Author Archives: Aristotle Consultancy
Startups in India for long have been the favorites of private equity and venture capital investors doling out funds. Banks, however, have been tough players on the funding scene. While banks in India (both private and public) are beginning to introduce initiatives to cater to startups, the efforts remain largely limited to regulatory guidance and corporate banking incentives. Some of them have stretched out as an incubator for startups but extending loans has been missing from most banks’ strategy to attract entrepreneurs.
JSW Ventures has received mandatory clearances from SEBI to invest $15 Mn (INR 100 crores) in early stage startups over a period of three years. The initial focus will be on technology-enabled startups operating in education, healthcare, financial services, SaaS and enterprise software space.
The fund will be overseen by Parth Jindal, son of group chairman Sajjan Jindal, and Managing Director, JSW Cement. Gaurav Sachdeva, a former executive of Brand Capital, has been appointed as Managing Partner.
As per an earlier announcement, JSW Venture Fund is eyeing a sweet spot of INR 3- 6 crore per deal, investing across seed to Series-A rounds of funding.
“Technology innovation is happening across sectors, from old-fashioned verticals like real estate to research-driven work being done in machine learning and artificial intelligence. We think that the opportunity to innovate across sectors and businesses is immense and want to be a part of this transition,” said Parth.
He further added that, “As an early-stage fund, we will not only provide capital but will remain strong partners of our investee companies as they grow, leveraging the JSW Group’s expertise and experience to help them blossom into world-class companies.”
Team, product-market fit, scalability and technology innovation will be the key criteria while assessing companies. “We typically like to lead investment rounds and work with founders helping them discover and solve business critical problems,” said Gaurav.
JSW Ventures is part of the $11 Bn JSW Group with interests in steel, energy, infrastructure and cement. The cue for launching this fund came in late 2015. The fund will invest proprietary capital of the family and not as a strategic investment vehicle.
Source – Inc42
Angel investors don’t just reside in big cities. Investors from smaller cities such as Guwahati, Kanpur, Vadodara, Raipur, Visakhapatnam, Agra, Jaipur, Chandigarh are increasingly ready to bet on innovative business ideas, says a study by deal making platform LetsVenture. According to the study which looked at deals struck by investors and startups on its platform, 13% of the investors in 2015-16 were from tier 2 and 3 cities.
Among the metro cities, Mumbai-Pune region and NCR have reported the highest number of angel investors at 337 and 307 respectively. In comparison, Bangalore came third with 298 angel investors.
It was a similar story when it came to the home base of startups. While Bangalore was leading with the number of startups in 2015, Delhi-NCR has moved to the top spot in 2016. Tier 2 cities saw an increase in the number of startups setting up base in these towns across India, with Pune recording the highest.
The study also looked at sectors that were most preferred by startups. E-commerce followed by healthcare, marketplace and data analytics were the most active sectors. Furthermore, seed funding in the first and second quarters of 2016 have seen a rise in seed deals versus those made in the same year-ago period. The year 2016 also saw a higher number of business-to-business (B2B) startups set up shop, as compared to 2015, when business-to-commerce (B2C) firms dominated.
Source – TechCircle
It’s not only investor appetite that has taken a turn of caution in the past few months, but entrepreneur expectations have been rationalised too, data from around 10,000 start-ups on deal-making platform LetsVenture shows.
Start-ups at ideation, beta, and proof-of-concept (POC) stages (early-stage start-ups, essentially) in the consumer sector have been seeking a lower amount when raising funds this year, compared to the last, while those making revenues are doing the opposite, given the investor-interest in companies that would turn a profit quickly.
The percentage of stake dilution that start-ups are offering has also come down in start-ups across the board.
In the business-to-business sector, however, expectations for fund-raise have largely remained the same, or even increased compared to last year, in line with the trend of investors looking to fund B2B start-ups which need far less cash to expand, many of which are even profitable, compared with cash-heavy, loss-making consumer Internet start-ups.
To be sure, entrepreneurs don’t always get the valuation they ask for or expect—the final number may look very different, but this is a fairly accurate representation of expectations.
Source – Livemint
It’s very exciting as a founder when you start a company, you are full of energy and excited about the possibility of the future. Before you get to doing the fun stuff make sure you’ve got the foundation down. A lot of startups I’ve seen neglect some very basic things that will eventually cause the company to implode, whether its employees leaving because they don’t feel appreciated, or paying huge fines because they didn’t take care of basic accounting and taxes.
Take care of your business’s basic needs. Doing accounting is one of those things which is so ‘uncool’ it’s boring as hell, however it’s oh so important. Getting your taxes right from day one is going to save you a lot of time and money later down the line. I used to be a part of a startup that neglected this and we ended up paying a huge fine. Get it done! DO NOT LEAVE THIS! I promise you if you don’t do this, you will fail as a business.
Another thing I see as a problem is basic employee benefits such as social insurance. These are basic benefits for employees that every business is obligated to provide by law. If you are a startup and don’t have social insurance for your employees, you are neglecting to take care of your employees basic needs.
Understand that as a founder, whether you are burning through your savings, or using investor’s money you are the beneficiary for your business. Chances are your employees are earning a salary and are not entrepreneurial and don’t care about your stock options. They want to save as much of their salary as possible and should they get sick or something happens they will want those benefits that the state provides them. As the founder of a company you may not need it because you come from a background of abundance and have private insurance, but your employees may not have the same benefits you do. Show some empathy and sort this out! There are so many startups I’ve seen and heard about that don’t provide social insurance for their employees its outrageous.
Another thing I see a lot is companies who never pay to train their employees or buy books or online courses for their team members. If you’re not doing this, well you should start. Everyone wants to grow, and by providing this as a company your employees will feel like your company is a place where they can develop their skills and grow as an individual.
Another issue I see crop up a lot is founders having absolutely no respect for employees time-off. Your employees are not your co-founders. You are paying them a salary for a fixed amount of hours to work in a day. Generally 6–8 hours / day depending on how the startup is organised.
Chances are your employees don’t care about stock options. If you’ve offered it to them, have you signed an agreement? Have you asked them if they want it? Your employees are only obligated to work the official work hours for you which is 8 hours / day 5 days a week, that translates to 40 hours / week. Any time beyond that you should thank them and make them feel appreciated. It doesn’t always have to be money, figure out a way to show real appreciation. Most of the time a heart-felt ‘Thank You’ or buying them dinner is enough.
Under no-circumstances should you contact your employees over the weekend to ask them to do something. If you really must ask them to do something because it’s an emergency, then ask nicely. If they can’t, respect it! Chances are if your employees are motivated and love working with you because they know that you are taking care of them, they will take care of the problem even if they’re on holiday. They need to have a life outside of work, be free to live their lives. They need to feel that they have some time-off from work, otherwise your company is going to suffer a burn-out and then your productivity will really take a nose-dive.
Reading through this you may be mistaken to think “are employees motivated by these benefits?” No they’re not, they just need to know that should something happen the founder of company has their back. Taking care of basic needs will help your employees feel safe, because they see evidence that you took care of their basic needs. You’ve got their back.
Running a company is like starting a family. Your employees become your children. Would you ever let your children go without education, health-care and appreciation? Absolutely not! You would be classified as bad parents if you did. Taking care of your companies taxes, your employees taxes, providing training, having respect for your employees time off will make them feel safe, happy and appreciated. If you want motivated employees take care of them! They are the foundation for your business.
Source – Inc42