Building a business isn’t easy. While it starts with a great idea, the real battle begins only after that. Right from putting together the right team to getting the first customer, the challenges only start to magnify with scale. During the early days, having the right mentor to guide the team could be the difference between a story and a lesson. We got the chance to speak with one such man, who has been instrumental in driving young startups towards success.
Saumyajit Guha, COO of Calcutta Angels Network, has got 15 years of experience with proficiency in Business Incubation & Entrepreneurship Ecosystem Development, Market Research & Analysis. Process Migration, Operations and Business Analysis. He has worked with the startup incubators at some of the best educational institutions in India including IIT Kharagpur & IIM Calcutta. He will be hosting a workshop at the upcoming Kolkata edition of Startup Knockdown+. But before the event, he shared some tips for any startups looking to pitch to an investor and his expectations from the startups participating in the upcoming and future editions of Startup Knockdown.
What investors look for
Talking about what an angel investor looks for in a startup while gauging the potential, he put feasibility and scalability high on the list. According to him, “An angel investor doesn’t come on-board just as an investment partner. He or she looks for an idea that is scalable and can get subsequent funding to give the investor a fruitful exit. If the product isn’t scalable, however good it may be, investors won’t be interested.”
He also highlights the importance of a good team with the right mix of enthusiastic and skilled people. He says, “The idea might be scalable but is the team capable enough to scale it up? This is a question most investors would ask themselves before investing in any startup”. When asked about how he gauges the team, he said that a little background check, customer and vendor feedback and the conversations tell enough about them.
Technology is also a major factor for an investor. Crediting the importance of a technology driven business, Saumyajit shares, “In today’s world, if the startup is relying on manual processes and there is no technology involved in it, there is no point starting up.” Generally a tech driven business is easier to scale and thus more interesting for investors. For most investors, these are the major points they look for before getting into the finer points.
Tips for participating startups
Coming to the topic of Startup Knockdown Kolkata, here are some of the tips Saumyajit had to share with the startups:
- Don’t build a business to get funded. It might sound a bit weird coming from an investor but we strongly believe in that. Build a business to do the business and investors will reach out to you.
- Plan your pitch smartly. At times startups spend too much time explaining the problem statement. Any investor listening to you, even the audience, understand the problem statement easily. Instead of stressing too much on the problem statement, it is better to concentrate on how you are addressing the problem and are going to make money out of it.
- Don’t start looking for investment in the idea stage. It is very naïve to look for investment at that stage. At that stage you should look for fund from the three Fs. Friends, Family, Fools. Also, Government, both Central and State, is pumping a lot of money to support very young startups and you should look at them. Majority of the investors will not invest at that stage unless the idea is very unique. If you are talking about something like marketplace, until there is a proof of concept, some initial traction to show, not many will be interested.
- Know how the funds will be used. We have seen examples where the founders plan to spend on a plush office when they clearly don’t need one. You have to be frugal and spend on what is required. If your business allows you to operate from your home with your laptop, you should. I don’t have an office for Calcutta Angels Network because I don’t need one. It is not about how much you can spend but about how well you can manage whatever you have got. If you are pitching and saying that you would get an office, you are not getting my money. If you say that I want to hire a kickass team and build a strong product, you have at least got my interest.
- Invest yourself in the startup. When an investor sees that an entrepreneur has skinned his or her own back in a bid to build the product, he is prepared to trust. Your pitch should portray how much you have worked on the product, how much time and money you have spent and how smartly have you played so far.
New startup hubs in India
Bangalore is undoubtedly the favourite place to start a tech business for many founders. When asked if he has observed new regions emerging as a favourite spot for startups, Saumyajit had a different opinion. He shared, “I have observed a tendency to go with the flow and a ‘me too’ attitude with many startup founders and I often fail to see the reason. You don’t have to be at some specific geographical location to innovate. Just because Uber has an office in a metro city, doesn’t mean you also need an office in the same neighbourhood.”
Adding further to our question, he shared some of his observations. “Entrepreneurs should note that B2B, while not as fancy, is a promising segment. You are in a business to make money. The B2B space offers huge opportunities to make money and lot of investment isn’t required. B2C requires scaling up a lot and that requires heavy investments. The key is to identify the right opportunity. Teams should look at complementing popular businesses instead of competing against them and flooding the market. In travel industry, corporate travel is a promising prospect startups can look at” shared Saumyajit.
Saumyajit will be joining us in Kolkata over the coming weekend for Startup Knockdown. He will be sharing his experience and important tips with the travel startups on how they can build a strong business. Find more details about the event at startupknockdown.travhq.com.