To make money, you need money!
When individuals approach SHEROES with a bright idea to start their venture and have a lot of queries on how to approach Venture Capitalists or VCs for startup funding, we thought of helping our community grow by taking the experts’ help!
So, is there a sure shot formula to sell your idea and get startup funding or is it just a matter of luck? We spoke to a couple of founders and also explored the legal side of funding. Here is what they have to say –
Priyanka Desai, the Founder of iScribblers - a firm which is saving the world from terrible content-says, “While an idea is vital in attracting an investor, it’s the execution that’s important. Most businesses fail due to the inability of execution, the responsibility of executing the idea lies on the team, making them the most important part of the equation.” Google's execution team helped them become the foremost search engine.
iScribblers is a self-funded company. We’re bootstrapped. It took us time to understand the market and set our pricing for different clients. In that time, we operated out of IIM-Ahmedabad’s best incubator, solely by jugaad.
Sunil Gupta, the Founder of Tragly-software platform for travel and tourism industry- which is also his second startup, lists out these pointers–
When drafting a Plan-B think of yourself as a customer.
When conducting a market research be a strong critic, and never sideline any negative points - even if it seems like a minor glitch.
Make a plan for centuries or decades and NOT for a few years!
Do not miss to consider “why it would not work?” and rework on these points and try to make the count near to zero.
Look out for reasons of “why it cannot work?" Rework on these points and try to bring the count of these answers to zero.
Focus on numbers and try to back up each number with facts and realistic data.
Do not rely on any amateur blog or data. Always look for reliable and proven resources for data, numbers and trends.
Entrepreneurs should focus on execution and growth, with the resources available to them and should not sound desperate for funding.
Is there a checklist that needs to be checked before you approach a VC? Or with every individual, there is a fresh test to be passed? Priyanka mentions that most of the VC’s usually look for the team and an impressive idea that could sustain in the market.
She further explains what VCs look for -
Scalable ideas – The ability to innovate your big idea, get it to the market and generate revenue models.
Personal traits in the CEO – Is the CEO focused? Can she communicate her ideas and is she a good salesperson? While funding the company early on, VCs observe personality traits of the founder.
Industry expertise and knowledge – It requires domain knowledge to grow your idea into a sustainable business. Since it’s the entrepreneur’s responsibility to take major decisions, VC’s prefer founders with sufficient expertise to make the right choices.
Adapting to the changing circumstances – What works today may not work tomorrow. Circumstances change all the time, can you adapt to them? VCs are interested in the response to “what if” situations.
The choices taken by the founder/s – The first and most important choice an entrepreneur makes, is zeroing on the core team. The best managerial teams are extremely close to each other. r.
VCs usually love e-com these days. How can other domains, not favored by VCs, get funded by them?
The market is flooded with startups, specifically e-com, and the question is whether other domains are getting their due. Is it hard to get startup funding for a not-so-glamorous sector? Desai, somehow does not agree with this, “A large enough market, either a product or an MVP (Minimum Viable Product), customers, revenues or revenue models and the scalability plan draw a VC’s attention. Most VCs are drawing their attention to domains other than e-commerce due to its saturation.”
Sunil says, "References should be treated just as a ‘gate pass’ to enter the show with a promise that they would listen. Then, the show is yours. It depends on you.” He shares an interesting story that happened during his funding process. A meeting that was scheduled at the office venue, was later changed to Café Coffee Day.
After the meeting and discussions, Sunil realized that he didn’t have enough money on him to pay the bill! He apologized to which the venture capitalist responded, “Yaar, to tum paise lekar hi chodoge!” [You won’t leave me without taking the money!] and they both had a hearty laugh.
This is a two part article series written by Samiksha Seth, for all those entrepreneurs who want to figure out about venture capital. Stay tuned for more details!