Trending on biz

Trending on biz

In the last two months, I’ve visited more than 50 colleges and trained over 5,000 students on generating and converting ideas into businesses. Some very interesting trends have emerged.

High on websites

With the emergence of Facebook, Google, etc, we have seen a lot of interest among students to start a website-related business. The ideas include plain vanilla e-commerce, directories, online counselling/training/placement service, and even odd ones like obituary service. However, the awareness level about back-end ops (server side programming, vendor/supply issues, marketing of online businesses etc) of starting a website/ e-venture is very low.

Lure of food

Many students wish to start a restaurant. Various versions of this idea are doing the rounds — packaged food, cooked Maggi, organic juices, night canteen, highway dhaba, rotating restaurant etc. One student wanted to start a restaurant in the middle of a lake — a submerged restaurant! Very interesting ideas, which given the right opportunity, have the potential to make a mark in the industry. However, this needs a better understanding of other aspects that make a successful restaurant —

location, ambience, staff, raw material procurement, licences etc.

Manufacturing missing

Students think of businesses that they are either consuming or can relate to directly. Unfortunately, manufacturing sector is not their radar. It can be due to horror stories about the greater challenge of setting up a physical infrastructure when compared to a virtual business.

Ideas lack global touch

One thing that hurts me is that most students do not think about a global business. They want to do business in their city, for their college or with their friends but do not think about an idea that can have customers all across the world. This may need some exposure, travelling or interaction with international students.

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Myths about venture capital

Venture capitalists (VCs) are similar to mutual fund managers. They raise money from large investors — banks, insurance companies, large corporates, etc — to invest in private unlisted entities. They do this for a fee and also take a per cent of the profits. They have about 8-10 year time window within which they have to get in (by buying shares) and come out (by selling shares) of the company.

What’s at stake?

All the VCs are interested in taking a per cent equity in the company against the money they invest. Venture capital is a risk investment. If your venture fails to do well, the VC loses his money, time and effort. Unlike a loan, the entrepreneur is not liable to return this money.

Is the money for free?

You have to give a part of your company up front. VCs also look for high returns (40-50 per cent).

Should I give a collateral?

They do not ask for a guarantee to their investments, which is the reason why they spend a lot of time trying to establish trust and credibility in the entrepreneur.

Can I get Rs 5-10 lakh from a VC?

Most of the VCs manage over Rs 100 crore of funds. So do not waste your time going after VCs if your requirement is small.

What businesses get venture capital?

Many businesses do not get venture capital like cash-flow positive (ad agency/recruitment), service oriented (training, franchisee), capital intensive businesses (dams/roads), single promoter driven (proprietorships, manufacturing workshops). Most VCs have their own qualification, selection and rejection criteria and focus on certain sectors (technology, healthcare, energy). So go to the right investor and invest your time wisely.

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A beneficial tie-up

Breaking news, top stories, gala award nights, 24*7 reporting and crowdsourcing of news have brought media to the boardrooms of large corporates as well as garages of small startups. Media delivery has gone hand in hand with media generation, with news happening and getting reported by the minute. Entrepreneurship has also taken a place of pride among media properties. Let us understand the role of media in entrepreneurship.

Print media

Edex and leading newspapers have regular columns for spreading information, awareness and knowledge about entrepreneurship in general and starting up in particular. Another leading publication runs Power of Ideas, a campaign to uncover ideas of the common man and bring it to mainstream. As a kid, I used to directly jump to the sports page of the morning newspaper. Now I hear young students eagerly wait for the education, business and career sections of their newspapers. Two leading mags focus exclusively on entrepreneurship while other biz mags bring out special issues on entrepreneurship/startups.


India’s leading TV channels have a weekly show on entrepreneurship. A channel is running its second season of discovering India’s best entrepreneur with prize money and guaranteed funding as a reward!

Online media

It has been at the forefront of entrepreneurship, due to its relation to technology, low cost of running campaigns and ability to reach out to audiences worldwide. There are millions of websites, blogs, video channels, e-learning and networking platforms for connecting entrepreneurs to each other and to clients. LinkedIn has become important for networking. Facebook has given rise to entrepreneurs who live, create and sell stuff only on that website!

Word of mouth

The world’s most powerful media is word of mouth. That one person who vouches for you and will talk about your product to others, is worth his/her weight in gold. I hope all entrepreneurs will engage with the media in a constructive way.

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10 common mistakes that KILL a start-up

In my interaction with over 10000 current and future entrepreneurs, there are 100s of mistakes I have come across that people make.

What may be perfect for a particular venture may turn out to be absolute disaster for another! But there are some key mistakes that any young entrepreneur can avoid while starting a business.

1. Not starting

The key to any successful business is to take the first step. Dreaming about success does not lead to it — doing does.

I have seen lot of ‘wannabe entrepreneurs’ reading up headlines and saying ‘I wish I had started this company’ — that is the exact difference between an entrepreneur and any other person with the idea.

Entrepreneurs are action oriented — they do not wait for perfect market research, funding from VCs or support from Government to take off their ideas. They take a calculated risk, jump and keep building the parachute along the way!

To every management strategy, there is an equal and opposite strategy – focus vs diversification, localisation vs globalisation and so many other conflicting theories!

In reality, strategies do not work – the entrepreneur makes them work.

So listening to everyone does not help, as there will be conflicting advises coming from different angles.

Best case is to build your trust in a mentor and find a Krishna for the Arjun inside you.

Recently, I came across an entrepreneur team that signed a term sheet for selling equity stake in their venture to a VC.

They were too happy to raise million dollars at a good valuation.

But after going through the details, I told them they were giving 3 times liquidation preference to their investors, which means that the investor takes home 3 times their money, before entrepreneurs get anything at the time of exit.

Now that is the devil in the detail that you should be aware of.

Remember, a deal is not done till you got the money in the bank.

Entrepreneurs should love their ideas, and be passionate about it — almost to the extent of madness.

But that is where it should not end.

The love should translate into perfect execution — from idea to product, and from product to market.

Take the case of Nano car — it is a great idea, an average product and poor marketing.

While it still has a chance to deliver on its original promise of a mass vehicle for transport, it will require perfect execution and correcting the mistakes of the past.

Majority of Indian businesses are run as a proprietor — single person owns the company and runs it with all risks and rewards to one individual.

Proprietorship is a highly respectable form of entrepreneurship, but there is always an opportunity to grow beyond the initial founder.

Kishore Biyani of Big Bazaar, one of the most renowned retailers of India, would have remained a shopkeeper had it not been for his ability to think big and grow teams to replace him.

Due to the hype associated with investors, many entrepreneurs think that raising investments is the only way to do business.

But in reality, the only way to make money is from customers. So you must do something awesomely well for your customers, and they would love to give you money for it.

That’s how you will reap profits.

I have seen several entrepreneurs wasting precious time running after investors in so called ‘investor meetings’.

Instead, I would suggest validate your idea, get customers and then go to a VC — that will also give you great negotiating power.

Most famous way to kill a business is to spend more than you have, either on a fancy business class airlines or renting office at Nariman Point in Mumbai.

If your product, distribution channel and value proposition is not established, even putting ads on TV will not help your venture. So use whatever money you have effectively.

But do not save pennies by cutting things like employee welfare!

Business planning is more important than the business plan.

And planning is a continuous process — it does not end by creating a fancy presentation or excel sheet.

Lean start-ups launch quickly, validate assumptions, modify products and scale up their efforts in directions that work.

As a wise man said, ‘If you get 60 minutes to cut a tree, spend 59 minutes sharpening the axe.’

In the hurry to grow and sustain their ventures, young entrepreneurs do compromise on ethics.

It can be as small as delaying vendor payments to as large as paying bribes to get contracts.

However, ethics are important in business.

While doing business in India, remember that your relationship with customers and clients matter a lot and hence, it is important to keep the long term goals in view before compromising for short-term gains.

In the recent past, the technology sector has seen an upsurge in interest among aspiring entrepreneurs, whether it is for building a website business or for mobile applications.

But most of these entrepreneurs are unable to sell their products.

Create and sell — these are the two basic functions that a business thrives upon.

So keep your ego aside and go out to sell your product to customers — even Steve Jobs did it.

Nurture Talent Academy, India’s 1st institute for training entrepreneurs took further strides to promote entrepreneurship among students by associating with Entrepreneurship Development Cell of IIT Delhi. Vishishth 2012, flagship business plan competition of EDC-IIT Delhi will be conducted in March, 2012 in the campus of IIT Delhi. As a part of promoting the event, Nurture Talent will be conducting over 15 1-day workshops at campuses all across the country and reach out to budding entrepreneurs even in tier 2 and tier 3 cities. Online registrations for the same can be made at Vishishth 2012 gives a chance for interested participants to showcase their talent and business plans in front of investors, venture capitalists, mentors, incubators and media.