Investors Say Hobby Entrepreneurs With Nonsensical Ideas Are No Longer Getting Airtime And Quick Cash
Hi Everyone Today We Will Talk About How Investors Say No To Hobby Entrepreneurs
Funding may have Taken a Hit from the End of 2015, but that hasn’t Stopped Entrepreneurs from Chasing the Next Big Thing. Global Startup Analytics Firm CB Insights Noted that India’s Funding Ecosystem Saw a 46% Fall in the Fourth Quarter of 2015, compared to the Previous Quarter. Their latest Report says Funding to Indian Startups Dropped a Further 60% in the Second Quarter of 2016 Compared to the First Quarter. But that’s Not Stopping People from Starting on an Entrepreneurial Journey, and Investors say there has Never been a Better Time to Start up.
This “Detox in Funding” is, in fact, Giving Better Startups Space to Grow, Believes Rajesh Sawhney, Co-founder of Delhi-based GSF Accelerator, which has Worked with Startups such as HackerEarth, SilverPush, and Timesaverz. “We have not only seen an Improvement in the Number of Startups but also in the Quality of Startups. Technology Startups with Better Focus on Product and Market are Coming to Us,” he says.
As Funding Dries Up, Entrepreneurs With Real Ideas Are Getting A Fair Hearing.
Rajat Tandon, Vice President at Nasscom, looked at the Number of Applications Received by the IT Trade Association’s Startup Warehouse this Year, he was Pleasantly Surprised. “Last year, the Startup Warehouse Received 3,400 Applications. Eight Months into this year, we’ve already Crossed 2,700 Applications, and We Expect to Get 2,000 More. That is a Big Number,” he says.
At Axilor Ventures, Started by Infosys Honchos S D Shibulal and Kris Gopalakrishnan, there’s been an 80% Growth in the Number of Startups Applying for their Accelerator Programme this year. Times Internet-backed Startup Accelerator TLabs Continues to Receive 200 Applications a Month, while Microsoft Accelerator has Received 1,500 Applications for its latest Batch. Delhi’s Jaarvis Accelerator has Heard Pitches from 500 Startups so far.
Second Inning Entrepreneurs
Another Group on the Rise is the Second Time Entrepreneurs. Nearly 25% of Nasscom’s Applications are from Repeat Entrepreneurs. While the Average Age of Founders Continued to be between 25 and 30 Years, Sawhney said many Entrepreneurs who Failed in the Previous Venture have learnt from their Mistakes and are Trying Again. “They are More Prepared and Understand the Market. They know the Product Market Fit,” He Explains.
Second And Third-Time Entrepreneurs Are Tackling Bigger Problems And Building Deeper Technology Products
Axilor has also Noticed that the Percentage of Founders with Startup Experience has Gone Up. Ganapathy Venugopal, CEO of Axilor Ventures, says, “Based on Our Sample, We have Noted an Increase in the Number of Founding Teams with Two to Four years of Prior Startup Experience. For Our Accelerator Programme, this is a Good Target Group as they have Better Insights About the Problem they are Trying to Solve and Can Move Ahead with Speed.”
Ravi Narayan, Global Director of Microsoft Accelerator, says there is a certain level of Maturity in the Market Now. “The Ecosystem has Developed, the Entrepreneurs know what Products to Build. Second and Third Time Entrepreneurs are Tackling Bigger Problems and Building Deeper Technology Products,” he says.
“Earlier you could get away with Building an E-commerce type of Company. Now, Startups know it is a long term Game,” says Narayan.
Now Its About Serious Business
So, if 2015 was the year of E-commerce, this year is being Deemed the One of Business-to-Business Products (B2B) in the Space of Artificial Intelligence and Internet of Things (IoT).
TLabs, which has Accelerators in Bengaluru and Delhi, almost 50% of the Applications Received for the latest Batch was for B2B, a 10% Increase from last year. For Nasscom, the Number of IoT Startups Peaked to Sit at par with Mobile Technology and Consumer Internet Startups at Around 25% of Total Applications Received this Year. SaaS Based and Big Data Companies came in Second with 10%.
The Increasing Interest in IoT has led Kyron Global, which Runs Accelerators in Three Verticals, to Open a New Vertical for IoT Startups. Venkat Raju, CEO of Kyron Global, says Horizontal Sectors like Analytics, IoT, Artificial Reality, Virtual Reality and Artificial Intelligence are Emerging, along with Drones, Robotics, and 3D Printing, all of which were Considered a Typical for Accelerators so far.
It Doesn’t Mean that these Platforms Don’t Continue to Hear Un-viable Ideas.
“We still Get a Deluge of Stupid Ideas Startups trying to Position Irritants as Problems and Solving them,” says Anil Chhikara, Principal of Jaarvis Accelerator.
He says One Startup Pitched an Idea of Converting Medical Shops in Towns and Villages into Clinics to Solve the Problem of lack of Healthcare in Rural Areas. “Clearly, they had Not Studied the Space and the Original Problem, which is the Unavailability of Doctors” he says, Adding that the Upside of Funding Drying up is that Such “Hobby Entrepreneurs” are Retreating. “This is Giving More Visibility to Serious Entrepreneurs who are Solving Real Problems but were Not Being Heard Earlier in the Din of Non-Sensical Startups,” says Chhikara.
Upside Of Funding Drying Up Is That Such “Hobby Entrepreneurs” Are Retreating
Another Positive Impact of the Funding Slump is that Valuations are No longer Inflated. “There are Realistic Expectations when it Comes to Expected Valuations of Startups, which are Working on a Problem but Don’t have Market Validation or Revenue Traction yet,” Chhikara adds.
A Good Time To Start
A Downturn Is A Good Time To Start Up And Entrepreneurship Never Stops
“The Confidence Continues to Build in the Ecosystem. It all Depends on How Many Actually Make it to the Point where they are Ready To Go and Accelerate.” Says Microsoft’s Narayan.
Sawhney says Investments will Continue. “There Might be a Funding Squeeze but this is Just the Beginning of a long Journey. It is a Great Time to Invest and Smart Investors will Continue to Invest. The Next Six Months are Crucial as Investors will Take Contrarian Bets.”