Band of Angels, now rechristened Indian Angel Network(IAN) held it’s 1st meeting in Mumbai today afternoon, where 6 businesses presented for raising early stage capital. IAN has now assigned a member to work with each of the businesses to help develop their plan and undertake diligence. Upon completion of these steps, which usually takes a month or two, IAN will either invest, decline, or request the business to revisit later.
With the Mumbai chapter now formally in place, there will be a monthly meeting where businesses can present plans and thereafter work with the team in Mumbai. This is excellent both for businesses in Mumbai/Western India, and for angel investors in this part of India. IAN hopes this will be a significant boost to entrepreneurship in Mumbai/Western India.
What struck me during some of the presentations, is that, founders were spending too much time on presenting product features and not enough on the other aspects necessary for a potential investor to evaluate the opportunity:
1. Team: what are the credentials of the founder and his/her core team? We want to know what kind of a track record of success the team has in the professional and academic level.
2. The addressable market: what is the addressable market for your product? I found that this was not tightly defined by many of the presenting founders. So (for example) if it was gourmet chocolate business for India, the founders were giving stats of the whole world’s chocolate consumption, when instead they should present data on the Indian gourmet chocolate market.
3. The competition: what is the existing and potential competition in your addressable market? This has to be presented with brutal reality.
4. Competitive advantage: what advantage do you have over your competition? Or, why should someone use you and not your competition.
5. Intellectual property: what is the intellectual property that the business will develop, such as brand, technology, processes, exclusive contracts, licenses, etc? A business without Intellectual property may not be able to sustain profitably for very long. On the flip side, especially on technology product you will need to show that you are not violating existing IPs with what you have created.
6. Marketing innovation: what marketing innovations are you undertaking to significantly cut cost of customer acquisition? Often marketing is far more expensive that building a product, and what use is a great product if you can get lots of customers/clients for it. With these in mind, you need to come up with marketing innovations which will significantly cut your marketing cost and carry your limited startup capital further. A few famous marketing innovations: Richard Branson who mastered the photo opp; Sabeer Bhatia who put the “Get your free hotmail” footer on every email; Larry & Sergey with Gmail’s 1GB storage; Kabir Mulchandani with buying out downtime on hoardings (when a hording had no ad on it) to splash AKAI, and paying taxi drivers across India to carry big empty AKAI tv boxes on their carrier to make it appear to people that lots of AKAI tvs were being sold.
7. SWOT: what are the strengths, weaknesses, opportunities and threats of the business? This gives an investor a realistic view of what s/he is getting into.
8. Proof of Concept: what is the proof that the business’ product will be accepted by the market? Are you getting good sales/adoption? Do you have positive testimonials from clients in you addressable market?
If you are presenting to IAN or any investor, please do keep the above in focus and you are sure to get a good response.
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My point exactly. That can mean a lot of things.
Just wondering, if ” google has capability to work on any ‘idea’ immediately” where does that leave the beleaguered entrepreneur presenting that ‘idea’.
jack in box
google is doing what every vc wants.
and google has capability to work on any idea immediately
that does not mean anything though
I am a founder of a start up firm , an exciting concept on recruitment front. I tried bootstrapping for 6 months , but in the end doing everything on your own , managing office rent, utility expenses ,staff salary everything was taking a toll on me.These six months may have fetched me only 3 – 4 customers but definately taught me how to get clients, what they expect from us and what not to do. Earlier i took 2 months to get a client but not its just matter of 1-2 days i get the clients. I wont call it failure but i guess it has laid the foundation stone for success of my business model.
With all my funds over, i thought of making a business plan , getting testimonials from companies if they like our business model and would like to work with us and then approach angel investors.
But as Mr. Rehan had said, i guess the strength of management team matters a lot for the investors. Even though the business model is appreciated by most of the investors, they have said its early stage for them and wanted atleast a team in place.
So even though the business model is brilliant and has a competitive advantage over job portals, recruitment consultancies and print media, still angel investment ( or seed ) seems far away at this stage.
So finally i am succumbing to the incubation opportunities i have recieved so far and giving away 50% stake to a Director of a company. He is offering me office space, staff cost, utlity bills etc. But i think 50 % is a big ask for all these things.
As a first generation entrepreneur , the bargaining power always lies with the investors. May be, after my this venture is successful, I can dictate terms with investors as a proven entrepreneur even though my second business model wont be attractive enough as the first one . So in this world , what you say has no meaning ……….But all it matters is who says that…………
Anyways i thought it would be better to take this incubation , get into a working model, get few more clients, show some revenues and then approach for angel investors & VCs
I hope i have made the right decision. Your comments will be helpful for me to analyse the situation and make a better decision.
Regards
Sumit Kale
9819291670
sumitkale24@gmail.com
Man, what and why is google doing in IAN. great conflict of interest.
Suramya,
While blogging all VC’s and angels say if you want to be an entrepreneur , do things differently …think differently and act against conventional wisdom etc and many of them will inspire you about stories of billgates, steve jobs, michael.S.Dell or the fact that 50% of all entrepreneurs in the world are college drop outs. now come to the real picture….you aproach any of these VC’s or angels..first question they will ask is which IIT did you pass out from?….well am not IITian….oh then which IIM?..err well am not an IIM grad as well…the VC says…we are extremely sorry…we will back only entrepreneurs with a reputed professional back ground say an IIM or an IIT……or atleast you should be an MBA from a top 50-b school!…sir..so what about bill/dell….well they all are unique individuals we can’t take a risk..we are sorry!
I don’t know whether am diverting from the discussion but just want to give my views on the professional qualification of the entreprenuer while presenting a business plan. I am not telling IIM’s or an IITian is bad or not capable ofcourse they are ( but also take this..most IIM grads were reluctant for starting some thing of their own some years back…well the situation is changing..thanks to “India shining” ), also take this i don’t think any MBA curriculam or engineering course has anything related to entrepreneurship and look at those teaching this business grads..most have no experience in doing some thing of their own.
Entrepreneurship & innovation has nothing to do with the degree you have , it’s an inborn talent ( IIT’s and IIM’s may give us an ecosystem to foster your skills….but being into IIT or doing an MBA doesnt mean that you can be a good innovator or an entreprenuer).
In 2005 my startup was the first in India to launch India’s first 24/7 SMS interactive TV channel in JV with Asianet ( http://www.youtube.com/watch?v=ByvT58RUSq4 ), so before launching the channel i was looking for developing the software for the same and i was not confident of developing it inhouse….so i thought of buying the same and finally i got a call from menno bessiot VP of yarosa entertainment netherland and finally he came down to Mumbai to meet me ( ….well at that time i was bootstrapped( hmm still too 🙂 and i took a second class ticket and travelled to mumbai from kerala…stayed in a dormitary in dadar for 80 rs/day and then next day met the VP of yarosa at oberoi in nariman point…..nostalgic stuff..well will once write about on my blog later). In meeting Menno offered me the software for Rs 10 lakh and he asked for a 50% revenue share on SMS/ AMC. Anyway i returned home disappointed and one day a student in final year of engineering appraoched me for a project for his final year. He told he had learned VB on his own and has developed some projects for over sees clients parttime. Anyway i asked him whether he can develop a software for my proposed project. After the requirement analaysis i took him to our TV studio to show how the other channels of Asianet cable vision works and he sought a months time for developing the software. within the first 10 days the initial version of the software was ready and finally we the chief minister of kerala officially launched the channel. Now the guy who developed this software had 10 back papers at that point ( he has still not cleared any of them), had further developed a lot of applications for us like India’s first photochat application on TV etc, starting with this 90% of my staff who has worked with me were either drop outs or those who have back papers…but people with exceptional talents.
So innovation/entrepreneurship is a form of creativity …..so rather than looking at the branding of one’s college or degree….let investors/ VC’s / Angels find ways to analayse the real talent of an entrepreneur! Also look for other credentials of an entrepreneur like his past experience that is valid rather than merely looking at the tags.
And to all those entrepreneurs who are really talented but don’t have a namesake IIM/IIT tag or even drop outs, Mahesh murthy of seed fund is some one whom you can aproach. ( http://www.rediff.com/money/2006/sep/26inter.htm ).