Need to build Startup Businesses & Startup Ecosystem

India from being the 4th largest startup in numerous the world back in 2015, did exceedingly well to become the No. 2 Startup ecosystem in the world (as reported in the Government’s Startup India website). Investors were upbeat in 2014-15 and heavily betted on numerous startups, many missing out on fundamentals of businesses. Over the next couple of years, the tremors or moderator due to those bad investment decisions. While some investors multiplied many times, those and startups lacked basics had to shut down or scale down or relook at their business model.

The shakeup has indeed made investors wiser and startups too are turning smarter. There seems to be a up swing once again, with a lot of opportunities popping up constantly. But then are we building a sustainable ecosystem in the process is a question I have been asked in numerous events and conferences either as a speaker or panelist or moderator. Thought it’s best to highlight some brutal facts which is essential to build successful Startup Businesses!

First let’s look at how a Startup ecosystem needs to be created that is scalable, sustainable and can contribute to the growth of our economy.

An ecosystem means inclusive; one that supports each other across all aspects that are required for the Startup Businesses to succeed. As we all compare how SiliconValley has been a startup success showcase, we need to pick those intrinsic attributes that’s behind the working. To a greater extent Bangalore (Bengaluru) has developed many of it, though not inexact line and scale of the true Silicon Valley attributes but it did have a lot of tick marks, which helped Bengaluru to fuel the growth of startups. Yet another interesting take is of Chennai, which has succeeded in the global scale as a SaaS city. It has over $billionvaluation across companies, and the down or majors are Zoho and Freshdesk, besides another 100 startups in different phases or scale of operations.

There has been a good initiative from the Central Government few years ago, and things many startups have registered under this umbrella and taken benefits right from collateral free loans, to certification, etc. Though the expected scale can be much larger as the potential to grow is humongous. I would say, not just the Central Govt.but even the State Government(s) too should take up necessary initiative and support the startup businesses to build a sustainable startup ecosystem.

The recent initiative Patna Ideathon 2018 from the Govt. of Bihar and Department of IT, was an event well organized and planned – be it scale and quality. The push right from the Chief Minister, Dy. Chief Minister and IT Secretary can be clearly seen as they realized that Patna has missed out in the development scale and had aglorious past; now that with this initiative they are trying to create a startup ecosystem, and I am glad to have been part of this mega event as a Jury for the shortlisted startups (about 36 in numbers, I guess).

  • There has be incubators and accelerators, and not just real estate business of co-working spaces making money without adding value to aspiring entrepreneurs and startup founders.
  • Ecosystem should be mentors spread across specialization right from business, to finance, to operations, legal, etc. who can lend their helping hand to startup businesses.
  • Investors, financial institutions, banks, to understand the specific demands, challenges, and nuances as to how startup businesses work and provide support through financing them at the right time, and at the right stage. This is easy said than done, as most find it difficult to evaluate the right startups and whether or not and how much to fund (considering their risk appetite).
  • Media should be showcasing those startups and in numerous not become a big paid media activity, to garner eyeballs. Then the fundamentals of building a and startups thwarted. Genuine startups need to be identified, highlighted as they too need the right visibility to build.
  • We also need a community that can help startups when faced with specific challenges or when they seek advice. This way, right at even an ideation stage, the aspiring entrepreneurs, startup founders need not reinvent the wheel for solutions which has either not worked, or not having the desired market opportunity.
  • Support from Government to ensure that this is awell-oiled engine, through ease of process, transparency, and regulations, and showcasing intent in building this startup ecosystem.

Jobs cannot be created by the Government (as their employees) to the extent of what’s required for billion plus population here. Neither the large corporate would be able to provide these jobs for all those seeking employment, every year. It is those micro, small, medium enterprises (MSMEs) and Startup businesses that can help solve this big challenge, and the need of the hour is to ensure that we build a sustainable ecosystem that’s built on strong fundamentals.

Look forward to your views, and happy to play a part in whatever way we can!

Russian Investments in Indian Start-ups

There is an upward trend in the growth of start-ups and young entrepreneurs in India today. Bubbling with fresh and novel business ideas, the current generation view start-ups as an increasingly lucrative option as an alternative to employment in a corporate. Metros incl. NCR, Bangalore, Mumbai, Pune, Chennai, and many other cities are seeing this boost with a lot of start-ups surfacing and these numbers are growing every year.

Many young graduates nowadays seek out to running start-ups, instead of hunting for mundane 9 to 5 jobs. This phenomenon can be due to various reasons. The current generation (the Gen Zs, Millennials) are more daring and willing to take risks. They seem to be more accountable for their actions and wish to be their own boss. Moreover, running a start-up allows them to have more exposure to the outside world, our economy and business environment, and well they also get a chance to involve themselves in social entrepreneurship and building network of contacts.

The funding climate in India has turned out to be favourable for various start-ups, as the government has come up with a number of start-up schemes to facilitate development and growth of entrepreneurs in their businesses. The government has classified start-ups according to their nature and scope of business and has allocated funds for these enterprises to build and grow. Want of capital is one of the bigger causes of a startup failure.

India also has a huge amount of foreign investment into start-ups in India, providing for a conducive start-up ecosystem for entrepreneurs to work in. Countries like China, United States of America, Singapore, Hong Kong, Russia, Japan, and United Kingdom have been active investors in start-ups in India today.

Many start-ups in India have benefited and built their businesses significantly through these foreign investments, which reinforces that Indian start-ups have a promising future ahead of them. This gives foreign investors the confidence and incentives from Govt. to invest in Indian start-ups without much of a thought/concern. Investments into Indian start-ups by foreign countries will also mean that investing countries will have certain incentives provided to them, like relaxed immigration rules and discount on manufacturing components, to engage in competitive pricing in the consumer market. With a population the size as equal to China and incredible economic growth potential, it is not surprising that foreign countries love to invest in Indian start-ups as well other fast growing sectors in India.

India is facing a maturing start-up ecosystem since 2015, and the start of movements like Digital India and Startup India have certainly helped accelerate their growth pace by bringing in awareness which was an essential component in transformation of thought process. Indian start-ups have started to be more adaptive to the global business models, making it easy for foreign investors to pump money into India, channeling it to the start-up sector. The ever-increasing amount of acceleration programmes, incubators, social networking events and academic training in business management has allowed for more college students and graduates to step up and embark on a start-up journey and venture into the business world, as they are confident that these programmes will help their start-up to be on the right track to build their entity. Most start-ups have technology-based services as their core, as India is heading towards a digitalised economy/society that depends heavily on technology-based services, like E-commerce, E-healthcare, etc.

Having mentioned the source of foreign funding flowing into the pockets of startups to scale up their businesses to the next level, Russia has been playing a pivotal role in accelerating the economic growth of start-ups in India, and it stands as one the major investors in this startup space.

Russian contributions to providing investment funds to start-ups in India has been on the rise lately, and seem to be benefitting big time through investments in businesses like OLA, Housing.com, Flipkart, Snapdeal etc. Majority of Russian investments are towards technology-based start-ups that have the ability to scale and addresses a bigger pain point of the consumers here. Also the government is taking steps towards moulding India to be a massive manufacturing hub, that can further fuel the growth of startup ecosystem in the manufacturing space too, in India.

Another start-up sector that Russia invests in is the E-commerce space. A reputed Russian corporate venture Sistema, has invested in the healthcare start-up space. One of them is healthifyme. It has announced that Sistema has provided funding of over US 12 million dollars. Sistema has also channelled US 14 million dollars into the healthcare start-up Netmeds.

Sistema is also looking at investing into Indian start-ups with its US 50 million dollar Asia fund. It has said that the US 50 million dollar fund is going to be invested solely in India because it can see a lot of potential for Indian start-ups to grow. The funds are likely to be invested into technology and consumer retail centred Indian start-ups.

Russian independent investor Yuri Milner has also invested in many Indian start-ups, like OLA, Flipkart, Housing.com and Swiggy. He has pumped in a massive amount of INR 10,800 crores into these start-ups. With the increased usage of cabs, online shopping platforms, property sales and food deliveries, Yuri Milner feels that these Indian start-ups that he has invested in can bring in a great value more so because these start-ups have identified the rising trends in transport, shopping, property and food preferences in India today.

Another Russian billionaire Leonid Boguslavsky has invested into the E-commerce start-up sector in India, because he finds a very big growth potential in the e-commerce market, as it possesses the capacity to transform the usual placement of shopping malls in major cities only, and reach out to all consumers out there through the online shopping platform. This validation comes at a stage when the usage of smartphones and the internet has been increasing in India tremendously over the past few years.

This explains why Russia wants to venture into funding start-ups in India because Russian investors can see high quality and high potential growth in India due to its expansive consumer base. Thus, it will be definitely a big boost for Russia in its investment returns. The ever increasing demand and need of over a billion population, the dynamic changes in demographics, are motivating factors for Russian investments into India.

Russia is known for its anti-virus software, security and encryptions systems that are top-notch. India will experience a tremendous growth in mobile networking and application development businesses if Russia collaborates with start-ups in the field of information and technology. A majority of investments made by Russian entities are into start-ups offering software solutions/platforms that can benefit the larger masses. Technology firms in Russian can invest in Indian startups, as they can leverage each other’s strengths thereby benefiting both countries in this process.

While it is clear that India offers a tremendous opportunity for Russia for it to invest in this startup space, it is equally important to identify worthy and capable start-ups with innovative ideas. Though there are a number of incubators and accelerators in the country, that field is still undergoing transformation, as most of them are a mere ‘co-working space’ – providing space by leveraging their real estate and making a revenue model out of these startups. Very few do go beyond and provide mentoring, business support, tech support and network/connect with investors etc. Therefore, it will be a good idea for Russian investors to collaborate and form alliances/partnerships with start-up business consulting firms in India, to facilitate in identifying potential start-ups that are investment worthy and one that can add value to all the stakeholders. Indian startups are still evolving and fine tuning their business models, and with right partners Russia can certainly tap into the early stage startup ventures as they can be unicorns at some point in time. This is a great time for startup ecosystem that’s seeing great momentum in India. Time to see Russia’s investments too in this space grow with accelerated pace!

About the author:

Above article is contributed by Mr Shyam Sekar S, Chief Mentor and Strategist, at Startup Xperts Business Consulting Pvt. Ltd., a business consulting and a digital marketing firm supporting startups and small and medium business to accelerate their growth. Startup Xperts has been featured as the emerging company of the year by Silicon India, 2014. Besides, Shyam has been featured as Most promising Digital Marketing consultants in Aug 2016, and Most promising Business Consultants in Oct 2016. As ecosystem partner for CII-Startupreneurs, as a Mentor with EDII (Entrepreneurship Development and Innovation Institute) and as Judge/jury/mentor for numerous startup events including the IIT’s, Shyam is actively involved in building the startup ecosystem.

How to start a startup – Points to consider!

Is Just an Idea Enough…?
Points to ponder before start(ing) up…!
An innovative idea is the most important seed for a startup business venture. An innovative idea can bring about a significant change in the way a product or service is adopted by the customer, but there are a host of other aspects that come into play to make the idea a working business proposition.

An innovative idea is absolutely necessary to establish a startup. But an innovative idea alone does not guarantee success in the marketplace…!

What turns an idea into a successful business venture?

While an idea by itself may be innovative, the real challenge for the originator of the idea lies in:

Stitching the idea into a profitable business model:In this context, a business model essentially refers to (a) how the idea (or a product/service based on that idea) will deliver value to the end user (b) how it can be monetized, and (c) how scalable it is.
Evolving a go-to-market (GTM) strategy that takes the business model (essentially the idea) to the market:Having conceived an idea, how will it be taken to the end user? The first question a budding entrepreneur with an innovative idea has to ask is this: what will be the profile of an ideal customer for me? Will it be, for instance, an online user from the general population looking for a specific service, or will it be a corporate entity looking to address a specific business need?
Among other questions, the GTM strategy has to, at the minimum, answer the following questions:

What is the profile of my typical customer? This question helps segment the market into various categories
Where is my ideal customer located?This question helps segment the market into various territories / geographies
What problem does it solve for my customer, and how critical is that problem?This question helps draw up the ‘sales and marketing pitch’ for the customer
What are the typical expectations my ideal customer would have from my product/service?This helps identify whether there exists a similar product/service in the market, and how your idea can be differentiated from existing offerings
How much would my customer be willing to pay for my product or service?Am I able to offer my product/service at a particular cost, or should it be high or low?
Managing Funds/Bringing investments during incubation:Working capital requirements are one of the most important aspects to be factored while establishing a startup. Entrepreneurs at times have a heady conviction behind their product/service, making them unintentionally overlook the fact that employees have to be paid their salaries, and that rentals and utility bills are a monthly occurrence!
The best way to kick-start a venture is through ‘boot-strapping‘. Self generated funds, or funds sought/borrowed from friends and relatives have been the widely used avenue in raising initial capital to set the venture in motion. If this option is not feasible, or when additional funds are required investments can be brought in through other options too; loans towards working capital or equity infusion from the investor community. Both options have their own merits (or demerits depending on the perspective!) depending on which stage of the business lifecycle the startup is at the time.

The main advantage of a loan is that it keeps management control of the startup with the entrepreneur themselves. This enables the entrepreneur to take operational decisions on organisational strategy, product/service roadmap, etc. based on market conditions, and while doing so, stays in sync with the vision with which he started off.

Equity infusion is a double edged sword. While it gives the entrepreneur access to the potentially vast network of contacts held by the investors, he has to concede certain extent of management control. Equity infusion is ideal when the startup has started to yield revenue (perhaps not profits yet!); such infusion is required to take the startup to the next higher orbit of revenue and profitability.

Whatever the investment route the entrepreneur takes, it has to be aligned with the merit of the idea, the business model, the GTM strategy and the long term plans for the venture.

The People Perspective:Having conceived a brilliant idea, a robust business model to go with it, and a GTM strategy that addresses the needs of all possible market segments, how well is it going to be executed? Having right people on the right seat. It is important to bring on board people who have a shared passion and vision about the idea/product/service.
Working in startups is characterized by the absence of role clarity – every role in the company becomes multi-faceted! The CEO could find himself making a pitch for funding during an investor meeting, at the end of which he would need to pick up the telephone to cold call a potential client! These situations will be the norm rather than the exception; hence it is imperative that the people who form the core team do not bring any bureaucratic baggage about hierarchy, role-compartmentalisation and other related aspects.

The People perspective covers not only employees: it also covers external consultants, professional mentors, advisors, partners, vendors/suppliers and others who are equally critical to the success of the startup; they bring the much required view from an external perspective, and along with it, a (brutally!) honest assessment of any shortcomings in execution.

Managing growth after establishing the business model:The issues, challenges and priorities will start to change; from the time of business start, and+ when it has reached a certain stage.
Managing growth could also involve the exit strategy for the founders. When does a startup cease to be a startup? At what stage will the founder reduce their stake in the venture? Is it the vision of the founder to make his startup a global organisation? Alternatively, is it the vision of the founder to have his startup acquired by a larger organisation which sees his idea to complement their business (typically associated with serial entrepreneurs)? It is not surprising to see examples of startups working in niche areas, eventually getting acquired by larger enterprises.

The aspects captured above are just the tip of the iceberg. It is wise that these are best approached by having a clear vision, goals, and backed by a robust execution strategy.

Dwight Eisenhower once quipped, “In preparing for battle, I have always found that plans are useless but planning is indispensable.”

Indeed, establishing a startup is no different from a battle. While we may not have all the answers at the very beginning itself, there needs to be certain goals and milestones that needs to be signed-off but be flexible enough to incorporate any changes in plans or execution, during the journey!

Startup Xperts is a Business Growth and Consulting company with an objective to transform CEO’s growth vision into realistic, strategic, actionable plans that delivers results. Startup Xperts supports enterprises through business strategies, goal setting, sales and marketing set up, developing a high performance sales engine, digital marketing, specialized trainings, executive coaching and leadership hiring.

Globally Recognized Certifications & Standards

Globalization has shrunk the world to an extent where we can see its impact in numerous instances in daily life. We use laptops and PCs for instance, which are assembled in China, with parts/subassemblies sourced from local and international manufacturers spread across the globe. When an Original Equipment Manufacturer (OEM) depends on a globally spread supply chain, it becomes imperative to ensure that the suppliers adhere to a well defined set of quality standards and organizational best practices.

Best practices that have an impact across the organization can fall under several functional areas: Quality Management, Environmental Safety, Organizational Health, Information Security, Process Improvement, Energy Management, Social Accountability, and so on.

Just as there are so many areas under which best practices can be categorized, organizations could look at several standards and certifications which establishes guidelines for managing their business effectively. In fact, for parts suppliers and manufacturers to compete in a global economy, they need to demonstrate their commitment to management excellence by getting accredited to globally recognized certifications as is relevant to their business.

Some of the most prominent globally recognized certifications that help organizations position themselves in the global marketplace are highlighted below.

(a) ISO 9001 – Quality Management System (QMS)

The ISO 9001 standard specifies the requirements for a Quality Management System where an organization is able to:

    • Consistently demonstrate its ability to provide products or services that meet customer expectations within the framework of applicable local/regional statutory & regulatory requirements
    • Ensure that its business processes are designed for continuous improvement through effective use of checks and balances to deliver products and services that meet customer expectations.

ISO 9001 standards have evolved over time, and in their current form, draw the focus towards achieving customer satisfaction. The accreditation process for ISO 9001 now measures the extent to which business processes as defined by the organization will be able to achieve customer satisfaction.

Benefits of ISO 9001 accreditation include:

  • Gives visibility to the senior management through an efficient quality management process
  • Clearly defines the areas of responsibility and accountability across the organization
  • Identifies and develops more efficient and time saving processes
  • Highlights process deficiencies, and thereby areas for continuous improvement
  • Reduces operational costs

(b) ISO 14001: Environmental Management Systems (EMS)

The ISO 14001 is a standard for environmental management systems applicable to all businesses. The objective of this standard is to reduce the environmental footprint of a business and to decrease the pollution and waste that a business produces.

The ISO 14001 standard can be adopted by any organization that seeks to improve the environmental impact of their business operations. This standard is of particular importance to large multi-national, multi-site companies, manufacturing, process and service industries across all industry sectors.

The benefits of ISO 14001 accreditation include:

  • A more proactive and measured process for environmental sustainability across the supply chain
  • Enhanced levels of waste reduction
  • Enhanced level of employee health and welfare
  • Reduced impact of business operations to the surrounding environment
  • Adherence to regulatory requirements on environmental impact

(c) ISO 27001 : Information Security Management Systems (ISMS)

The ISO 27001 standard is largely targeted towards IT/Software and Systems engineering companies. The information security controls in a business operation typically address important aspects of Information Technology or data security. In today’s connected world, information present in the IT infrastructure of organizations is one of the most valuable assets. Information assets are held by organizations on behalf of their customers, by virtue of providing them business services

It thus becomes imperative for organizations to ensure that:

There exists a robust process to examine the organization’s information security risks, taking account of the threats, vulnerabilities and impacts
Designs and implements a coherent and comprehensive suite of information security controls and/or other forms of risk treatment (such as risk avoidance or risk transfer) to address those risks that it deems unacceptable
Adopts an overarching management process to ensure that the information security controls continue to meet the organization’s information security needs on an on-going basis

(d) Organizational Health and Safety Assessment Standard (OHSAS) 18001

The OHSAS 18001 is a non-ISO standard which deals with how Occupational Health and Safety of employees, contractors and visitors in an organization is effectively managed. The OHSAS standard draws attention of organizations to the potential risks/occupational health and safety hazards that persons can encounter during the course of their duties in the organization. It also helps organizations identify the regional regulatory and legislative requirements with respect to Occupational Health and Safety

.
The OHSAS standard is compatible with ISO 9001 and ISO 14001 standards, and can hence be approached from the traditional Plan-Do-Check-Act sequence of implementation.

Organizations accredited to the OHSAS standard derive the following benefits:

  • Reduce the exposure of employees and other parties to occupational
  • health and safety risks associated with their business activities
  • Potential reduction in resultant costs
  • Greater assurance of conformance with occupational health and safety guidelines
  • Demonstration of conformance to third parties, and of due diligence generally
  • Consistent and proven management approach to health and safety, present and future
  • Deployment of method for continual improvement of the occupational health and safety management system

(e) Software Engineering Institute – Capability Maturity Model (SEI-CMM)

The CMM Process Improvement & Certification process enables software product organizations and software services companies to benchmark their processes at five levels:

  • Level 1-Initial: Processes unpredictable and poorly managed
  • Level 2-Managed: Processes defined by nature of projects and is reactive
  • Level 3-Defined: Processes defined by the organization, and are reactive
  • Level 4-Quantitatively Managed: Processes are measured and controlled
  • Level 5-Optimizing: Organisational focus is on process improvement; defect prevention

Each of these levels could be attributed to software product companies, in which case the applicable model is referred to as CMMI-Product & Service Development (CMMI-DEV). Where it is to be attributed to Software Services, it is referred to as CMMI-Service Acquisition and Management (CMMI-SVC).

The certifications mentioned above some of the most prominent ones that apply to a wide spectrum of industries. There are other certifications, sometimes derived/extended from the parent ISO QMS that deal with Energy Management, Safety in Food Manufacturing, etc. Likewise, organizations could also look at Six Sigma based approaches for process improvement.

The common denominator amongst all certification programs is that they demonstrate the existence of well-defined management approaches to running all the business processes in an organization. By virtue of being globally recognized, these certifications help organizations position themselves in the global supply chain.

Startup Xperts is a Business Growth and Consulting company with an objective to transform CEO’s growth vision into realistic, strategic, actionable plans that delivers results. Startup Xperts supports enterprises through business strategies, goal setting, sales and marketing set up, developing a high performance sales engine, digital marketing, specialized trainings, executive coaching and leadership hiring. Whether the organization wishes to move forward with ISO / CMM certification or have systems and processes that are world class, equivalent to ISO/CMM standards, Startup Xperts provides its expertise in getting these organizations ready for this initiative in a highly efficient and a cost effective way.