Is it a good idea to ping an investor via LinkedIn?

I personally think it is worth a shot for an entrepreneur to try reaching a potential venture capital (VC) or angel investor via LinkedIn. Particularly if you can find a mutual contact to provide an introduction. The main benefits of this approach, over just cold calling or dropping a note on the investing firms website, are the following:

  • The investor can quickly browse through your profile to get a good sense of your professional background and relevance to the startup you are working on
  • Check for mutual connections to do a quick reference check

But, here are a few suggestions while trying this approach:

  • Do some research on the VC firm you are trying to reach and figure out the most appropriate person to reach out to, based on their profile. Most investor profiles list areas of investment interest (e.g. internet, mobile, education, etc.) and so this should not be tough to do
  • Reach out only to one or at most two people at that firm who are appropriate for your particular startup. It does not help if your ping everyone in the VC firm. Yes, this does happen often and if anything it’s counterproductive. What happens is one of the investing team members who receives this, will forward it to the other team member who is more suitable to look at your company (based on interest areas) and if they realize you pinged all the members indiscriminately, it shows that you have not done any research on which of the investors would be better suited for your startup
  • If you have a mutual connection with the investor, see if you can get an introduction by the mutual connection (especially if this person knows the investor well and is willing to refer you)
  • Avoid requesting to “add as connections” directly. Try sending a message via InMail or through mutual connections. Many investors are particular who they add as connections and so, if you directly try adding them, they might “ignore” your request
  • See if the VC is part of any group that indicates a mutual interest area and use that group to reach out to him/her
  • Keep the LinkedIn message short giving a 3-4 sentence summary on your teams background and what you are trying to do. Ask the VC if you could get 15 mins over the phone to give more background and see if mutual interest. Avoid very long messages.

While on the topic of reaching out via a social network, I would highly recommend reading the following article by Ried Hoofman on “The real way to build a social network“, if you haven’t already read it.

Note: Pluggd.in published this blog here.

 

 

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Introducing Edustars

Go to the EduStars website

Education continues to be an exciting sector for entrepreneurial ventures in India. The following chart shows the extent and frequency of the investments that were made in this sector by Private Equity investors (including Venture Capitalists) over the past few years.

Source: Venture Intelligence, Jan 2012

A recent poll conducted among various investors showed that education is one of the most favored sectors for investing.

Source: Venture Intelligence, Jan 2012

What makes education an exciting sector? Anything new?

In his comparison of India and China, Professor Yasheng Huang of MIT – an expert economist on India and China – calls out education (and thereby Human Capital) as one the top reasons why China is ahead.

Here is a link to Prof Huang’s recent presentation at TED. (Forward to 10:30 if you are pressed for time)

This presents a great opportunity for Indian entrepreneurs to have an impact on the Indian education ecosystem – be it K-12, Higher Education or Skills Development. The growing penetration of technology (mobile/tablet devices, internet, etc.) provides greater opportunity to reach out to millions of people and provide more personalized learning options (Khan Academy is pursuing a similar strategy in the US today). There are several opportunities to make the learning process an enjoyable experience. For example, social media tools can be leveraged to improve user interaction and promote group learning.

Why Edustars?

As of right now, in India there is no convenient platform for information sharing among the Education entrepreneurial community.

Edustars has been created to fill that particular need.

At a high level, Edustars aims to:

  • Provide an online platform for information sharing
  • Provide access to a world class mentoring team with deep domain expertise
  • Periodically recognize outstanding startups with an “Edustar” award, thereby providing nationwide visibility
  • Provide information from similar startups around the world with regard to their challenges and triumphs.

We welcome suggestions from education startups regarding any other venues wherein Edustars can add value and contribute towards your overall su
ccess.

 


SaaS Tools Aimed At Startups

I just got back home after the unpluggd event here in Bangalore. Checked out some really cool demos. I want to highlight some that are trying to solve problems that startups run into and can’t afford expensive solutions. Here are a few such cool SaaS based offerings (in no particular order):

  • interviewstreet.com – if you are looking to hire programmers this is a cool SaaS company that helps automate testing the programming aptitude of your applicants. Customers: Facebook, Google, Flipkart, etc
  • 99tests.com – crowdsourced QA testing for startups. Customers: Flipkart, etc
  • freshdesk.com – SaaS customer support system started by ex-Zoho guys. Customers: 30+
  • unbxd.com – search tool for ecomerce sites. Customers: 6
  • recruiterbox.com – SaaS based company for startups to manage the job application process end to end. Customers: 50+
  • Exotel.in – SaaS based unified voice SMS solutions. Customers: 8

All these companies made a compelling case about solving real issues that startups face, in a cost effective fashion. Most of them have a free one month trial or freemium offer. If you are a startup and want to help your fellow entrepreneurs, please try out some of these tools. 

I have added these companies under the Tools section of EntrepreneursToolBox. If you are a startup and use any other such cool tools/products created by entrepreneurs in your ecosystem, please drop me a note or leave a comment. I will collate all the feedback and do a more detailed post if enough responses/interest in this topic.

Startup Competitions – How Do They Help?

Recently, I had the chance to be one of the judges at a startup competition. After the event, I was thinking through whether these competitions are helpful to the participating startups and if so how. Overall, my conclusion is that these competitions are indeed helpful but the startups need to be strategic about picking the right competitions and not overdoing it by entering too many of these. Here’s my reasoning.

How startup competitions help

  • Free marketing – This is self explanatory. For a cash strapped startup, getting free publicity through the right competition could be hugely helpful. To pick an example from my Boston days, the MIT 100K competition has led to the creation of about 150 companies over the years including successful ones like Akamai Technologies. The startups in this competition get reasonable amount of recognition/free marketing through various media circles.
  • Exposure to investors and mentors – Through these competitions, a startup can also get exposure to investors and mentors in a lower risk setting. If an investor gets exposure to your startup through the competition and likes you he/she will most probably follow-up to take the conversation forward. Also, through these competitions a startup could meet experienced entrepreneurs who could mentor your startup to success. 
  • Firming up the business plan and pitch – The structure around these competitions forces you to think through your business plan and helps you shape it better. Also, your pitching skills (either the short elevator pitch or longer version) will definitely get exercised and refined through the various stages of these competitions. 
  • Answering tough questions – If the competition has the right set of judges, the startup will be asked some tough questions around their business plan. This would be a great way for the startup to prepare for answering such questions and thereby refining their business plan in a lower risk environment. 

Things to watch out for

  • Picking the right competitions – I think this is something that startups don’t necessarily think about. I would encourage the startups to think whether the competition serves the above mentioned benefits (and anything else specific to your company). In addition, is the competition in the right domain/industry for your startup (e.g. consumer startups vs enterprise vs medical technology, etc.)
  • Over exposure – This is one thing that I find a common issue. When I look at some of the competitions over the past year that I have judged or attended, I see some startups that have entered almost all the competitions (and some have not won any of them). So much so, that someone called a startup a “professional competitor”. This might be ok if you are winning these competitions. For example, I know a startup in the US that won every business plan competition they entered and ended up using that as seed money. But, if you entered a couple and didn’t win, its obviously not the end of the world. After all, I’m assuming your goal is to build a successful startup and not necessarily winning competitions. Please think about this. If anything, entering too many competitions might hurt your chances of getting funded by an investor (if raising outside capital is in your plans) since they would wonder why so many other investors who looked at the company through these competitions not invest.
  • Premature exposure – This is also something to watch out for. If your business plan is very premature and you will not be able to do a good job pitching/answering questions, you are better of refining your pitch before entering a competition. After all, the saying that “First impression is the best impression” is very true for startups as well. You want to put your best foot forward in these competitions and for that you need to be really well prepared.

Those are my quick thoughts on this very important topic for startups as they consider entering various competitions. Would love to hear your perspectives on this.

Note: Published by yourstory.in here

Investing in Education – MIT Enterprise Forum Event

I had the pleasure of participating in the MIT Enterprise Forum Bangalore‘s kick-off event last night. The topic for the night was “Education”. The event was well attended and it was great to see the entrepreneurial energy and excitement among the participants around this sector.

I was asked to share my perspective on investing in education and so I put together a few slides on the topic. Post the event, I have received a handful of requests to share the presentation. And so, here it is (a cleaned up and shortened version). Obviously, without the verbal commentary this presentation only tells a partial story. But, happy to engage with entrepreneurs who share a mutual interest in improving the education ecosystem in India.

Investing in Indian Education Ecosystem

Do we need an Angieslist in India?

I was reading Ashish Sinha’s experience using various online classified/listing services (you can read it here) and have to confess I had a similar bad experience over the past 10 days. I will share the story and the learnings below. But, this whole experience has reiterated my firm belief that we need something like an Angieslist.com in India. As a consumer in the US, I used to heavily rely on this paid service to identify quality service providers (doctors, dentists, plumbers, baby sitters and the list goes on) with reviews from real customers. Here’s more info on Angieslist from Wikipedia.

Ok, here’s the story. My wife and I have been trying to find a good babysitter for our two daughters over the past year. We have gone through probably a dozen but still have not landed a good one. Most of the babysitters have come through referrals in our apartment complex and have not worked out for many reasons, which I don’t want to bore you with. But, about 10 days back, I decided to find a professional agency to help me with this and was willing to pay for their services as well as pay more for the babysitter if need be.

I asked around a few friends but none new of any good agencies. I was always a skeptic to find a service through the web without personal reviews but desperation drove me to it. I went to google and searched for relevant key terms and came up with listings from the usual suspects: Justdial, AskLaila, Quikr, Sulekha, Click.in, Locanto, etc. to name a few. I noticed that some of these sites had reviews for the services and read up reviews wherever available and picked the best one as per reviews in 3 different sites and browsing the company’s website. To summarize the experience with this agency we picked – it was horrible. The only thing they did right (for themselves) was cash a cheque we were stupid enough to give for their services and they were smart enough to collect upfront. You can skip next two paragraphs if you are not interested in the details

Baby s(h)itter experience

As tempted as I am, to mention the agency’s name, I will avoid and say that this agency was extremely professional and did show up at our house with a babysitter the same day I called them. We (my wife and I) interviewed both the agency and the babysitter and were extremely happy with the answers. We paid the agency the commission (steep one at that) and signed up for the service with the promise of three replacements of the babysitter in a year if not satisfied. Alas, that’s where the misery started.

Next day, the babysitter did not show up as promised. When we called the “agent” the agency provided she made some silly excuse and said that she would send a new babysitter the same day – the bait-and-switch trick! We were sent a new babysitter without any background info on her and after a cursory interview decided to try her – after all she was certified by the agency we thought. This person showed up late everyday for a week and finally didn’t show up one day. During this week, we kept calling the agency and “our assigned customer service agent was always traveling and would call us back” trick was pulled out of the bag. At this point we decided to stop the babysitter and tried contacting for a replacement and again “agent” will call back. Finally we pulled the plug and went back to an apartment referral babysitter.

What did I learn?

I went back and tried to figure out what are all the lessons from this experience. Here are a few:

  • Always search for a service name followed by scam (or similar words) in Google before you sign up for it. For example: “XYZ services scam”. This was eye-opening since I found a handful of experiences very similar to ours. If I had read this before, I would have never called the agency.
  • Of the various listings/classifieds site, only a few allow for reviews. I went back and tried leaving a review with as many of the ones as possible (to pay it forward). Even if it meant being forced to sign-up for an account with these sites.
  • And, for the few like me who didn’t know this, the listing sites take down bad reviews on “listing owners” request as per a customer service agent at one of these listing sites I spoke to (to figure out why my review was removed). Obviously there is a revenue opportunity for them here and see why they are doing this. 
  • But, as a consumer, when you see a review on any of these sites you need to be aware that you are not paying for it and hence you cannot expect to get honest reviews from real customers on both good and bad experiences. You will find only “good” experiences that the “listing owners” like. Sad but true.

That brings me back to my point. I had alluded to this in a previous post “Whats On(line) in India?”. I would very much like an angieslist.in where the consumer pays but gets a trustworthy review. Anybody out there?

 

Employee Equity Allocation

Employee Equity Allocation I get this question often (and was asked again today). I wanted to include links to two really good posts (that I point entrepreneurs too) on this topic that are relevant to startups around the globe.

The first is by Fred Wilson who is a VC and a prolific blogger (one of my favorite VC bloggers):
http://www.avc.com/a_vc/2010/11/employee-equity-how-much.html

The second is by a Sillicon Valley based entrepreneur Evan Reas who seems to have done a lot of research on this topic:
http://startuphoodlum.com/2011/01/03/equity-grant-averages-to-startup-employees/

After reading these blogs, let me know if there are any unanswered questions, especially in the Indian context and I’ll be happy to address them.