Entrepreneurs should always be in the good books of existing investors, says Klaas Oskam, MD, Signal Hill
With over 18 years of extensive experience in middle-market investment banking at Signal Hill, Klaas Oskam has closed 25 deals across the tech space, including enterprise software, IT services, Internet and digital media and education technology, with a combined equity value of of $ one billion.
Speaking at the sixth edition of TechSparks in Bengaluru, Klaas, who is the MD at Signal Hill, said, “At present, there is boom in India which the country has never seen before. Almost 80 to 85 per cent of the total investment made in the last two years has gone into consumer Internet space.”
He added, “If you go deeper, you will see that out of the $11 billion of investment coming in the past 21 months, $9.5 billion has gone into consumer Internet. The top ten companies have grabbed almost 75 per cent.”
A Deloitte report stated that B2C e-commerce market in India has exhibited rapid growth and attracted large investments from the PE/VC community. With positive fillips from the demand and supply side, this market is likely to reach $60 billion by 2017.The online channel is expected to grow at a much faster rate vis-a-vis more established channels as it is expected to account for 10.1 per cent of overall retail sales in 2018, up from 6.5 per cent in 2013, and 3.5 per cent in 2008.
Flow of capital
Talking about the current fund raising scenario in India, Klaas noted, “Last year witnessed a great boom in the startup industry with unicorns raising significant amounts of money. Apart from that, early stage companies are also seen to attract the attention of many investors. In 2012 and 2013, 45 companies in the consumer Internet market got seed and Series A funds. All these funded companies are chasing big dreams and are ready to get the next cheque of Series B, C and D funds.”
Klaas emphasised the need for early-stage companies to have a good team and other key business metrics to showcase and sell their dreams to investors. When you reach the last stage, you are a winner as you are too big to fail. At the mid-stage, you need to deliver on the dream and show that you are the top contender among the five to six competitors in the domain, and that you are running your business backed by consistent and high-growth performance.
Markets are getting stabilised
Though increasingly mentors are starting to enter the market, capital variables will not dry up. Klaas mentioned that even though consumer Internet companies need additional capital to grow, they are still looking to raise the next round of funds.
To the aspiring entrepreneurs, Klaas said that every startup looks for funding from Soft Bank or Tiger Global. But in the absence of both, entrepreneurs also need to be in the good books of existing investors.
“It's time for startups to demonstrate their strength by showing that it's not just capital that helps them grow, but also what they use it for to execute their plans and sell the product in the market. You may face hard times and end up speaking to 50 to 100 investors. Out of the 100 investors, you may face rejection from 50 but it should not let you down, as entrepreneurs are after all the stars of the show and we look for more innovations in the near future,” Klaas added.
A big shoutout to TechSparks 2015 sponsors – Sequoia Capital, ICICI Bank, Money on Mobile, Microsoft, Signal Hill, IBM Bluemix, PwC, Atom Tech, Teamchat, Govt. of Karnataka, Intel, Rabbler, Dailyhunt, Reverie, Loginext and PayUBiz; Partners – Duff&Phelps, Taxmantra, Dineout, Exotel, 360ride, Yoga Bar, Chai Point, GWC; and our Media Partners – TV9, Fortune India, RedFM and Deccan Herald.