DARE - Because Entrepreneurs Do

Emerging entrepreneurs from the NEN community are working on smart strategies to get their first capital in—and they do not include wooing a VC

In the mid-1990s, Google Inc. started with $100,000 and Amazon with $40,000. At around the same time, Sanjeev Bhikchandani founded Naukri.com, India’s top job portal, working out of his family’s garage, paying Rs 800 every month to his father.

Inspiring startup stories—yes, but are these exceptions, belonging to another time and age?

Today, would you need a lot of money to launch your business? Is it wise to put your ideas on hold until you get venture capital? Should you consider if your startup is of a kind that venture capitalists would be interested in?

Koustabh R

Stories emerging from the NEN community reflect interesting ways in which new entrepreneurs are tackling these very questions. A new graduate sells herbal juices because the venture has low operating cost; a team of engineers tackle new opportunities with minimal investment and another refuses an investor because his startup is not mature enough to receive funding.

Here are their stories.

Nutrolics: Koustabh R
Koustabh’s company ‘Nutrolics’ delivers fresh herbal drinks at the doorstep. Two months ago, he started with 60 customers. Today he has 250 clients, eight employees and Rs 50,000 in monthly revenue.

What did Koustabh do to get funds? Took up the job he got through campus placement, organized white water river rafting expeditions, and conducted salsa classes. Within three months of working in a company in Kolkota, he had savings of Rs 1.7 lakh, the amount he had estimated for his seedfund. That’s when he quit his job, returned to Pune and launched his company.

Venkata Sashank

“I have seen many new entrepreneurs go wrong in their financials and 70 percent of the time, it is their miscalculation that leads to their startups going kaput. I tried to learn as much as I could about financial planning through the workshops and entrepreneurial talks we conducted at our campus E-Cell. Thanks to that knowledge, I reverse calculated my finances before taking the plunge,” shares Koustabh, an ex-E Cell coordinator at Symbiosis Centre for Management and Human Resource Development, Pune.

He expects to plough back Nutrolics’ revenue to expand and automate production processes in the coming months. And when he enters the final phase of his plan, which will focus on research, he hopes to secure private equity.

Is he looking for a VC? “To get funds from a VC at this stage of my startup is like getting struck by lightening in the bottom of a swimming pool. I’d rather focus on my customers,” he adds with a laugh.

NextGen PMS Pvt. Ltd.: Abhishek Humbad, Snehil Taparia and Gaurav Gupta
Abhishek, Snehil and Gaurav, members of Birla Institute of Technology, and Sciences-Pilani’s Entrepreneurship Cell ‘Centre for Entrepreneurial Learning’ (CEL) founded NextGen, an energy and environment consulting firm, in December 2007.

Their initial plan was not this. They had aimed to enter the renewable sector by setting up biogas plants. But they soon realized that they didn’t fit the VC mould. So did they give up? Not at all. They developed an entirely new approach to tackle the opportunity in cleantech energy, by moving into consulting—a good business with very low capital requirements.

They started by taking part in B -plan competitions at several institutes and won Rs 1 lakh in hard cash. That was their first capital. They conducted carbon footprint reports for BITS campuses in Pilani and Goa, IIT Kharagpur and IIT Roorkee. While their services were free, it was a worthwhile investment in other ways. It increased their learning and built their credentials. Abhishek followed this up with an internship at YES Bank, which, in February 2008, became their first paying customer.

The team attended conferences and transformed them into marketing opportunities. This is how they got their second customer, Intel India, in October 2008. Since then, the company’s client list has grown to include ICICI Bank, Ministry of Renewable Energy, Bharat Petroleum Corporation Limited, World Wildlife Fund, Infosys, Wipro and Mindtree. They have managed to keep their operational costs low by working out of an incubation center first at BITS- Pilani, and later at IIM-Bangalore. The result: Net revenue in the last 10 months has touched Rs 25 lakh.

Abhishek Humbad, Snehil Taparia and Gaurav Gupta

NxT: Venkata Sashank
Sometimes, even when the money is on the table, it might be a smart idea not to take it. This is what Venkata Sashank did when an investor came to him with a lucrative offer, in less than a month after he founded NxT —a startup that builds business models for SMEs.

Four months later, in May this year, Venkata faced his biggest financial crunch. He had appointments with federal officials in the US, but a key client defaulted and Venkata was left broke with no money to even buy his flight tickets. He borrowed from his family and friends—a debt he is still paying. He co-founded another company Dot Now, that provides social media strategies to SMEs, to complement NxT’s offerings. But he didn’t call back the investor.

“I was shocked and scared. I didn’t need that much money to start my company, but more importantly, I had no intention of selling my idea or letting anyone else have a majority stake. I want to continue building my startup my way, even if it means I have to struggle—for the valuation of my company will be many times bigger than this offer in a few years,” says Venkata.

“As long as I believe I can deliver, I will win—even when the money runs low,” Venkata adds.

More articles on www.nenonline.org.  Content provided by NEN

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