There are some lessons that I have learnt in my own entrepreneurial journey…. and as an entrepreneurship evangelist, have had the opportunity to observe many startups start up, and fail, including one of my earlier ventures.
Here are some observations:
Don’t underestimate the costs and time that you will require to meet your milestones – often entrepreneurs, enthused by their deep passion and conviction in the concept, expect things to happen sooner than it would, and they usually expect to achieve it with lesser resources and lower costs than it would actually require. Running out of cash, especially when things are moving in the right direction, is the single biggest horror that a startup or early stage company can face.
Split your entrepreneurial journey into three phases, each of which will require a different approach and capital:
- Proving the concept – developing the product roadmap, testing the value proposition, product, pricing, business model, marketing program, sales program, etc. I.e. testing and refining each aspect of the BUSINESS behind your product/solution.
Depending on your business, this could typically take anywhere between 6-18 months. In this period keep your costs low, focus on a few initial customers, launch in a limited geography and focus on getting the business dynamics right.
- Building the foundation for scale: This will involve refining your processes, developing the backend operations management technologies, building the right team, etc.
- Scaling up: Once all the above has been done, then you think of scaling up the venture. This is the stage when external capital can accelerate the pace of your growth. Often entrepreneurs plan for scaling up even without getting the first 2 points sorted, and that can be quite a challenge.
Continue reading “Some learnings from my entrepreneurial journey and from startups that we have engaged with at Applyifi”
If you are a student – either in school or college – and if you are clear that you want to become an entrepreneur some day, below are some suggestions that you may find useful:
- Volunteer in the sponsorships committee at college events. The process of approaching people and companies for sponsorships will teach you a thing or two about selling and convincing people. It makes you comfortable with pitching.
- If you have the chance, intern in a role that requires you to sell. Anything. A sales role helps you understand how difficult it is to sell something, and helps you calibrate your assumptions when you start your own venture. A sales role also helps you become comfortable with failure and rejection. This will help you become more persistent and resilient in your own venture.
- Restrict your lifestyle to a very low cash requirement. Even if you do take up a job after college, try to restrict your lifestyle as that will give you much more flexibility to bootstrap and start something that you wish to pursue.
- Be observant. Even when you volunteer or intern or take up a job, observe how different aspects of a business are managed. Some of these things will teach you how to do things, and some will teach you how not to do certain things.
Overall, whether you want to start something of your own, or want to take up a job, be entrepreneurial in your approach. Being entrepreneurial means being driven by something that excites you, thinking through all aspects of executing that idea, being responsible and committed to making it a success. And overall taking ownership of that concept.
Wish you all the best. Go win. In whatever you choose to do.
This was my response to the above question on Quora
If you plan to start something of your own some day, get yourself into a job that requires you to sell. Anything. Especially if you are young, try to get into a company where you can get exposed to different aspects of business from close quarters. Keep observing and thinking of how you can improve each aspect that you notice can be improved. Learn from the mistakes made. Absorb the good things done there.
Why do I suggest a job that requires you to sell? Several reasons…
- As an entrepreneur, you will be constantly selling… if not your product/solution, you will be pitching to investors, you will be pleading with high-quality talent to join you, you will be urging vendors to give you credit, etc., etc. You will always be selling. Hence, getting comfortable with selling makes you better prepared for life as an entrepreneur.
- Sales is the part where the rubber hits the road. It makes you aware how hard it is to convince someone to buy something. Even the best things. Learning this first-hand makes you be realistic when you make your business plans.
- A sales job makes you comfortable with rejection. As an entrepreneur you will find many doors closed on your face. A sales job makes you better prepared for it.
Consulting and investment banking, while they will give you exposure to different types of businesses, there will never be much practical, getting-your-hands-dirty kind of learning experience… and that practical experience is very, very useful.
Consulting and investment banking will give you perspectives on what happens in different situations….. and the impact of the strategic directions chosen and implemented. However, each situation is different, and what is right for one situation may not apply as well to others. Also, each individual and team is different, and what will be right for one team may not work for others. Hence, while observing how a client dealt with a tough customer us useful, it may not be of practical use for you if your personality and way of working is very different from that client whose behaviour you observed.
If and when you are infected with an idea that does not get out of you head, and have the conviction to follow it through, go for it and get started. Nothing like learning on the job. As they way, as entrepreneurs, you have to learn to build the plane while you are flying.
This was my response to the above question on Quora
The only way to make money as an investor in startups is to have a portfolio of investments. If you invest only in one and hope that it works out well, well, the chance are rather slim.
Startups by design are experiments … a set of assumptions that are being tested in the market by someone who has the conviction about a concept. Sometimes the experiment works, often it does not. But that is the only way new ventures get created… by testing many ideas.
So, if you want to make money by being an investor in startups, think of investing (or better co-investing with other angel investors) in 15–20 startups over a 3–4 year period. Some of the companies you invest in will shut down. Some will struggle to keep afloat, but will amble along. Some will become good businesses for the entrepreneur, but will not give any return (exit) to investors. Only a very few of these investments will give multi-bagger returns making up for the losses incurred in those who did not do well in the market.
This was my response to a question on Quora
I worry that questions like these indicate that we have created the wrong perception about entrepreneurship in general, and VC funded startups in particular.
Often we come across individuals who want to become entrepreneurs because they believe that that is an easier way to make money. And while it may be true that entrepreneurship gives you a much better chance at wealth creation, considering entrepreneurship purely with the intention of wealth creation and then finding a concept to start up with is almost always a recipe for failure.
And there is a reason why entrepreneurs who start off with the objective of making money, and then try to find a mission often fail. Every business will have ups and downs… and in the initial phases there will be a lot more challenges than what the entrepreneur has anticipated. So, unless the work is in an area that the founding team is passionate about, they usually don’t have the patience or resilience to drive through the tough times. Continue reading “Does a VC-funded entrepreneur make more money than a bootstrapped one?”
This was my answer to a question on Quora:
The way to raise capital for your education sector startup would be the same as it is for any other startups. i.e. first you need to assess if your venture is likely to be of interest to investors. (Not all kinds of businesses are VC/angel fundable).
Investors would want to know the following:
- Is the concept/product/solution addressing a real need or opportunity?
- Is that opportunity large to build a very large business ?
- Is the venture doing something that is innovative, disruptive of differentiated than what the customers are currently doing to address the need that you propose to address?
- Is the differentiator defensible? I.e. Is there something unique about your venture that gives you a significant head-start and a defensible competitive advantage.
- Is there a strong business case underlying the concept?
- Can this scale?
- Is the team competent and aware of of experienced in all aspects that will be required to build a strong business around the product
Continue reading “How should an education startup raise funds to scale up to the next level?”
I often come across business pitch decks, or even company websites that have fancy set of words that don’t really communicate what the company does. For example, a tagline like “Redefining Healthcare” feels grand, but does not give the reader any clues on what your company does.
Instead, if the tagline were to be specific saying “Your neighborhood childcare clinic’, there is specificity in communicating what you are offering. If your tag line can also communicate your value proposition, it is ideal. E.g. “Affordable cardiac care”.
It is important to get the tagline and headline right because it is on the basis of these that your potential user/customer will decide if they want to explore your website/product further. Even if your consumer / customer desperately needs what you do, they will not bother to read the details on your website or brochure if the headline does not appeal to them? Your brand name/tagline and/or headline tells them exactly what you can do for them.
A good tagline is important even when pitching to investors. VCs and angel investor networks get 100s of business plans every month. And a few individuals in VC firms have the task of sifting though these pitch decks to shortlist those that they think are worthy of more time. Because it is impossible for anyone to go through 100s of pitch decks very, very diligently, it is often the first impressions and the clarity of communication of the first couple of slides that will decide whether the deck makes it to the ‘shortlisted for further review’ bucket.
Also remember, the tagline you have for consumers/users/clients may be different than the description of the business that you have when you present to investors. Consumers need to know your value proposition for them, while investors need to know the business behind that value proposition.
E.g. your tagline to consumers may be ‘Your neighborhood childcare clinic’. And that line may go below the logo. But when pitching to investors, you may want to add a headline to the title slide saying: “Raising Rs.2cr to scale up a chain of affordable, high-quality childcare clinics from the current 3 centres to 25 centres in Delhi NCR in 2 years’. This is important because an investor would like to understand the following: Continue reading “Why the success of your startup can depend on a great tagline.”