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

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.

Amazing Indian Entrepreneurs

Now that India has reached the top of the rankings in all forms of cricket (One day, Test and T20) after the splendid cricket world-cup victory last Saturday, I’m sufferring from acute CWS (cricket withdrawal syndrome). To take my mind off cricket, I went to Instapaper and was catching up on my reading. I came across this article in Forbes claiming that BRIC countries surge in Billionaires list this year. As I was browsing through the list of Indians billionaires, I was wondering how many of these were self-made or entrepreneurs. Of the $246.5B in net worth amongst these 55 people, $80B (32% by networth) belongs to the 26 (47% by number) self-made/entrepreneur billionaires.

Couple of quick observations:

  • In terms of count: Software tops the list with 6 billionaires (5 from Infosys) followed by Real Estate (4), Pharma (3), Media (2) & Commodities (2)
  • In terms of NetWorth: Software ($13.3B), Real Estate ($10.5B), Pharma ($9.7B), Telco ($8.3B), Media ($6.4B), Mining ($6.4B)
  • The youngest entrepreneur on this list is 45 and the oldest is 87
  • Even though people like Azim Premji, Ajay Piramal, Cyrus Poonawalla, etc. have built great companies in new industries they did not inherit, they are still not counted on this list as self-made since they started out inheriting companies in some shape or form (this is how Forbes has classified them)
  • I browsed through the stories behind these amazing Indians and many of them are highly inspiring. I have provided links to their Wikipedia pages (if available) in case you want to browse as well.

Here’s the original listing from Forbes. And below you can find the list I curated of self-made/entrepreneurs from the original Forbes list:

As I was browsing the above list, I couldn’t help but notice that it is missing a whole slew of highly successful Indian entrepreneurs around the globe. Here are a few names at the top of my head that I know off and admire:

I’m sure there are many more amazing Indian entrepreneurs. Who did I miss? Which Indian entrepreneur do you admire? 

The following are additions based on suggestions from readers:

Note: Published by yourstory.in here

In case you are interested here’s a snapshot from the spreadsheet I created (click on the link below to see a larger version)

I
ndian Billionaires and Entrepreneurs

 

 

 

 

Frugal Innovation in Medical Technology

 

For those of you following medical innovation in the developing world, the article earlier this year in The Econmist was quite informative. Here’s the link to the article. This was a good follow-up by The Economist to their more industry agnostic Frugal Innovation article from last year. Wanted to share some of my observations on frugal innovation particularly as it relates to India and medical technology.

Activity Level

  • Startup activity:  There is a decent bit of activity in the frugal medical innovation space in India. There are at least 15 to 20 startups that I met over the past year who are doing high quality work in this space. Most of these fall under the diagnostic devices category aimed at areas such as opthalmology, diabetes, cardiac conditions, cancer and infectious diseases. There were also a couple of companies going after therapeutic devices.
  • IP creation: There is some level of Intellectual Property creation in these startups especially as they try to completely re-engineer and build the product ground up to suit the Indian price point and market conditions. Granted these are not based on years of scientific research done in an educational institution and hence are not fundamental innovations but still there is a decent bit of novelty in these technologies and their applications.
  • Talent: The other good thing for the ecosystem is the existence of large Multinational Corporations such as the Healthcare divisions within Philips, GE and Siemens that have a decent pool of talent. Many of the startups I met with are people who have either gained experience working at these larger companies and/or done a PhD in scientific research at one of the leading US institutions (MIT, Stanford, etc.). At the firm I work, we have at least two instances of founders matching this profile and doing a healthcare related startup. 

Top Challenges

  • Distribution: Many of the companies I meet with are going after the Bottom Of the Pyramid (BOP) as their initial market. The challenge is that majority of this market exists in rural India and distribution becomes a big issue. Even a GE that has come up with the low cost ECG machine for India apparently had challenges with distribution. It becomes all the more challenging for a one product startup with limited financial resources. This is an important issue to think through before figuring out which market you will focus on.
  • Who pays: The other issue with going after the BOP is that in many cases the end consumer does not have the financial capacity to pay. Hence in many cases the government and its programs subsidise the cost of treatment. And as a startup, it becomes tricky to deal with the government as a customer – to put it mildly. You probably need someone in the team who has previous experience in a similar role of selling to the government.

Ideas to Ponder

  • Tier II instead of BOP: Now that many healthcare service providers are focusing on the Tier II Indian cities for growth, does it make sense to target these as the initial customers and gain market traction before attacking the BOP?
  • Go for CE or FDA certification: I see many startups doing this already. They go and get a CE Mark or an FDA approval and that helps them get more market adoption in India. I will share more about the regulatory process in India in a subsequent blog post.
  • Disrupt existing incumbent technologies: Would be good to see some of these technologies that go after Tier II and BOP segments move up the chain and service the mainstream healthcare service providers in Sec A Indian cities. I am trying to find an example for such a story but can’t think of one at the top of my mind. 

Would be great to hear your thoughts on this topic.

Note: Pluggd.in published this blog here.

Intellectual Property in India

I had the pleasure of attending a very informative round table discussion today on Intellectual Property (IP) in India organized by Zinov Consulting and NASSCOM Emerge. There was representation from academia, large multinational corporations, IT companies, startups, IP specialists and startup investors. As you can imagine, being a VC investor, this is a topic that is close to my heart and I thoroughly enjoyed the discussions. Wanted to share some of the data I collected as I was preparing for this event and some questions/observations from the discussion today.

Patents and Startups ???

Media_httpboston2bang_fjhfh

If you look at the US and two very active VC investment markets there, California and Massachusetts, it is no surprise that the level of IP creation is quite high in both these states. Obviously, IP alone is not the only ingredient to successful startups, but in the hands of a good entrepreneur, IP can act as a key ingredient to cook up some outstanding companies.

How does India fare?

Media_httpboston2bang_kzyex

As can be seen from the above graph and the statistics, India has some ways to go to catch up with other leading IP generating countries such as the United States and China.

My Key Observations

Still early days in India

  • India is 10 years behind China in terms of patent numbers
  • Patents are around Indian market constraints and application of technology to solve these constraints (e.g. Financial Tech, Mobile) – what some might call Frugal Innovation or Reverse Innovation
  • Unusually high concentration in Biotech/Life Sciences
  • Fundamental scientific innovation still rare

Startup perspective

  • Not too many IP-based exits (M&A, IPO) hence startups not too eager to file – especially in IT. This will change with more IP-based exits happening.
  • IP incubation centers such as academic institutions need more active participation. It’s tough for VCs to fill the shoes that an academic center plays (in countries such as the US) over extended periods

Questions/Observations of other participants

  • India files about one-tenth the patents filed in China. Also 60% of Chinese patents are filed by Chinese companies. In India, only 20% are by Indian companies, rest is by MNCs.
  • Public companies, particularly the bigger IT companies cannot compromise on margins even by a few basis points. This makes it tough for them to focus on long-term and spend money on IP 
  • Time bound (project based) innovation happens in India but that’s not the same as unconstrained innovation that happens in startups in the US (based on one technologist’s experience working in startups in the US as well as India)
  • There is a need for multi-disciplinary faculty to enable IP creation (and guide doctoral students) for solving real issues faced by industry
  • On a similar note, Indian industries do not value PhD and due to this the brightest and the best opt for an MBA post their undergraduate degrees or go abroad to do PhDs and never return
  • Frugal innovation – someone had questions around whether this can really produce IP. Particularly in areas such as “Open Source” software development (which Indian companies adopt for cost reasons).

I have outlined above some of the questions/observations from the session. Just want to throw these out and see what people have to say about this.

Would love to hear reactions on this very important topic from a startup ecosystem perspective.

Note: Yourstory.in published this Blog here

Articles/resources  (do feel free to send in other links):

Homeward Bound

January 2011 marks a year since my return to India as an early-stage venture capitalist after spending 13 years in the US. Despite my earlier apprehensions, things have been quite amazing. I would like to share some of my observations in the hope of inspiring others to move back and ride the crest of the amazing Indian economy and contribute to its continued surge.

WHY DID I MOVE BACK?

Answer is simple: I believe this is the perfect time to be part of the Indian entrepreneurial ecosystem. The economy is booming, but there are many basic problems in areas like the Internet, mobile communications, enterprise IT, healthcare, energy, education and financial services that require solutions – this is a dream scenario for any entrepreneur. In cities like Bangalore, there are already many development centers addressing these needs. The work here entails not only low-skilled jobs. I have friends in companies like Yahoo, GE (Healthcare and Energy), Google, Intel, Biocon and Amazon, who are involved in cutting-edge product development. This I see as a treasure trove of entrepreneurs in the making. Our firm has funded entrepreneurs from many of the companies mentioned.

SWITCHING GEARS

What could be better? I ask this of the many entrepreneurs, including returnees, whom I have the pleasure of meeting on a daily basis and try to corroborate their responses with my observations. The top three challenges returning entrepreneurs seem to face are: getting the early team right, navigating bureaucratic red tape (like incorporation, bank accounts) and finding seed/early stage funding

WHAT DOES A VC LOOK FOR?

I am also often asked what is it that a venture capitalist looks for in a company? What does a VC in India want? An early-stage VC always looks for an outstanding team, aiming to solve a problem in an exciting market, with sustainable differentiation and a solid business model. In addition, there are two criteria particularly relevant to India — strong customer interest in a product or a service that can be verified and measured, and the ability to scale or grow a business. It is also important to understand that a business model that works in one city might not necessary scale across India with all its diversity.

PERFECT TIME This an awesome time for any entrepreneur who is considering a move back to India with a goal to be actively involved in a startup. My tips to those planning such a move is to pick an exciting industry or business segment that matches your expertise. Next, make sure that you choose a founding team to launch the business with great care; make sure you have some people with recent India experience. Do not fall into the trap of worrying about things beyond your immediate control such as traffic, bureaucracy and poor infrastructure. Finally do not look back, burn the bridges to wherever you came from, so that you are not tempted to return prematurely. After all, it usually takes five years or more to succeed as an entrepreneur and India is currently one of the best places in the world to live that dream and to impact the world.

I wrote this for the Economic Times. Would love to hear your perspectives on this topic. Here is a link to the ET e-paper column.

It’s not all about USP

Over the past few months I have heard at least a 100+ pitches by entrepreneurs looking for VC funding. Almost all of them had one thing in common. Most spend too much time/effort explaining their USP (Unique Selling Proposition) – whether they truly have a USP or not – and miss out on all the other aspects of the business that a VC is interested in learning about. I personally think this USP funda is overrated. I wanted to share my perspective on a good seed/early stage VC pitch. I know these are the basics but I spent some time browsing the web seeing if I could point to another blog and add to it but couldn’t easily find one that covers all the aspects I want to cover (particularly as it relates to Indian startups) and so here I go. At a high level, I look for the following:

  1. Team: Experience, relevance to the space, complementary skills, relevant advisors
  2. Product: Customer pain point, your unique solution, sustainable differentiation, USP
  3. Market/Business Model Dynamics: TAM, growth rate, competition, your business model, go-to-market strategy
  4. Customer Feedback/Traction: Qualitative and/or quantitative
  5. Financials:  Pro forma financials, how much you are raising, use of funds

In this post, I will address the first one in detail in this post.

Team: This is by far the most important thing. As a seed/early stage VC, I’m entering into a long-term relationship with the entrepreneur and so it is very important that I get confidence around the following:

  • Experience/relevance: Does the entrepreneur have relevant experience in the space in which he is starting the company? It could be relevant education or work experience or a combination of both.
  • Complementary skills: A good founding team has about 2-3 people with complementary skills. Be it technical, marketing, sales, business development or financial – a good team has a mix of these skill sets. You don’t need all these, but at least having one technical and one business person to begin would be ideal. Even if you don’t have the right co-founders, if you can identify these gaps in the team and make a skeleton profile in the pitch and say this is the kind of person we are looking to add to the team that will work (and you can ask the VC to help identify this person as well).
  • Quality: Don’t compromise on quality while finding your co-founders. The founders are the ones that make or break the company and so you need to be extremely selective here both in terms of relevance to your company as well as fit with the rest of the team. It’s better in my perspective if you only have two outstanding folks in a team who work well together (and maybe both technical) and missing a third founder (say business person) than to have a mediocre third founder. You can always find/hire this third person.
  • Relevant Advisors: “Relevant” is the key word here. If you are a medical technology or clean technology company that has a Scientific Advisory Board of technical experts in the space that is quite relevant. But, if you are an Internet startup and have five advisors of varying background, I would really question the relevance. I would rather back a strong team with no advisors than an ok team with a whole bunch of outstanding advisors. At the end of the day, it is the team we are backing and not the advisors.
  • Young entrepreneurs: One other question I often get is “Do you back young/first-time entrepreneurs?” The answer is an emphatic yes. Many of our portfolio companies are first time entrepreneurs who are a few years out of undergrad.  They normally tend to be deeply technical. The key for these teams is to find complementary skills as discussed above – might not need them right away but a good founding entrepreneur realizes the gaps in the team and actively seeks to fill these gaps.

Let me stop now. Would love to hear your thoughts/perspectives on the above.

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