How to build a scalable business: GHV Accelerator Founder

What is scalability?

Scalability is the capacity of a company or system or a process within an organisation to manage the increase in demand. That is, a business is said to be scalable when it can be expanded enough to accommodate the growing business needs. Scalability helps a business grow as per its full potential. Scalable conditions provide a room for economic growth within a company.

_Investors invest only in businesses that are scalable. Scalability is important criteria for investors in deciding whether to invest in a particular business or not. Better the scalability, higher the economic value of the business and therefore higher the investor interest.

_Outsource non-core tasks: Transfer some specific tasks that can easily be contracted out to another larger company that is focused on that task. Think of the production of some specific components. Can some other company produce it? If yes, would it make your business more scalable? That paves the way for your organization to focus on the core of your business, as also leveraging the cost and operational efficiencies of someone else that is focused on doing what you outsource.

A scalable business model helps you capture the full potential of your concept. It allows you a better chance to be a leading brand in the market. Scalability also allows you to quickly adjust plans to capture additional, unplanned demand. Often when opportunities come up, organisations are not ready for scale and they miss on a chance to move into a different orbit of scale and growth.

For example, consider that you own a drug manufacturing company. In case of an epidemic, there will be more demand for drugs so the company should be able to meet the increased requirements.

Why scalability is critical for businesses?

_Scalable businesses are more attractive to strategic partners. Scalable businesses have a greater chance of attracting strategic investors or partners and a strategic buyer is likely to be interested if the future potential of a venture is higher.

_Scalable businesses attract better talent. People want to join organisations that have the potential for growth. Scalable business models allow businesses to grow, thus making them more attractive for professionals to consider joining.

What can you do to make your business scalable?

_Process orientation: Introduce process as your venture scales up. Make the processes simple and easy to understand so that training and on-boarding time for new employees is lesser.

_Reassess your portfolio of products and services: Evaluate the efforts, management time and investments required to produce a product or a service line against the contribution that particular product or service is making to the overall business. Is it worth it? If not, then assess if that business really needs to stay or can be hived off, or if required, discontinued.

_Automate routine processes: Delegate everything that you can in your business using the “self-service” approach. That means, delegate work to non-human systems that require no human intervention. For example, consider using the online ordering system, improved Web services, automatic updates to the customers etc.

Every start-up business model need not be scalable. But if your concept has a large base of potential customers who can be serviced profitably – you should think of creating the right processes, building the right infrastructure, making the right investments and hiring the right talent to ensure that your business is able to capitalise on the full potential that the concept has.

The author is the Chief Mentor and Accelerator Evangelist at Gurgaon-based GHV Accelerator. He is also the Founding Board Member of the Indian Angel Network Incubator.

For More Details - http://www.ghvaccelerator.com/

Source : e27.co 

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Parameters overseas investors consider before investing in India

There is a constant buzz about India having become a hotbed for overseas investors, more so, since the BJP-led government took over the reins of the country in 2014. Add to it the fact that the ‘startup culture’ is at an all time high in the country with more students and corporate professionals jumping onto the entrepreneurship bandwagon than ever before. Given the scenario, there is little reason why investors wouldn’t be all wide-eyed, considering the number of unique and innovative business ideas springing up from across the length and breadth of the country; each of which offers them an opportunity to grow their money multifold. Also, diving into the Indian market gives the investors access to the burgeoning class of Indian Consumers, thereby creating deeper inroads for expansion.

But what is it that lures investors, overseas investors in particular, to put their money in a particular venture? In today’s article, I’ll decode the criteria that investors evaluate before finally taking the leap of faith and putting not only their money, but also time and experience, that will give the businesses the much-needed opportunity for a global footprint.

Image Credits : Shutterstock

These broadly include:

1. The overall economy/ governance of the country
2. Factors specifically related to deciding which business to invest in (this happens after the investors have already narrowed down their search to a particular country and sector
3. Overall performance of the economy – Amongst the foremost criteria that investors consider is the overall state of the economy of a country. No investor would risk putting their money in a country where the economy is on a downswing, owing to the uncertainty it places on their investments. On the other hand, an economy that had been consistently following the upward trend on the graph is likely to find favor with them.
4. Political stability – Political stability is yet another criterion that is important from an investment standpoint because the regulations and policies governing businesses change, every time a government changes. This can prove to be a big risk for investors, and one that few would want to take.
5. Ease of doing business – Long drawn processes for setting up and operating the business (in terms of completing the paperwork and getting the necessary clearances) can be a big put off for investors. They have no interest in wasting precious time in a system defined by red-tapism and would rather invest their resources where the government regulations and policies are ‘pro-business’. For instance, the Modi government has undertaken a slew of measures to change the long-standing perception of India not being a very ‘business-friendly’ country, and therefore, detrimental to the interest of investors.

Right from introducing a single portal for all businesses to getting the necessary clearances for setting up shop in the country (which will have an automatic escalation mechanism, and hence will avoid delays and corruption), to announcing huge initiatives like ‘Make in India’ and ‘Digital India’, the world is suddenly looking up and taking notice of India as a great investment opportunity. And the results are for all to see with several deals already having been signed with countries like Japan, Australia, US etc. and many others underway.

Other countries that rank high in terms of ease of doing business and have thriving economies include Singapore, New Zealand, UK,US, Finland, Hong Kong, Denmark etc.

4. Tax regime – The tax regime applicable to businesses are also important from an investor’s perspective. They would much rather settle for an investment in a country where the tax regime is business friendly instead of one where they constantly need to focus their energies on how to minimize their taxes rather than pursuing more significant business matters. Moreover, issues like retrospective tax that have plagued India in the past are a big dent on a country and are a sure shot way to ‘shoo’ away the investors.
5. Identifying the high growth sectors – After having assessed the government and economy-related criteria, the next thing that investors look out for is the high-growth sectors. They ideally prefer to invest in sectors that either find favor with the government (for instance, the current government is inclined to give infrastructure projects and renewable energy projects a big boost and is offering many sops to investors and entrepreneurs alike) or those that have been performing well consistently over the years or in sunrise sectors that offer great potential in the coming years (the ROI is high in such sectors because even a small investment can yield high returns in a relatively short span of time).
6. Choosing the right venture to invest in

Once the investors narrow down their search to a particular country and also a particular sector, the next step is to evaluate the options in terms of the companies that can yield the maximum returns for them. The vital aspects taken into consideration to arrive at the final decision include:

1. A unique and disruptive value proposition – In a market that sees new ventures coming up every day, investors are always looking for that one idea that stands out from the rest and has the potential to change the landscape of that domain.
2. Return on investment – There can be no better option for investors than to place their bets on a venture that has the potential to create disproportionate value within a relatively small timeframe as compared to other businesses
3. Passionate and driven management team – A great management team can accomplish a lot simply with their passion and drive. Investors look for these qualities as well as credentials of the management team to gauge how far they can take the business and live up to their promise. It is important that the management team has the capability to mobilize the funds and derive optimal resource performance; to convert the business plan into hard figures. They should prove their worth not just by coming up with winning strategies but also by executing them efficiently and effectively to get the desired output.
4. Business Scalability- Plausible investments occur when a business is anticipated to be a global performer. It is important for investors that the innovation or idea they are investing in is scalable and has the potential to grow across geographies, so it can reap the maximum returns.
5. Leveraging technology- In today’s era, technology offers a competitive edge to any business that uses it effectively. It gives businesses the cutting edge to accomplish their long-term vision faster and better and gives them a definite lead in the market. From an investor’s perspective, if they have to choose between a business running in a traditional manner and one that bases its operations and decisions based on technology, the latter will be a clear winner. After all, the effective use of technology is a common factor between all leading global companies the world over.
6. Exit strategy – Last but not the least, a clear-cut exit strategy is a crucial parameter, on which several businesses fail and investors reject even the most innovative ideas. Unless the company has a proper exit strategy chalked out, investors will not be interested in investing because that is the moment of truth for them; the stage where they get to encash the benefits they have reaped on their investment.

Conclusion:

Investing millions of dollars on a business is not an easy decision and the options need to be weighed very carefully. It requires that investors take the decision keeping in mind a host of factors related to the overall economy, high growth or high potential growth sectors as well as those related to deciding which company to put their money in.

Though certainly high risk translates into high returns when it comes to business, no investor would want to see their investment go in vain

Vikram Upadhyaya

Accelerator Evangelist, GHV Accelerator. Vikram is a Strategic leader and entrepreneur with a successful background of building and leading top performing teams focused on exceeding goals. Dynamic in orchestration of multimillion-dollar business start-ups, turnaround & growth ventures. Advanced communicator and cultivator of key relationships with all levels of personnel, clients, businesses, and executive managers. Big picture thinker, talented and driven to impact bottom line while ensuring staff compliance with enterprise standards, procedures, and regulations. Vikram is a visionary & an entrepreneur, holds 16 years of Indo-Japan Market Experience.

For More Details - http://www.ghvaccelerator.com/

Source : YourStory. 

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India calling: NRI entrepreneurs flocking back to homeland (Entrepreneur India)

NRIs Returning to India

“The Indian entrepreneurial ecosystem was the triggering point for my return to India in January 2011,” shares Vikram Upadhyaya, Chief Mentor and Accelerator Evangelist, GHV Accelerator. A Graduate from University of Tokyo, Upadhyaya started his entrepreneurial journey way back in 1999. Besides being a serial entrepreneur, Upadhyaya has a diversified experience in handling Japanese offshore projects to global corporate strategy and specialises in new ventures turnaround.

When asked about his decision to return home, Upadhyaya replies, “It was quite a big decision in my life when I and my family decided to relocate to India from a place where we lived for over 15 years, a city that is described as one of the most safe, developed and prosperous destinations of the world - Tokyo.”

In 2008, when Upadhyaya was trying to establish the TiE - Tokyo chapter along with mentoring and investing in Indian start-ups like Druva, Stayzilla, Merinews, IndiaCollegeSearch etc, he met Kanwal Rekhi, who was also visiting Tokyo along with other TiE - Tokyo Founding Members. Also known as the father of Indian entrepreneurship, Rekhi is an Indian-American businessman, venture capitalist, angel investor and an entrepreneur. He is currently serving as the Managing Director of Inventus Capital Partners.

“Over my three days of interaction with him, I realised that if I wanted to do something impactful for the country and empower entrepreneurs, I will have to be in their ecosystem. In 2011, I finally decided to be a part of the change and committed myself towards working to empower the Indian entrepreneurial and start-up ecosystem,” asserts Upadhyaya.

Through Green House Ventures (GHV), Upadhyaya looks to close investments in 10 promising startups from India every year. He plans to put $100K against 20 per cent equity in each startup and complete the acceleration programme, which will help startups close Series A and go global.

For More Details - http://www.ghvaccelerator.com/

Source : EntrepreneurIndia. 

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How to raise funding for a prototype? (ENTREPRENEUR INDIA)

In the context of a startup, a prototype should be anything that will help you to demonstrate that not just the product, but also whether the intended users of the product are actually as excited about the product as you are. A prototype is something that allows you to test the various assumptions that you have made for your venture.

A prototype has to be a very basic version of your product – just enough to give your consumers a feel of what you are building or something that will demonstrate that your technology or innovation actually works.

Most aspiring entrepreneurs with ideas often tend to seek angel investors or venture capitalists (VCs), to fund them at prototype development stage. That is, however, unlikely to happen in most cases. Investors investing at a power-point or pre-prototype stage are very rare.

How then should aspiring entrepreneurs deal with the funding needs for even building the prototype? Here are some thoughts:

Keep the costs at bare minimum.

Often entrepreneurs who are at the prototype stage make the mistake of taking on costs like office space, capex like hardware, etc. While a comfortable office is good to have, but at the prototype stage it makes sense to optimise and focus costs only on the key objective – i.e. building a damn good product.

Also, at the prototype stage, it is not necessary to build all the features and certainly not the frills that make the product look good. A functional prototype that helps the intended audiences experience the product and get a feel for the use-case is sufficient.

Take on only those costs that help you deliver on the sole objective of proving that the technology/innovation works and/or that consumer find it useful.

As best as possible, try to bootstrap and make the prototype with your own resources.

Try to build the prototype on your own rather than outsourcing it to an external agency. Angel investors or VCs are unlikely to provide funds for building a prototype. At the very least, they will expect you to go into the market, talk to a reasonable number of customers/users and get the evidence that what you are building is indeed going to be liked by the market. And in most cases, you are likely to need a prototype to get that evidence.

In most cases, I have observed that the costs of building a prototype is really a lot lower than what the entrepreneurs estimate. Often, you will be able to convince a vendor or partner to provide their service/components pro bono or low bono, perhaps with the commitment that you will give them either a higher value after you raise capital or giving them nominal equity in lieu of their services.

Despite keeping costs to a minimum, if you need to raise some capital, try to take help from friends & family.

Family & friends are indeed a relatively easier pool to tap into. There are several examples of entrepreneurs raising their initial capital – very limited fund raise – with small co-investments by a number of people including ex-bosses, ex-colleagues, ex-business associates/partners, family members, relatives, friends, etc.

Bring money from friends and family who trust you and are giving you money for your entrepreneurial journey with mid and long-term returns.

The trick is to manage this round with the level of rigour, maturity, discipline and governance standards as you would do with an institutional investor. Do the documentation well, explain the risks and potential rewards well, help them understand the terms, set clear and easy to understand term-sheets, have a good share holder agreement, etc.

Many entrepreneurs feel shy of asking family & friends. However, it is not as if you are asking them to donate for a cause. You are giving them an investment opportunity in which you are staking your opportunity cost because you believe that the concept will have a good monetary upside.

If family & friends does not work for you, instead of approaching angel investor groups or VCs, try approaching individual investors who may have an interest in your space.

After you explore your first circle of family & friends, instead of angel investors or VCs, it is prudent to explore individuals who may have an interest in your space.

You may also have an opportunity to get some funding from corporates who may have a strategic interest in the product or service you are attempting to make.

For Example - If you are building a healthcare app, someone who owns a pharma company or a hospital may be interested in investing in the venture. Or, if you are building a logistics startup, someone in the retail or logistics space may be interested in the concept.

Put in your own savings

Nothing demonstrates your commitment and belief in the venture than you putting your savings into the game.

In any case, do not raise too much money for a prototype.

Focus on building a good, basic product. Keep it simple. Keep it low-cost.

For More Details - http://www.ghvaccelerator.com/

Source : EntrepreneurIndia. 

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Why are most startups not able to raise Series-A funding?

Most startups, even those who get angel funding or seed-stage funding or investments from accelerators/incubators, are unable to get follow-on funding. Why is Series-A funding so elusive? When Angel Investors invest in a startup, they do so after assessing whether the startup will be able to raise follow-on capital. That’s how they have a chance of getting an exit for their investments.

Why then, are startups not able to raise follow-on capital despite the mentoring and advice they receive from their angel investors or accelerators or incubators? At GHV Accelerator, we analyzed this problem and spoke to investors and startups to understand the reasons. And based on our conversations, we had some very interesting observations. Kindly note that these are reasons of decline by VC’s, even when they believed that the opportunity was large and the concept/product was exciting.

Reasons for startups to not get Series-A funding

(This is in no order or priority, but investors mentioned that they often see at least two of these reasons in angel-funded or accelerator-supported startups that they end up declining)

• The team has failed to build the skill-sets and competencies that are required to take the venture to the next level i.e. some skill sets are missing
•  The venture has not done enough to demonstrate that there is a potential to grow i.e. whilst focusing on developing the product, the venture missed out on building traction as an evidence of the potential
• Lack of defensibility of the differentiator – often lack of IP or anything that can give the company a defensible, unfair advantage
• Lack of in-market validation of the product
• Interestingly, poor product or service was rarely a reason for decline

When we spoke to startups, we realized that most were totally unprepared to engage with VCs. Here is a checklist of what we think startups should be prepared with. Of course, there are a whole lot more things that they need to be ready with, but these are absolutely necessary for even getting follow-up meetings after the initial interaction with VCs – research their past investments, understand their perspectives and thoughts on the market, etc. This helps startups align their thoughts and conversations in line with the VC perspective.

• Understand their investment criteria – some may give more weightage to traction, some to the team, some to market sentiments, some to global opportunities while some may look for domestic focus, etc.
• Understand what they are looking for i.e. the kind of ventures they are seeking – some may be keen on product ventures while some may be open to a services business. Some may look at operationally intensive businesses, while some may not.
• What is the investment scenario – remember startups are ‘competing for capital’ with other startups, even those from completely different sectors than yours – and therefore, it is important to understand the investors view of your sector. (e.g. in the current environment, some VCs are shunning e-commerce ventures while some believe that there is still some potential in verticle spaces, and yet some others are keen to invest in ventures that support e-commerce e.g. logistics, analytics, etc.)
• Be clear on what you seek from the VCs beyond the money – clearly articulate how they may be able to add value – this helps them understand why this could be a relevant investment for them e.g. “You have investments in XYZ and ABC company. Clearly, there are synergies in what we do and two of your portfolio companies. Hence, we believe that your fund will be the ideal investor for us as it will help us leverage some synergies.”

Check the webinar –https://www.youtube.com/watch?v=sy8W75wqAzw

About the Author :

Vikram Upadhyaya, Accelerator Evangelist, GHV Accelerator

Vikram is having diversified experience from Japanese Projects Offshoring to Global Corporate Strategy and New Ventures Turnaround, specialized for the Japan-India Cross Border Business execution.

For More Details - http://www.ghvaccelerator.com/

Source : YOUR STORY 

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Govt ropes in advisor for stuck telecom projects (The Hindu Business Line)

The Government has roped in Vikram Upadhyaya, Co-Founder of the Indian Angel Network Incubator, as an advisor to projects being undertaken through the Telecom Centres of Excellence (TCOE). The primary objective of roping in Upadhyaya is to ensure that the ideas generated by TCOEs are taken from conception to commercial deployment based on sound business.

The Government had set up TCOEs in a first-of-its-kind public-private partnership in the telecom sector. There are eight Telecom Centres of Excellence across the country working on key issues like technology management, rural application, next-generation network and policy. However, after more than five years of existence, the applications have not been deployed commercially.

“I have submitted a broad framework on how to turn around the TCOEs. I have seen some very good ideas being worked on at these centres. Over the next 12 to 18 months my focus will be on taking some of these ideas to the market,” Upadhyaya told BusinessLine, adding that he has also proposed collaboration between the TCOEs and the Indian Angel Network Incubator.

Upadhyaya has been an angel investor and has orchestrated multimillion-dollar business start-ups, turnarounds and growth ventures. Having worked in Japan in the late 1990s, Upadhyaya is known for his familiarity with the country and will try to interest Japanese in TCOE. Upadhayaya sees his unpaid advisory role as a business opportunity.

Separately, he is planning to start a seed accelerator fund in India with the backing of investors from Silicon Valley. Accelerators help new start-ups companies get off the ground and find follow-on investors through mentorship and a network of potential financiers. Upadhyaya said that India needs an accelerator that brings down the time period for a start-up to get follow-on venture capital.

For More Details - http://www.ghvaccelerator.com/

Source : The Hindu Business Line. 

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