Raising money isn’t the way to building a great startup; building value is: experts at Elevate 2018
The founders of ZoomCar, NestAway, Chumbak, and Your Story recall their startup journey, and offer interesting takeaways to Elevate finalists.
The Government of Karnataka has shortlisted 250 finalists at Elevate, its startup competition. But starting up is only the first step in what’s likely to be a long journey. The other steps include growing the company, raising money, and scaling up.
On Tuesday, the government brought in four top founders – of ZoomCar, NestAway, Chumbak, and Your Story - to talk about their journey and prep young startups for the real world. The panel, titled “Accelerated pace of change in the market place”, focused on how the entrepreneurs grew their business, raised money, and strategised for the future.
Naganand Doraswamy, Founder, IdeaSpring Capital, said, “Startups take several steps to succeed. It's not just money; it is connected to finding investors and the right mentors.”
Every entrepreneur shared their unique experiences.
Greg Moran, ZoomCar's founder, said it was not easy when he moved from the US to India. “I dropped out of B-School to build a sustainable mobility business. It was more difficult because I moved from the US to India,” Greg said.
Greg told the audience that renewable energy businesses were big between 2008 and 2010 and investors were flocking to them. It was then that he realised the opportunities in the sustainability movement and looked at mobility as a business. “We looked at growth capital with strategic investors. It took a long time to convince them about our business model. Our business model works for automobile companies and we have two auto OEMs that invested with us.”
Sustainable mobility was an under-penetrated business in India. Greg started with market research in four or five cities, and spoke to close to 1,000 people before starting his business.
“I pooled money from friends and family. We had to run the business with sharp focus; that's what made us scale in the initial years before we raised large rounds of money,” Greg said.
Focus on creating value
But raising money isn’t the way to building and running a great company. The panelists said achievement lay in building value for customers.
Vivek Prabhakar, Chumbak, said, “My co-founder and I had an idea about fun souvenirs and there were no great designs a decade ago. I did not know any VCs so we did it on our own for the first two years.”
In the early days, the founders of Chumbak made samples and researched whether people would pay for their products. They sold a house to start the business and worked on designs that were well accepted. “I wanted to see great product out there and not just make money. We did not have a business plan; we had a back-of-the-envelope conversation and took the risk,” Vivek said.
Chumbak raised money after two years of being in the business, to achieve scale. “Money does not solve all your problems. With raising money comes responsibility,” Vivek said.
Time and effort
The panelists went on to speak about finding the right mentors based on the industry they were in, adding that any business required time and effort.
Deepak Dhar, Co-founder, Nestaway, said, “The question we asked was whether we would be happy, and would solve a problem. All of us had mixed successes before the Nestaway journey. We were middle-class people and realised there were no houses for bachelors in this country. This was our business opportunity.”
Nestaway was launched in 2014 and began with five houses, managing the properties on a revenue-sharing basis with the landlords. “The basics of business are the same. If you enter the consumer business, you need to understand the needs. That’s when you can run the company well,” Deepak said.
The panelists said the first round of fund raising depends on a story and a vision – that is what investors are looking for. They added that the phases of growth for an idea-stage startup are establishing the idea and working on growth.
Shradha Sharma, Founder of Your Story, said, “Capital raising is a tough journey; it’s a spiritual journey. I built my business on my own for 8 years before I raised money. I had built a rigour before investors came in. If you can do it on your own, then don't raise money.”