Entrepreneurs in the making learn lessons on fundraising, valuation and the importance of mentoring at regional mentorship camp organised by Lufthansa & TiE Bangalore
To bootstrap or to be funded? A question that’s a part of life for every early stage founder and startup enthusiast.
The answer to this and many other such questions were to be found at the Lufthansa Runway to Success regional mentorship camp held over the weekend by TiE Bangalore. Runway to Success is a multi-staged initiative that celebrates the spirit of Indian creativity, diversity and entrepreneurship. The camp was held at NS Raghavan Centre of Entrepreneurial Learning (NSRCEL) on Saturday.
K Vaitheeswaran, Founder of India’s first online shopping site, Indiaplaza, said at the camp, “It is not essential for all companies to raise money. Also, several rounds of investments don’t increase the probability of success for a startup. They could be symptoms of a badly run company.”
The entrepreneur-turned-author explained that bootstrapping essentially means “effective deployment” of whatever little funds an individual or company has at their disposal.
Vaitheeswaran advised the forum of entrepreneurs to spend money only on what customers will be able to see and experience as well as on the website (or product), ensuring the best UI and UX to facilitate the consumer’s journey.
He stated that while spending money, businesses should co-relate it to the impact in a customer’s life. For example, in the case of e-commerce, if companies have to spend an extra rupee on packaging, they should.
“Irrespective of the nature of the business, there is always a bootstrapping option. The availability of capital is the biggest roadblock to innovation and creativity,” he explained, adding that companies should stay bootstrapped till they are sustainable and can stand on their own feet.
Fundraising also brings along the pertinent question of valuation. In the past few months, India’s biggest unicorns, Flipkart and Paytm, have both raised massive rounds of funding ($4 billion and $1.4 billion, respectively) at sky-rocketing valuations from Japanese internet conglomerate Softbank.
Helping entrepreneurs understand this concept better was Anjana Vivek, Founder-Director of VentureBean Consulting, a Bengaluru-based business consultancy.
Speaking to YourStory, Anjana explained that valuation was nothing but a psychological game based on demand and supply of the company’s offerings. Valuations of companies are not always stable since they are based on an uncertain future.
A recent example is mobile-payments company Freecharge, which was bought over by e-commerce marketplace Snapdeal for a whopping $400 million in 2015. Just two years later, Freecharge was bought by Axis Bank for just Rs 385 crore (~$60 million).
Explaining the reason behind this, Anjana said, “Valuations are based on a hypothesis, and we see it failing when the hypothesis goes wrong or different. In most cases, we haven’t seen the scope of profitability that has hit valuations.” Technically, she said, valuations are also highly dependent on a firm’s topline/bottom line cash flow along with a sigma of other factors.
However, the aim of the event was also to offer mentorship by leveraging the TiE network.
According to Geetika Dayal, Executive Director, TiE Delhi-NCR, “Lufthansa and TiE Delhi-NCR have been working closely for the past 5 years to build Lufthansa Runway to Success as a platform to nurture future business leaders in India.”
Geetika added that guru sessions at these camps held by TiE Chapters and Lufthansa across the country provide a platform for experts to pass on valuable insights and business lessons they have learned through experience.
Offering insights was Satish Mugulavalli, Director – Technology, at early stage venture capital firm YourNest, who helmed a session on understanding startup investments.
Speaking to YourStory on the relevance of such events, he said, “When compared to the US, our ecosystem is still at a fairly early stage, so we should see it as continuously evolving. These are essentially for ecosystem building.”
He believes that the association of TiE with events like these helps in better access to information and even capital. “If we see potential in a startup, we might connect them to partners or refer them to other venture capitalists. Sometimes we have seen that we have left an investment, but our LPs have taken it ahead and invested in the business,” he added.
Moreover, according to him, the fact that a German airline like Lufthansa is organising mentorship camps in Bengaluru showcases the potential the Indian startup community exhibits globally. “Global companies won’t want to miss out on an association with the next big thing,” Satish said.
With global companies keen to associate with businesses in India, Anjana is of the view that, “Disruption is what everyone is scared of and people or businesses do not want to miss out on. Further, Bengaluru is a dynamic city with an active ecosystem that speaks for itself.”
In a statement, Wolfgang Will, Senior Director, South Asia, Lufthansa Group, shared, “Entrepreneurs are a very important target group for Lufthansa in India. And Runway to Success brings alive for this audience our philosophy of Nonstop You and our promise of striving to be ‘More Indian than you think’. This season, we are excited to further expand our outreach with mentorship camps at startup hubs like Bengaluru.”
Others who spoke at the event included Avnish Sabharwal, Managing Director, Accenture Ventures and Open Innovation, and Peter Yorke, CEO at content marketing firm Yorke Communications. They spoke about topics related to digital transformation of the startup ecosystem along with conversion of focused online marketing.
TiE Bangalore reportedly has access to more than 50 angel and VC firms, hosting a community of more than 1,000 early-stage startups with more than 120 charter members.
YourStory is an online outreach partner for Lufthansa Runway to Success – Season 5