Students, academics, entrepreneurs, investors, and industry experts gathered in Mangaluru recently for a two-day workshop and conference, titled Startups in India: Challenges, Issues and Opportunities. It was organised by MSNM Besant Institute of Post Graduate Studies in association with Kanara Chamber of Commerce and Industry (KCCI).
The speakers offered a range of insights and case studies, from ideation and funding to growth and compliance. YourStory also conducted sessions on scaling strategies and frugal innovation, and moderated a panel on startup tips from three local entrepreneurs. Here are seven key takeaways from the two-day event for aspiring entrepreneurs.
1. The timing is right
This is a great time to be an entrepreneur, explained KCCI President Isaac Vas. “Ideas that seemed crazy or even imaginable just a few years ago are commonplace today,” he said, pointing to Uber, Ola, and Airbnb as examples.
“Much more can be done, and there is always space for new entrants,” he added. Aspiring entrepreneurs should not assume that the market is saturated, as seen in the rise of brands like Bira in the beer segment, which was largely dominated by Kingfisher. Isaac also cited iD Fresh Food with its idli-dosa-vada batters as a notable startup in the food products space.
Entirely new segments in gaming and entertainment are opening up in digital space, thanks to the ubiquitous and affordable mobile broadband access. Social media make discovery and marketing easier as well, Isaac added. Government funding schemes for women entrepreneurs have increased, and the social entrepreneurship movement is also picking up for those founders who want to make an impact beyond profits.
2. The business idea
To start with, founders should explore the quality, originality, and potential of their idea, emphasised Gaurang Shetty, CEO, RiiDL (Research Innovation Incubation Design Laboratory). Chances for success will increase if they have a feasible solution for a real problem faced by customers, unique insights, and an unfair advantage.
Gaurang listed a number of questions founders should ask themselves. Is this a highly scalable idea? Do you have a paying customer now? Is this the right team? Is the timing right? Who are the other players in this space?
Founders should also be prepared to commit to the journey for at least 10 years. As useful metaphors for the importance of the proposed solution, Gaurang compared it to air, painkiller, or supplement.
It is a misconception that you can’t be an entrepreneur without an MBA, political connections, inheritance, and domain experience, explained Bobby Pauly, Partner, Tata Opportunities Fund at Tata Capital Private Equity. He pointed to Infosys, BioCon, and Lijjat Papad as examples in this regard.
3. The business plan
Despite the ups and downs of the startup journey, it helps if founders create a business plan, according to Ajith Kamath, Proprietor of Ajith Enterprises. The plan should explain what the entrepreneur intends to do and how.
Though circumstances may change, the business plan helps see broader connections, and holds the founders and employees accountable to their commitments. The very act of writing things down makes concepts, marketing, and financials more explicit, Ajith explained.
He cited examples from his own journey, such as becoming eligible to bid for contracts by first becoming a sub-contractor to gain experience. He also called for more exposure about the business and entrepreneurship world for engineering and IT students, and vice versa.
YourStory conducted a session on the journey from ideation to scaling up business ideas. Founders need to reflect on their journeys and aspirations and decide whether they want to remain small enterprises or global players. As explained by authors like Subroto Bagchi, scale is a question of mindset, business scope, knowledge, brand, partnerships, people, and risk management.
Examples range from corner medical shops to large-scale chains like Radha Medicals or CVS. Ola and Paytm are good examples of Indian startups going global. Boards of advisors and directors help scale stage companies tackle growth issues; having coaches and mentors also helps.
Founders need to document, support and reinforce the values of their organisational culture. Roping in celebrity endorsements have helped some brands scale. An ecosystem of suppliers, distributors, and franchisees has helped ecommerce and fast-food players attain national and global scope. Effective practices of knowledge sharing, innovation management, and co-creation are needed to sustain a company’s creativity edge in the long run.
Risk from errors, fraud, and attacks increase as a company scales. ‘Black swan’ events like the recent coronavirus outbreak pose new kinds of challenges as well. In sum, a desire for growth involves a willingness to embrace complexity, implement processes, step out of the comfort zone, and plan with agility.
5. Funding and finances
Funding needs for entrepreneurs vary across the stages of ideation, discovery, validation, customer creation, and company building, explained Naveen Narayan, Fellow Member, Institute of Chartered Accountants of India.
Funding sources for the startup journey vary during ideation (self-financing, business plan competition prizes, family), validation/seed (angels, crowdfunding, incubators, government grants), early traction (Series A: early stage venture capital), and scaling (growth stage VCs, PE).
There are also grants given to new startups, but not to modified entities formed by splitting up or the reconstruction of an already-existing business. Naveen advised founders to research the implications of each type of investment with respect to risk, repayment, involvement, duration, return to investors, pressure, and decision-making.
For example, VCs are involved full-time in the investment business, whereas angels often have other full-time jobs. Incubators help develop a startup’s business model, while accelerators build on a validated model. Incubation periods may last for a year, while accelerator engagements last up to a quarter.
Companies may have high valuation based on business potential even though they are currently loss-making, he said, pointing to Paytm, Swiggy, and Flipkart as examples. India has the third-largest numbers of unicorns in the world, Naveen added, citing Nasscom data.
Investor types and interests in the startup vary across the journey, explained Bobby Pauly of Tata Capital. These include angel investor (team potential, mentoring), seed investor (emerging team, MVP), VC (strong team, proven model, high growth), and PE or tech giants (winner takes all, multiple markets, ‘clash of the titans’).
Good investors bring not just money to the table, but knowledge, operational guidance, resources, and access, Bobby added. Accounting, governance, environmental safety, and legal contract mechanisms become particularly important in growth stages. Vision, team, and an enduring value system are key success factors for the long term, Bobby affirmed, citing Infosys Co-founder NR Narayana Murthy.
Vittaldas Leeladhar, former Deputy Governor, Reserve Bank of India, cautioned larger startups to work on minimising losses. The journey to scaling up and expanding also calls for wisely managing cash flow and expenditure.
YourStory shared examples of frugal innovation practices, which should not come at the expense of product or service quality. Examples include the sharing economy, crowdsourcing, hackathons, modular development, upcycling, pay-per-use financing, and environmental sustainability.
6. Founder tips
YourStory moderated a panel on founder tips featuring Tanuja Maben (Basil Café, Forrader Academy), Prajwal M (Skylark Drones, IKP Knowledge Park), and Prachetha Shetty (Thacker Farmtech). The three founders shared insights on ideation, funding, customer development, and challenges faced.
At some point, aspiring founders need to just jump in and get started so that some clarity and direction emerges. Constant research and feedback help to stay focused. Some founders work as many as 18 hours per day on their startups, which takes a lot of patience and perseverance.
Mistakes and failures should be treated as valuable learning lessons. At the same time, failure should not be regarded as the end of the world – founders’ resilience increases each time they bounce back.
Founding teams, especially techies, should pay a lot of attention to their pitch decks in terms of quality and display. Gaurang of RiiDL cited a DocSend report that indicates that investors usually read an average successful deck for 3 minutes 44 seconds; twelve percent of the investors read pitch decks from their mobile phones.
The founder journey is not glamorous, and an ‘overnight success’ actually reflects a decade of sleepless nights and hard work, cautioned Isaac Vas of KCCI. It takes a lot for entrepreneurs to commit to making their dreams a reality.
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7. Mangaluru ecosystem
Many speakers emphasised that the Mangaluru ecosystem for startups is growing from strength to strength. IKP Knowledge Park in Mangaluru is helping scale more than two dozen startups, and also has a makerspace.
The Startup India programme has flagged off incubators at the National Institute of Technology, Surathkal, and NMAM Institute of Technology, an engineering college under NITTE University. The Centre for Entrepreneurship Opportunities and Learning (CEOL) has been launched in Mallikatte.
KCCI is launching an initiative, called Native Startups, comprising local entrepreneurs addressing local problems. Institutional support can help identify and build confidence in aspiring entrepreneurs, and events like conferences provide a platform for knowledge sharing. See also YourStory’s coverage of local startups like Samvitti Capital and Baker’s Treat, as well as the La Eve women entrepreneurship initiative.
The 2021 edition of the workshop and conference on startups will be held at a bigger scale, said Molly Chaudhuri, Institute Director and Conference Chairperson. More government initiatives at the national and State levels are supporting and promoting startups, added V Ravindrachary Registrar (Evaluation), Mangalore University.
In sum, Mangaluru seems poised for a boost to its startup movement, which builds on the region’s reputation for creativity and entrepreneurship in the education, banking, hotel, food, and health sectors.
(Edited by Evelyn Ratnakumar)
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