Today, the market is replete with choices. Startups have to negotiate a highly competitive environment. Therefore the need to reach a wider audience becomes all the more imperative for them. Startups today need to be diligent and assess their product at every stage. They need to plan every step in advance and be prepared to take the organisation to the next level earlier than traditionally believed.
Some of these interesting perspectives were brought in the ISB entrepreneur mixer panel discussions held in Bengaluru recently. The panels consisted of entrepreneurs and investors. The entrepreneur panel members included Alok Goel, ex-Freecharge and Redbus, Keshav Baljiee, ex-Orchid and Founder of Spree, and Vishal Srivastava of Trainedge Consulting. They discussed the importance of bringing in the right product fit before focusing on marketing. The investor panel comprising of Prayank from Accel, Rajat from Matrix, Raghav from BVP, and Sanjay Jain, an independent chartered accountant, shed light on different facets of securing funding.
Product perfection and defining a right culture is imperative before marketing
Two of the biggest concerns startups have are marketing their products and hiring the right talent. Startups today need to look at innovative ways to capture the attention of their target audience. Today with the growing number of products and services entering the market space, people are becoming more discerning and selective in their choice.
Focus on the product
Traditionally, marketing follows the strategy of the 4Ps model. With the growing base of online technology and mobile apps, the factor of placement gets taken care of. Therefore, the two main functions of most organisations here are restricted to product and promotions (marketing). Hence for most organisations, it becomes essential to make a product that is close to its prototype.
The panelist of entrepreneurs said that it has become essential for startups today to create a good product. They said that with the growing number of products and applications in the market this becomes all the more pertinent.
According to them:
It is important to leverage your product before focussing on marketing or promotions. This is essential because if you put out a half-baked product then the customer simply doesn't come back. To get the product mix right, several startups focus on launching different versions of their product, giving them time to assimilate feedback and suggestions.
Alok Goel also added that it is essential to define clearly and sharply what your product can do and can't do. According to them, while it is possible to have gaps, it is essential to communicate to customers what your product or service does. Keshav Baljee further added that whether it is the hospitality, online or offline business, it is important for everyone today to have the basic hygiene factors in place. He further added that these are given, and expected from all organisations whether it is a startup or an established organization.
Talent acquisition and growth strategy
Culture plays an important part in talent acquisition and growth strategy. According to the entrepreneurs, it is best to build a team around those few pivotal individuals who helped build the culture, and not around money. Adding to this point of view, Vishal said that
people do not leave the company they, in fact, leave the boss, so you need to be very transparent and clear in your communication.
He further added that after they get funded, startups just focus on hiring people by paying more, but people who come in due to connections and passions are the ones that last longest.
Keshav also said that it is imperative to get a background of the industry and its players. “If you’re looking for people for a specific role,” he adds that you need to check where they have worked before and what their strengths are.
‘With too many choices we begin looking at the softer aspects of entrepreneurs before funding’
With the growing number of choices and great entrepreneurs in the market today, investors have begun to set the bar higher.
Since almost all startups have great ideas, investors today have started focussing on softer aspects. Raghav said that these include aspects like ethics, how the entrepreneur has used the funds they had, and how aggressive they are.
Sanjay Jain added that when entrepreneurs start, they do not focus on legalities. The investors believe that the legalities and compliance rules should be a focus point as well. Lack of this causes issues when they approach VCs and investors. Investors like to even see how engaged you are with lawyers and chartered accountants and other legal aspects.
They also said that startups need to do their due diligence before heading out for investment; they need to be very clear about the amount they actually require and what they need it for. This is important, adds Prayank, because once an investor puts in the funds they will begin looking for results.
Evaluation components include scalability of the company, how will the product hold even 10 years from now, what is the vision and how clean the organisation is. There are no fundamental differences between evaluating an online or an offline organisation. It is important to be able to defend your business model. However, for online teams, Rajat added that they look at how the entrepreneur is in tune with the product; for offline more commercial traits of the entrepreneur is looked at.
Questions and expectations increase once an entrepreneur takes funding.
To raise Series A round of funding, one must meet several parameters in which they would have had to qualify in the angel or seed investing round. These could be as necessary as revenue, or as basic as usage. Find a metric that works for the business, that works and various rounds of funding becomes easier.
One of the most pertinent questions as an entrepreneur the investors say that you should ask is “What is the fund cycle?”It is important to do your diligence on the investor and see how they have reacted in different situations. Investors look at individuals who look at creating the next 'Google', they look for the passion and drive. The VC will want to push you, and want entrepreneurs to take risk and be aggressive.