zone to pursue a vision, and this despite knowing that it is going to be a tough, challenging journey defines the undying spirit of an entrepreneur.

In the course of my entrepreneurship journey, I have come across these 5 die-hard traits that make someone the ‘entrepreneur’.


Entrepreneur are dreamers, they know where they want to be in the future. They have a crystal clear vision and a definite sense of purpose and direction to fuel it. Some people say entrepreneurs are gamblers. Well, they are not. Entrepreneurs are just this bunch of people who possess an uncanny ability of farsightedness and gut instinct. They recognize the unique opportunities which others don’t see and connect the dots to transform the picture in their imagination onto the canvas.

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Guest Post – Digital Marketing Tips for Bootstrapped Startups


You are ready to get your brand off the ground. It’s an exciting time. There are going to be lots of challenges in order to get your voice out there. You are basically competing in two categories. You are competing with those who are already in your industry brand. You are also going up against the other messages that people are sending.

There are other brands that are going to be doing and saying the same thing as you. You need to make your voice count. You need to make your voice be heard. You need to be saying something that no one else is. This is exactly what we will be exploring today.


1) You have to post things frequently. Always be consistent with your message. Do not stray from your original brand. When you respond to posts, be sure you are doing things accurately and sensibly. It’s not enough to post a few responses every few days. You need to post things every day. The one thing you need to watch out for is posting too much.

Some brands get in the habit of overdoing it. Do not fall into this trap. Look on pages like Google Analytics.Pages like this will give you some idea of how much is too much.

2) Do not use your social feeds as a means of promotion. This is not what these platforms are there for. Spend some time and mic things up. Use these platforms to engage and get to know your audience. Along the way you can throw in some promotional stuff, but do not make this your end goal.

Remember this, it’s not about you. It’s always going to be about your customers, your fans. Never make it about you. Your customers can smell this a mile away. Your customers will also be turned off by this. Many brands for Bootstrap startups have made this mistake. Listen to what we are telling you. Learn from this.

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Some Tips For Startups Presenting In B-Plan Competitions

I was part of the jury at Conquest 2015, the annual startup fest and B-Plan competition of BITS Pilani. Conquest is perhaps, one of the most meaningful Business Plan competitions in the country. The Conquest team makes efforts to provide mentoring support to shortlisted teams, so that their plans are refined by the time they get to the finals. The program is designed and executed entirely by students.


(Disclosure: Applyifi was the partner for curating startups for Conquest 2015. However, my positive comments are not because of that. I have been associated with Conquest for the past 10 years and have always found it to be well curated, well managed, and well attended. That BITS Pilani has a very vibrant and involved alumni network, supporting New Venture Creation on campus and are a huge support for Conquest, is a big plus).

Click here to see the 10 finalists of Conquest 2015. (It was great to see teams that were comfortable pitching their venture in an open forum. It shows the confidence of the entrepreneurs, and that they are not afraid of being copied.

Some Observations From Yesterday’s Finals:

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Angel investors, VCs and other funding options for startups

While most entrepreneurs think of VC funding as the most obvious way of funding their startups, there are actually many different ways in which you can fund your startup.


Getting Risk Capital I.E. Angel Investors Or Venture Capitalist – VCs

Angel investors or VCs are investors who give you capital in exchange of equity in the company.

Angels and VCs buy equity in a company for a price and expect to make a profit by selling it at a higher price. Just like it happens in the stock market, but in this case because your company is not listed, VCs make money by privately selling the stock they hold in your company to someone else.  E.g. an angel investor may ‘exit’ by selling his/her stock to a VC and later the VC could exit by selling the stock they hold to either a Private Equity firm or to a strategic investor, or in rare cases by diluting their holding during or post an IPO.

The money that angel investors give is collateral free. I.e. you do not have to mortgage your house or something to get money from angel investors of VCs. In case the company fails, investors lose their capital and entrepreneurs do not have to return the capital. This is the one and only reason why angel investors and VCs will evaluate plans thoroughly before making a decision to invest in a company. In effect, they are taking the following risks about your venture:

  • That you and your co-founders are a great team that is capable of scaling up the business
  • That your concept will work
  • That the market is large and therefore there is potential to build a large company

Because of this, funds raised from angel investors, VCs and later from Private Equity funds is called ‘Risk Capital’.

While angel investors and VCs provide capital without collaterals, and thus allow you to start up without having your own capital or collaterals for a loan, it is probably the most expensive form of capital. That’s because you are giving away equity in exchange for the capital you raise.

Let us understand this with an example. I am of course, simplifying and exaggerating for easier understanding, but the principle is correct.

Let us assume company A raises INR 10 lacs [i.e. USD 20,000] from an angel investor and gives the angel investor 10% equity in the company. Assume further that this company is able to successfully scale up and is receiving aINR 5 crore [USD 1 mn] funding from a VC for a valuation of INR 20 cr.  [USD 2 mn].  Assume that the angel investor exists at this round by selling his stake to the VC. In this scenario, the VC would get about INR 1.5 cr for his/her share holding in the company. The illustration below gives a sequential view of the capital structure of the company after every event i.e. when the angel invests, when the VC invests and finally when the angel exits by selling his/her stake to the VC.


Bootstrapping is the art of going as far as you can without external funding. I.e. pooling together your own resources, usually at a pre-concept stage or at a prototype building stage.

Often, people bootstrap their startup while still keeping their job at some. Whether you should bootstrap or go for external funding is a factor of how much money you need, and for what. I.e. if you are building a solar micro-grid, it is unlikely to be funded through bootstrapping, as it is likely to be a capital-intensive business. However, on the other hand, an e-commerce venture can most likely be bootstrapped… often by using SAAS platforms, etc.

When to bootstrap

  • When your concept is yet to be proven … and can be proven with limited capital
  • When you too are unsure if you would like this to be your lifetime career and want to give it a shot
  • When you have the resources to go past the concept proof stage

When not to bootstrap

  • When the capital required for the proof-of-concept stage is more than what you can garner from your current resources

Even when you don’t need the capital, it is sometimes good to pitch to investors as it gives you a good feedback on your concept. If many investors say no, it may be worthwhile evaluating the concept and pan thoroughly before diving into the game.

You may want to consider the points below before you take the decision to bootstrap:

  • Evaluate whether your idea has a good business case – speak to some experts, pay attention to those who are not excited about your idea. After all, even if it is not costing you a lot of money, your time invested has a lost opportunity cost.
  • Prioritize: to bootstrap efficiently, you need to make your limited resources go far. Take a call on what is critical and what can be put off till you receive adequate capital.
  • Keep the expenses side as low as possible. That means having a very, very lean team. That means hiring multi-taskers rather than specialists.
  • Consider SAAS and outsourcing: Even if that is not your most preferred option, you should take a call on what is important. Is getting ‘something’ out in the market more important or getting ‘The most perfect product’ most important? SAAS platforms may not give you the customization possibilities, but often they can shave off a significant percentage of your funding needs. You can always develop your own platforms after you have proven the concept and the model.


In other words, taking a loan.

Institutional loans often require a collateral, which many entrepreneurs may not have. Even if you have the collateral, do a real hard evaluation if the business model and concept is fully ready for you to take an individual risk on. Often, getting other external investors gets you more parties to take strategic decisions with, and provides an invaluable group to bounce ideas with.

Friends & Family Round

For startups, which need limited capital to start up, a friends & family round may be an option worth considering.

Points to remember in a friends & family round

  • Treat the friends & family round as a formal fund raising round too – pitch to the interested investors as you would to a group of angel investors or VCs
  • Complete the paper work and other formalities too – issue equity shares
  • Manage the relationship as a professional investor relationship – send quarterly reports, have a board, etc.

Get Strategic Investors

  • Larger companies for whom your concept is an adjacent or related opportunity may find it interesting to investing as a strategic investor.
  • Adjacent opportunity – e.g. Educational content platforms could be an adjacent opportunity for a large company in the education space
  • Related opportunity – e.g. healthcare services for the poor is a related product for a microfinance company
  • A strategic investor, apart from providing capital, also helps validate the concept for external investors thus making it easier for raising the next round of funding or for getting co-investors in the current round.

To sum it up – there is no ‘one size fits all’ situation here. Pick the one that is best suited your startups’ needs.

Live it up. Start up.

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11 components that make up a good business plan

Investors will be interested because you have a plan to address an opportunity well, not just because you have identified an opportunity that is interesting. That’s why, while having a good idea is certainly a good starting point, it is not enough for investors to invest.

Most entrepreneurs make the mistake of detailing out their product or service or concept. What most investors are looking for is your plan for building a strong, profitable, scalable, defensible business around that product or concept.


The success of an entrepreneurial venture depends entirely on the quality of execution. Many companies fail to implement their ideas well. Hence what investors seek in the plans they review is evidence that this team will be able to execute well on a concept that appears to address a potentially large market.

What should a business plan cover?

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Starting Your Entrepreneurial Journey – Some Food For Thought

In my view, easier availability of early-stage capital than ever before, public celebration & adulation of entrepreneurial heroes, a well-deserved respect for entrepreneurism and also society’s willingness to accept failures in entrepreneurial ventures make it easier for younger people to consider entrepreneurship as a career.

I share below some observations that will hopefully provide some food for thought before you embark on your entrepreneurial journey.


A great idea of concept is not the same thing as a great business. Once you identify aconcept that has a meaningful value proposition to your potential customers, you have to think of how you can build a strong, sustainable business around that conceptThink hard about concepts like revenue streams, business model, go-to-market strategy, resource requirements, etc.

Don’t ignore challenges. Think hard about all possible challenges and then find a way to mitigate themEntrepreneurs tend to overlook the challenges when they are driven either by a desire to be an entrepreneur or when a concept stokes their interest.

Write a business plan. It is YOUR plan for YOUR business. Often, entrepreneurs assume that a business plan is to be written only when you seek venture capital or debt. However, a business plan is nothing but your plan for your business. Create a document that will help you think through the steps you need to take in your entrepreneurial journey. And that’s your business plan.

Do not bother about teamplates. A business plan is not about templates or formats. It is an articulation of your story about how you plan to go from point A to point B and then onward to points C and D in your journey. And as you think through various aspects, including costs and revenues, the plan will start getting more robust.

Don’t focus on the excel sheet. Focus on the business model. A 5-year excel sheet projection is just that – an excel sheet exercise. It is neither a reflection of the potential nor a reflection of your ability to meet that milestone. However, an excel sheet exercise provides you a reference point to consider different possibilities of scale and help you plan the intermediate steps in reaching those milestones. I.e. it is not important to detail the calculation for a Rs.98.74 cr revenue by 2012 as it is important to be able to state “We believe we can be around a Rs.75 cr to a Rs.100 cr. enterprise by the 3rd year of operation and here is how we plan to go towards those milestones”.

It is ideal to gain experience about building and managing businesses before you create your own enterprise. Most successful entrepreneurs have built businesses after gaining significant experience across functions in different organizations. Though often celebrated, entrepreneurial successes of people with no prior work experience are a rarity.

Think big if the opprtunity exists. Your ability to scale should be restricted only by your aspiration and not by capital. In today’s environment, it is far easier to raise early-stage capital than ever before. If your concept is right, if the market potential is large and if you have the capacity and capabilities to deliver on that potential, you will find the capital to fund your dream.

One of the most common observations of investors, both domestic and foreign, is that entrepreneurs (especially in India) are afraid of thinking big. Entrepreneurs tend to think that it is prudent to be very conservative in your projections, especially if you have no past record to prove your scaling-up capabilities. However, unless you are keen on creating a business that is small, it will be important to provide a view of the potential and your aspirations, especially if you are seeking venture capital. Of course, the aspiration to scale has to be based on a validated assessment of the potential and backed by a strong, sustainable plan to deliver on that potential.

Make your own decisions but listen to what more experienced voices have to say. If a number of investors reject your proposal, it should be a signal for you to consider what aspects of the model seem to worry investors – relevance of value proposition, market potential, business model or your ability to deliver on the potential. Once you have identified the issue or issues, you need to revisit that in your plan and see what changes you may want to make in order to address any flaws in your plan.

Just because you do not get funded does not mean it is a bad idea or your plan is wrong. Often, especially with new concept, it is difficult for investors to take a bold step. Often entreprenerus are able to create new markets based on their insights and conviction about the opportunity. Others may not be able to see the vision as the entrepreneur is imaging it. Hence, just because others reject your idea does not necessarily mean that this is not worth pursuing. But do also consider the points of skepticism as it will only help you iron out issues that you may not have thought about.

If you still do not get funded and do believe it is a concept worth fighting for, you need to find innovative ways of building a proof of concept.

Find mentors and investors with belief in your concept. It is also important for you to find investors who have a strong belief in the domain that you wish to be in and convince them about your ability to deliver on that potential.

Importantly, don’t be a lone ranger. Connect with other entrepreneurs. Seek guidance. Ask those ahead in the entrepreneurial journey to share their experiences. Network and seek mentoring from accomplished and successful entrepreneurs.

To end, I would like to clarify that entrepreneurship to my mind is not just about starting or owning an enterprise. It is about an entrepreneurial spirit that inspires individuals to take ownership of an assignment of area of responsibility. It does not matter whether it is in your own enterprise or whether in an organization where you work or whether the organization is a commercial enterprise or a not-for-profit entity. Do well in whatever you choose to do. Do it diligently, honestly, ethically and with enthusiasm and commitment.


As the advertisement of a spirits brand said ‘Its your life, make it large’.

This article was originally published in Inc42. Read the article here.

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