The thought of starting out on one's own can be a very daunting prospect, more so for aspiring first time entrepreneurs. Most may have an idea, but the details of how to execute it can be fuzzy. The nitty gritty of how to actually start a venture, make a product, acquire customers, raise funds and build a company can easily overwhelm even the most enthusiastic of beginners.
In a bid to demystify the perennial start-up questions: how do I start and how do I make it work? India Emerging spoke to successful entrepreneurs from different sectors to create a six step guide to starting up.
THE IDEA
For most entrepreneurs, there is no single 'eureka' moment, when an idea suddenly dawns on them. Most have worked in an industry for sometime and know where the gaps are and what solutions will work best. Medical equipment company Perfint's founders had worked in the healthcare product industry for around 10 years. They had all quit GE Healthcare and were working in different companies in the service industry and wanted to get back to product development. "For us getting into services was almost suicidal," says S Nandakumar, Perfint's Co-founder and CEO. He says their collective experience was in healthcare products and so they wanted to develop solutions for hospitals, clinics and labs. "We evaluated a few product ideas and backed one, which we thought would work best. We made a prototype in late-2006," he adds. For V R Govindarajan, his company Perfios, a personal finance software provider, developed out of his own pain point of not being able to manage his finances with ease. Govindarajan had co-founded global software services venture Aztecsoft , which was acquired by IT services major MindTree, and knew what was required of an entrepreneur. He worked on several personal finance software product ideas for six months, built a prototype and got feedback from people in the banking and wealth management industry. "I had the experience and knew what to do, but I did not assume that mine was a great idea," says Govindarajan.
THE MARKET
An idea might seem perfect and unbeatable, but does it have market potential? Sanjay Purohit, an IIT-Bombay and IIM-Ahmedabad alumnus who had worked as CEO of three different companies, knew there was scope in education, as it was a $40 billion opportunity. He identified sub segments in higher education such as test preparation and distance learning, which is a $2 billion opportunity and growing at 15%. "Primary growth restraints have been lack of strong teachers, limited reach of classroom programs in tier-II and tier-III cities and towns and high price of classroom coaching for IIT and MBA courses," he says. Purohit started iProf, an elearning venture, which has established a chain of Wi-Fi enabled centers across the nation and has also developed India's first personal education tablet. Most entrepreneurs write out a business plan, as it helps streamline and focus the concept and highlight the gaps. However, as the start-up progresses on the growth path, the business plan can change, like it did for Perfint's Nandakumar. He says they were first making products for the healthcare services sector, then decided to build their own proprietary robotic products. Finally, they fine-tuned the concept to products in interventional oncology.
THE TEAM
The team can make or break a start-up, say entrepreneurs. Mukesh Bansal, who wanted to sell personalised products in India, launched e-commerce retailer Myntra in 2007. He had worked with four start-ups in the US and knew he would not be able to handle all aspects of starting up on his own. "I knew I needed a few people who were passionate about the idea as a lot of work needs to be done in the initial few months," says Bansal. He hit the alumni networks and reconnected with two of his juniors from IIT-Kanpur, Ashutosh Lawania and Vineet Saxena, who were also keen on becoming entrepreneurs. Perfios' Govindarajan says it is a great advantage if you have known the key people in the team for sometime before working together.
THE PRODUCT
Perfint's Nandakumar worked with clinicians extensively to get the product right. "We delayed the launch by almost 20 months because we wanted the product to be robust," he says. But building the first set of products can be tough. Shama Bhat's Bhat Biotech, which builds diagnostic products for various tests, was founded in 1994. He leveraged 35 years of experience in R&D and manufacturing in the biotechnology area to conceive this enterprise. Since he was working in the field of HIV, Bhat says, making diagnostic kits for HIV detection was not difficult for him. The kits were ready to be manufactured by the time he moved to India. However, it was not easy going in India where he needed a government loan to start manufacturing. "After being in the US for more than 16 years, it was difficult to adjust to the bureaucratic set up in India," he says. Bhat persisted and got his loan and in 1996, the company's first products hit the market.
THE CUSTOMER
Depending on the venture, entrepreneurs tackle the process of customer acquisition in different ways. "We did door-todoor marketing of our products and did various demos in Rajasthan's Kota, the education hub of India," says iProf 's Purohit. Perfios' Govindarajan worked with financial advisors to spread the word about his product. He also used the social media to make people aware of Perfios.
THE INVESTOR
Entrepreneurs mostly use personal savings and funds from their network of friends and family as the seed investment. An entrepreneur then bootstraps and gets a product or prototype ready before going in for an angel round. Myntra had begun selling its first few products when it went in for angel funding. Bansal says the company needed funds to put in place the marketing team and to expand. "We approached people we knew," he says. Four angel investors and Erasmic Venture Fund (now Accel Partners) agreed to invest. Perfios' Govindarajan preferred to go in for an angel investment as he wanted people on board who would work with his team closely and who would provide the right contacts. While raising venture funding, most start-ups, like Perfint, work with investment bankers. However, iProf 's Purohit did not follow this tried and tested route. "I made the elevator pitch on my own and made presentations to some 10 venture capital firms," he says. They raised .`27 crore from IDG Ventures, Norwest Venture Partners and Kaplan, a test prep company. Entrepreneurs say venture funds look at the team's capability, the company's track record and ability to execute before investing.
In a bid to demystify the perennial start-up questions: how do I start and how do I make it work? India Emerging spoke to successful entrepreneurs from different sectors to create a six step guide to starting up.
THE IDEA
For most entrepreneurs, there is no single 'eureka' moment, when an idea suddenly dawns on them. Most have worked in an industry for sometime and know where the gaps are and what solutions will work best. Medical equipment company Perfint's founders had worked in the healthcare product industry for around 10 years. They had all quit GE Healthcare and were working in different companies in the service industry and wanted to get back to product development. "For us getting into services was almost suicidal," says S Nandakumar, Perfint's Co-founder and CEO. He says their collective experience was in healthcare products and so they wanted to develop solutions for hospitals, clinics and labs. "We evaluated a few product ideas and backed one, which we thought would work best. We made a prototype in late-2006," he adds. For V R Govindarajan, his company Perfios, a personal finance software provider, developed out of his own pain point of not being able to manage his finances with ease. Govindarajan had co-founded global software services venture Aztecsoft , which was acquired by IT services major MindTree, and knew what was required of an entrepreneur. He worked on several personal finance software product ideas for six months, built a prototype and got feedback from people in the banking and wealth management industry. "I had the experience and knew what to do, but I did not assume that mine was a great idea," says Govindarajan.
THE MARKET
An idea might seem perfect and unbeatable, but does it have market potential? Sanjay Purohit, an IIT-Bombay and IIM-Ahmedabad alumnus who had worked as CEO of three different companies, knew there was scope in education, as it was a $40 billion opportunity. He identified sub segments in higher education such as test preparation and distance learning, which is a $2 billion opportunity and growing at 15%. "Primary growth restraints have been lack of strong teachers, limited reach of classroom programs in tier-II and tier-III cities and towns and high price of classroom coaching for IIT and MBA courses," he says. Purohit started iProf, an elearning venture, which has established a chain of Wi-Fi enabled centers across the nation and has also developed India's first personal education tablet. Most entrepreneurs write out a business plan, as it helps streamline and focus the concept and highlight the gaps. However, as the start-up progresses on the growth path, the business plan can change, like it did for Perfint's Nandakumar. He says they were first making products for the healthcare services sector, then decided to build their own proprietary robotic products. Finally, they fine-tuned the concept to products in interventional oncology.
THE TEAM
The team can make or break a start-up, say entrepreneurs. Mukesh Bansal, who wanted to sell personalised products in India, launched e-commerce retailer Myntra in 2007. He had worked with four start-ups in the US and knew he would not be able to handle all aspects of starting up on his own. "I knew I needed a few people who were passionate about the idea as a lot of work needs to be done in the initial few months," says Bansal. He hit the alumni networks and reconnected with two of his juniors from IIT-Kanpur, Ashutosh Lawania and Vineet Saxena, who were also keen on becoming entrepreneurs. Perfios' Govindarajan says it is a great advantage if you have known the key people in the team for sometime before working together.
THE PRODUCT
Perfint's Nandakumar worked with clinicians extensively to get the product right. "We delayed the launch by almost 20 months because we wanted the product to be robust," he says. But building the first set of products can be tough. Shama Bhat's Bhat Biotech, which builds diagnostic products for various tests, was founded in 1994. He leveraged 35 years of experience in R&D and manufacturing in the biotechnology area to conceive this enterprise. Since he was working in the field of HIV, Bhat says, making diagnostic kits for HIV detection was not difficult for him. The kits were ready to be manufactured by the time he moved to India. However, it was not easy going in India where he needed a government loan to start manufacturing. "After being in the US for more than 16 years, it was difficult to adjust to the bureaucratic set up in India," he says. Bhat persisted and got his loan and in 1996, the company's first products hit the market.
THE CUSTOMER
Depending on the venture, entrepreneurs tackle the process of customer acquisition in different ways. "We did door-todoor marketing of our products and did various demos in Rajasthan's Kota, the education hub of India," says iProf 's Purohit. Perfios' Govindarajan worked with financial advisors to spread the word about his product. He also used the social media to make people aware of Perfios.
THE INVESTOR
Entrepreneurs mostly use personal savings and funds from their network of friends and family as the seed investment. An entrepreneur then bootstraps and gets a product or prototype ready before going in for an angel round. Myntra had begun selling its first few products when it went in for angel funding. Bansal says the company needed funds to put in place the marketing team and to expand. "We approached people we knew," he says. Four angel investors and Erasmic Venture Fund (now Accel Partners) agreed to invest. Perfios' Govindarajan preferred to go in for an angel investment as he wanted people on board who would work with his team closely and who would provide the right contacts. While raising venture funding, most start-ups, like Perfint, work with investment bankers. However, iProf 's Purohit did not follow this tried and tested route. "I made the elevator pitch on my own and made presentations to some 10 venture capital firms," he says. They raised .`27 crore from IDG Ventures, Norwest Venture Partners and Kaplan, a test prep company. Entrepreneurs say venture funds look at the team's capability, the company's track record and ability to execute before investing.
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