Investor`s Choice

Investors prefer to see in a company before they get excited enough to write a cheque -

1. Seasoning. They’re looking for more experienced, older entrepreneurs who've “been there, done that.” The time of investing in the 19-year-old kid who’s a tech genius isn’t necessarily gone, but the kid had better be able to find an older, seasoned executive to join their team.

2. Customers. Rather than putting the emphasis on the team or the revenue numbers, there seemed to be a new emphasis on the customer:

• What compels them to buy this product or service?
• What problems does this product or service solve? Why is it better than the alternatives?
• Why is it worth the price?
• Does it compel you to tell others about your experience?
• Are your customers asking if they can invest in your company?

3. Team. The team is still an important part of the equation, but the entrepreneur is just as important. Here’s what the investors are looking for in both:

• Passion. The entrepreneur must demonstrate a contagious excitement about their vision for the company.
• Tenacity. The entrepreneur must prove they have the stamina and willpower to stay with their vision through thick and thin.
• Flexibility. The entrepreneur must be willing to reevaluate and refocus their plans when things don’t work out as anticipated.
• Commitment. The entrepreneur must be willing to invest enough of their own money into this project to convince investors they are serious.
• Teamwork. The entrepreneur’s team must prove it can work effectively together.
• Coachability. The entrepreneur and the team must be coachable. No team knows everything they need to know to succeed.
• Knowledge. Investors prefer to back teams that really know their market and have a combined background that is rich and impressive in the niche for which the company is engaged.

4. Opportunity. Investors want big ideas, those that can change the world. Ideas that change our behavior, culture or way of thinking. Ideas that can build $100-million-size companies. Anything less is too speculative. The risks of investing in a company are so great—and the chances of a reward so small—that investors can’t afford to bet on opportunities that won’t surely have huge payoffs. And one of the biggest problems when addressing opportunity is, “Am I too early?” Investing in a huge opportunity five years before the market will recognize and embrace it is a very frustrating thing. Not only will you lose your investment, you’ll have to suffer the extreme frustration of watching someone else make a lot of money on the foundation you helped build.

5. Business model. Will the numbers map out? In other words, once someone takes a sharp pencil and starts tracing where every revenue dollar comes from and then seriously challenges every expense it’ll take to generate that revenue dollar, will you have

• a profitable model?
• a repeatable model?
• an expandable model?
• a predictable model?
• a defensible model?

Many entrepreneurs fail because they don’t know how to do this type of exercise with a “real world” view.

So how do you and your company match up? If you were honest and found areas where you were lacking, please find someone who can help you fix your problems before you approach anyone to invest. Your extra investment of time will significantly improve your chances for funding.

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Project Managers - Don'T Press, Just Impress

You get a genuine prospect, you ask for requirements, tend to believe that you have understood the requirements since you would like to close the deal, you prepare a set of documents under the different names of design plan, development plan, resource plan, timelines plan, implementation plan, deployment plan, testing plan etc; and then you jump into working for the customer.

Few days pass and then the customer starts pushing to add in more features/functionalities as his maturity towards the system enhances. You tend to be polite and accept to incorporate small features that would take about 2-3 hours. Then he requests few more features and then you would assume that it is hopefully not repetitive and then accommodate in order to avoid clashes. When it continues, you start letting customer that it would be difficult to accept new requirements midway. You realize that customer delays the payment so that you would consider including his desired new features. That is when you tend to press the customer to avoid unnecessary changes, add in imaginary features and to make the payments on time. All above scenarios are very common and I guess, are applicable for all projects; regardless of whether you are building the product or providing services, the requirements of which have been hastily agreed to kick-start the project.

There is a scene in one of my favorite movies ‘Rocket Singh – Salesman of the year’. The newly graduated friends would be having late party when the DJ threatens to leave. When everybody gives up convincing him, Ranvir Kapoor walks up to him, talks for couple of mins and does the trick. “Thodisi conversation, thodisi persuasion, thodisi negotiation”. Below are few suggestions for project managers, especially for start-up organizations as they tend to give into the pressure of doing more for small payments –

• Freeze the requirements document: I understand that this is easy said than done; however, you can clearly mention that you would leverage Time and Material costing model if the requirements continue to change. Once the customer understands that he will have to pay for the delay, he will attempt to freeze the requirements.

• Document of Understanding: I agree that it is difficult to get a commitment from the customer as it is very likely that although the requirements are frozen, the customer can always interpret a requirement differently and ask you to deliver more than agreed with either the same or lower cost. Prepare a Document of Understanding and get a sign-off that your understanding of requirements is at par with them. This is one of the most crucial steps. Use your communication skills and convince its importance to the customer how it would avoid last minute unpleasant surprises and costs as well.

• List of deliverables: Ensure that everybody is clear in terms of deliverables and additional deliverables will cost timelines, resources and hence additional payments. Put down the expectations in terms of contents of document.

• Expectations Management: Usually, most of the managers do a good job of expectations management to ensure that customer’s expectations are met. However, good leaders also put down their expectations in terms of payments on time. Let’s accept it that there is no free meal in the world and someone has to pay when work is done. One needs to make it clear that the work would be stopped and resources would be allocated to different projects, if the payments are not done on time. If you do a good job of completing the deliverables as expected, you are entitled to ask for the payments on time.

• Meet decision makers: Often, the deals are lost since you spend all your energy in impressing folks who are not decision makers. Ensure that a budget is available and that decision makers are involved in discussions. Even if you don’t get decision makers to attend meeting in the first place, schedule a meeting to talk to them and explain about your expertise and services. They are the ones who sponsor the projects and approve the payments. The rest of the folks usually work on it to showcase the details for their appraisals or merely because they have been asked to get it done.

• Budget constraints: Sometimes, you get to talk to decision makers and realize that they have genuine constraints on budgets. I would suggest not hanging your boots so soon. Visit them again, check out the reasons, validate their rationale on budget and if you are able to implement it although with smaller margins but having a good long term relationship, I would recommend going with it. It takes a while to know that business is not only about money although it is an important fuel for startups as well as all organizations.

I understand that most of the people would like to make their presence felt, get recognition for their efforts and perhaps it is a human tendency. Sure, Go ahead and impress; however, by doing a great job, not by shining apples for your bosses/customers; by working sincerely and delivering the projects on time, not by stepping on your colleague’s toes; by following ethics, not by stealing somebody’s due recognition.

You’ll have different pressures at different times to deliver the job. The above pointers may help you decide whether to get pressed or leave the bosses/customers impressed.

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Does your idea have to be "unique" for your startup to be successful or you can be just "+1" to the market, execute well and still succeed?

You are more likely to fail if you are "unique".  Its safer and easy to clone existing businesses and incrementally improve them.  First movers almost never understand the market as well as their competitors and are usually annihilated by the later competition (which only has to improve their product or exploit a new marketing channel).

Creating a new market and holding it is the most difficult you can do, where as incremental improvement is much easier and has comparable financial advantages.

Google was not the first search engine.  Google did not invent search monetization (Overture did).

Facebook was not the first social network.  It was a clone of HouseSYSTEM and myspace.  Myspace was a friendster clone.

Zynga did not invent Farmville, they copied the game almost to the pixel from Farmtown.  Farmtown was a copy of the Chinese game HappyFarm.

The iPod was not the first mp3 player.

Microsoft Windows was not the first or even the best GUI OS.  In fact it was technically inferior to its competitors, but won the standards war because Microsoft had a better understanding of the market and the nature of computer standards than IBM or Apple.

And so on.  Its rare that the first company into a market is the company that becomes the dominant player in that market.  I have never seen it happen in the absence of a government granted monopoly.

Your product should be designed to satisfy a validated demand that consumers have, but perhaps in a new way, or with a new technology; for instance, people have been watching video since the 1960s, but Youtube enables them to satisfy that need over a new medium (the internet/web-browser).

If there is not a product in a market (or atleast an extreme shitty product), the reason is generally that there is no demand for that product.  However, concepts like tablet computing and Groupon were tried several dozen times and failed before they were successful.

Personally, I am big fan of improving existing services, exploiting superior knowledge about your market (such as using better marketing strategies or distribution methods) and market segmentation.  Market segmentation is great strategy for grabbing your competitor's customers and potentially being able to achieve higher margins

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20 Business Ventures Ideas for budding entrepreneurs which can be started within Rs 5 lakh only

No.	Business	What's it about	Skills  Needed	Amount you need to start (Rs)	Gross Profit (%)	Break even period	Company in  the Name	Entrepreneur(s)
1	Ultra-short temping services	Arrange temporary manpower for event managers. There are young people reaady to make some quick money and event managers are looking for more hands.	Networking	1,000	20	10 months	Radicals, Mumbai	Chirag Bhatia, Varun Parekh
2	Shoe wash	Canvas shoes were cleaned earlier with just detergent and an old toothbrush. But people who wear today's fancy sneakers prefer paying a bit to have them cleaned by experts.	Knowledge of using the chemicals involved, marketing	7,000	40	3 months	Shoe Laundry, Mumbai	Sandeep Gajakas
3	Food delivery	How do you lay out a dinner spread with the best dishes from the best restaurants in town? Or, get food from your favourite resturant? A specialist food delivery service can do just that.	Marketing and sales	15,000	20	2 months	Dial-a- Meal, Hyderabad	Pani Kumar Reddy
4	Uniform making	B-schools are making dress codes compulsory for students. Law and medical colleges may do the same. Tie up with these institutions to deliver dresses at student-friendly prices.	Man management	20,000	N.A.	1 year	Ecstacy Enterprises, Kolkata	Atiq Shah
5	Property management	Find a suitable workplace for business enterprises and save their time by doing all the cumbersome paperwork for them.	Marketing and sales	50,000	50	1 month	E-States International,Pune	Sundip Joshy, Sachin Dhanwala
6	Telecom Business Consultantcy	With the spirit of entrepreneurship reaching new heights, leverage your knowledge and expertise to make business plans for budding entrepreneurs.	Networking	50,000	N.A.	4 months	Tons Telecom, Bangalore	Sridhar Pai
7	Wedding planning	Weddings in India have unmatched opulence and are a long drawn process in some parts. Organise them for people who do not have the time.	Creativity	50,000	15	Depends on projects you get	TAB Events, Delhi	Rita Bhasin
8	Concierge services	Arrange services like medical treatment, babysitting and even plumbing for newcomers to a place.	Networking, communication skills	50,000	10	6 months	Concierge 4 India, Delhi	Arvind Pandey
9	House keeping (hotels)	Help hotels keep their rooms spick and span.	Man management, communication skills	50,000	20	N.A.	Pristine Interiors, Delhi	Ritu Mukherji
10	Pre-recruitment and assessment exercise	There is a talent crunch in India. Help cos hire workers by preparing tests and then evaluating applicants on the basis of their performance.	Marketing and sales	75,000	25	2 months	MeritTrac, Bangalore	Madan Padaki
11	Custom-making chocolates	Prepare the perfect food, chemically speaking, and serve in fancy wrappers.	Creativity, love for chocolates	100,000	30-35	1 week	Rage Chocolatiers, Bangalore	Rashmi Vaswani
12	Bus service website	Inter-city bus service is booming. Create a webpage that shows all the bus routes and their rates and through which tickets can be booked.	Knowledge of IT, bus routes	200,000	10	5 months	RedBus.in	Phanindra Sama, Charan Padmaraju, Sudhakar Pasupunuri, Bangalore
13	Custom-making festival gifts	Innovatively choose festival gifts for a client and have them appropriately wrapped.	Sensitivity, idea of direct gift makers' outlets	300,000	20	3 months	Sacred Moments, Mumbai	Prakash Mundhra
14	Online ads	Have a directory of websites and use your access to those in charge of them to get the right niche ad space for a client, so that he maximises his reach to his target audience.	Media planning, knowledge of Net, networking	300,000	20	1 year	Ozone Media, Bangalore	Kiran Gopinath
15	Verification services	Informaton security is a big concern for BPOs. Check the background of prospective employees to avoid corporate fraud.	Networking with police, legal knowledge	400,000	10	6 months	Pinkerton Consulting & Investigations India (PCII), Gurgaon	Krishnendu Biswas, works for PCII as MD
16	Tank cleaning	Growing use of water tanks and concern for hygiene gives you a chance to displace the guy in dirty overalls and professionally clean tanks with the right equipment.	Tech-savvy	400,000	30	7 months	TanClean, Mumbai	Sunil Uplab
17	Travel guide	Pollution, long working hours, stress - customise trips to forests, fishing riverines and mountains for those who just wanna chill	Knowledge about getaways, high fun quotient	1,50,000	35	24 months	Outrigor, Bangalore	Sandeep Chakrabarti
18	Revenue credit billing	Manage the credit finances of hospitals that are outsourcing this job. The quicker you recover money for your client the more the chances of success.	Knowledge of insurance, networking	2,00,000	20	3 months	Health and Insurance Integrated, Noida	Deepak Mendiratta
19	Merchandising services	Merchandising by business establishments is growing. Do it efficiently for them.	Marketing, creativity	2,00,000	10	15 months	Desk Digital Print, Delhi	Yogesh Bharadwaj
20	Housekeeping (offices)	Help Shining India. Get its offices cleaned.	Man management, communication skills	5,00,000	5	12 months	Collections, Delhi	Ramesh

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