Indian start-ups & the missing golden touch
Ron Conway - The man with the Golden Touch. It was so wonderful reading this article on Ron Conway. An angel, who knows support at the right time, no matter how minuscule, means a lot. He has invested in 500 startups - including Google, Twitter & Facebook. 500 is no joke which means he has at least spoken to 5000 odd startups assuming a high 10% hit rate.
My first & short visit to the valley led me to meet & interact with a lot of people involved with startups. The biggest difference I noticed is people are open to the idea of speaking to a not so popular or well established person, even if it is 2 minutes, they give you a chance. Probably even they don't want to miss a chance of unearthing the next Google. A high percent of them know to ask the right questions early to figure if you are of interest to them and would tell you so clearly if they want to move on.
On the other extreme, the problem we face in India at its ground level is
Who knew a small app on facebook to share books you read would exit with a significantly large deal. And of course when we initially started the idea was just to steer the app to get more students on it and sell textbooks during the fall peak, in focus with what ugenie did then. But our hearts were in it & we passionately worked on it and we saw the bigger possibilities. Of course the company was blessed with "angels" who took the reach very high with potential buyers. Irony is if the same individual had started it as an independent company I am pretty sure no one would have stood by him or her.
For a lot of companies all you need is a little hope, belief to pursue their dreams. And when entrepreneurs are on it, no matter how small and insignificant the idea is and/or the market, you never know what comes out.
Case 2: In fact there was an instance when for a similar execution focused, not so capital intensive idea I heard a potential angel actually say "Oh but you are not a well established company." continued with something more which meant "You might be talented and accomplished good results but you are small. We would rather support a dumber big company than a smarter more efficient small company".
Sometimes i feel, you are better off not wasting your time pitching and selling your idea to angels & VCs. Most of the time they would just try to kill the idea even without prior research or having thought through the possibilities. ( Or may be the Americans & Israeli's are more hopeful beings ;) ) Sometimes its even annoying as to how much they weigh on your past designations & qualification. Then there are others who would want to keep good terms with the smarter first timers but with no concrete helping hand whatsoever. These are more tricky than the non-believers.
The amount of stress most startups go through given the state of support system along with highly coupled financial dependence never lets one operate at their best. I know of startups which almost died but later when they did manage to get deals going on their own, they are highly acclaimed by the very same people who had shot their ideas down. At the core, the product or the founder would not have changed much, a little support early on would have saved the distress & pressure, more the precious time. Even the team could have performed in its superior form.
You as a founder are at loss with the experience a good angel or VC would bring if you decide to go on your own. However, it is also questionable as to how many VCs and angels here have the golden touch. The golden touch to improve your chances of success - to connect you into a strong network, to spend time & strategize with the team, to promote your business. Considering the low hit rates you are mostly justified to find your own way to fund yourself.
In India, you need to come to terms that the support system is bleak or non existent for first timers. It is not deterring anymore, after having been through a struggling startup. But just a wishful thought of how much more can be achieved if only we were blessed with true angels
My first & short visit to the valley led me to meet & interact with a lot of people involved with startups. The biggest difference I noticed is people are open to the idea of speaking to a not so popular or well established person, even if it is 2 minutes, they give you a chance. Probably even they don't want to miss a chance of unearthing the next Google. A high percent of them know to ask the right questions early to figure if you are of interest to them and would tell you so clearly if they want to move on.
On the other extreme, the problem we face in India at its ground level is
- the reach to Angels, VCs.
- If you are lucky to have that you need to fight their preconceived notions of the kind of people & companies that would succeed.
- If you do find a VC or an angel you might still be void of the golden touch angels bring and the real support network of VCs.
Who knew a small app on facebook to share books you read would exit with a significantly large deal. And of course when we initially started the idea was just to steer the app to get more students on it and sell textbooks during the fall peak, in focus with what ugenie did then. But our hearts were in it & we passionately worked on it and we saw the bigger possibilities. Of course the company was blessed with "angels" who took the reach very high with potential buyers. Irony is if the same individual had started it as an independent company I am pretty sure no one would have stood by him or her.
For a lot of companies all you need is a little hope, belief to pursue their dreams. And when entrepreneurs are on it, no matter how small and insignificant the idea is and/or the market, you never know what comes out.
Case 2: In fact there was an instance when for a similar execution focused, not so capital intensive idea I heard a potential angel actually say "Oh but you are not a well established company." continued with something more which meant "You might be talented and accomplished good results but you are small. We would rather support a dumber big company than a smarter more efficient small company".
Sometimes i feel, you are better off not wasting your time pitching and selling your idea to angels & VCs. Most of the time they would just try to kill the idea even without prior research or having thought through the possibilities. ( Or may be the Americans & Israeli's are more hopeful beings ;) ) Sometimes its even annoying as to how much they weigh on your past designations & qualification. Then there are others who would want to keep good terms with the smarter first timers but with no concrete helping hand whatsoever. These are more tricky than the non-believers.
The amount of stress most startups go through given the state of support system along with highly coupled financial dependence never lets one operate at their best. I know of startups which almost died but later when they did manage to get deals going on their own, they are highly acclaimed by the very same people who had shot their ideas down. At the core, the product or the founder would not have changed much, a little support early on would have saved the distress & pressure, more the precious time. Even the team could have performed in its superior form.
You as a founder are at loss with the experience a good angel or VC would bring if you decide to go on your own. However, it is also questionable as to how many VCs and angels here have the golden touch. The golden touch to improve your chances of success - to connect you into a strong network, to spend time & strategize with the team, to promote your business. Considering the low hit rates you are mostly justified to find your own way to fund yourself.
In India, you need to come to terms that the support system is bleak or non existent for first timers. It is not deterring anymore, after having been through a struggling startup. But just a wishful thought of how much more can be achieved if only we were blessed with true angels
(Anonymous)
American investors for India?
Re: American investors for India?
There are few big funds who are actively investing like sequoia, IDG (shouldn't be counting accel - erasmic here) etc. They have lesser reservations about talking to startups/mid sized firms which have founders who have visibility in the US investment network or proven track records.
The latter case of investing specifically into "online" startups for indian market is characteristic more for a local fund.
My focus of the post is mostly about angels in India who have have been entrepreneurs themselves and visionaries.
(Anonymous)
Networking
Or are you saying that there is no support group? Cause maybe some entrepreneurs realise the need for a support and network only after they have started up and then the time and effort required for effective networking might not be there.
What do you think? We at SutraLite are being supported by the Morpheus Group, you must have heard of them... what do you think of it is a venture to increase the support for startups in India.
Re: Networking
I see your point of a common mistake made by many startups to network only once they have started & struggling at the crucial time. However, my opinion in the post is about the absolute state of the startup ecosystem in India which makes the networking/reach itself harder. The support group to whatever extent it exists is also not sufficient beyond a scale and scope of the market.
If you did note the intricate mention of potential investor in Case 2, you would understand the problem exists even if you are well networked. If I have to rate my network, it is possibly the best a first time entrepreneur can dream of in India.
Having interacted closely with 5-6 proven entrepreneurs (companies of the scale of $30-$100 M) one thing I have realized is they are not helping at the ground level to improve the indian startup scene, they don't talk to small companies, they are not angels yet. I got lucky to have a continued reach with them, but there are tens of other competent entrepreneurs who need the support and cannot get any.
And the angels and VCs are mostly from investment banking background or MBAs whose first job was at the VC fund.
Morpheus Group I have heard are doing a great job. I do not like their mode of investment with a time constrained advisory role for comparatively large stake. Otherwise I do not have enough visibility to comment on what is the scale till which they can aid, what markets are they well connected with. From what I have heard there are severe limitations.
(Anonymous)