Something About Startups-2

Finally, if you think this is probably the best time to become an entrepreneur, you could be just a little wrong — many observers feel that the situation will get even better in the next two or three years. “The ecosystem to develop products is still not here in India,” says Druva’s Singh. “It should develop in the next five years,” he adds. Sure, there’s always room for improvement but we are already in the middle of exciting times for both entrepreneurs and investors. In the following pages, we feature some promising entrepreneurs with interesting ideas. And no, they are not your usual suspects. 

Forty-five Indians and people of Indian origin made it to Forbes’ annual list of the achievers under the age of 30. The number five years ago was just 11. With 600 entries, this year’s list was published on 04 Jan 2016. Twenty-two year old Ritesh Agrawal, the founder of OYO Rooms, the Indian version of wildly-popular Airbnb, was one of the most prominent Indian names in the list. OYO Rooms is a startup that focuses on managing and owning room inventory in budget hotels. Founded in 2013, it owns 40,000 rooms in 4000 cities across 160 cities. Forbes said that being under-30 gives a lot of advantage as the new-gen-entrepreneurs were born in the tech era, and are best poised to bring disruptions in the world. Some of the other prominent names were 28-year old Gagan Biyani and Neeraj Berry, co-founders of food delivery app Spring, 25-year old Karishma Shah, the youngest in Alphabet’s Google X team, which aims to solve world’s big problems through innovative tech ideas. A bunch of names from the world of finance included- Citigroup’s 27-year old president Nila Das, Viking Global Investors’ Divya Nettimi (29), Millennium Management’s Vikas Patel (29), and Caxton Associates’ Neel Rai (29). 

Startup Story

Having a State Bank account that wasn’t net enabled made Abhishek Nayak realise there was a large chunk of people who didn’t have access to online transactions or would rather pay cash. After reading that many customers of online bus ticket service Red Bus booked electronically but preferred to pay in cash, Nayak convinced the company’s founders — his seniors from BITS Pilani — to let him collect the cash from customers as a pilot. Arpit Mohan came on board to help with the technology and Gharpay was incorporated in April 2011. The company collects cash from customers at their doorstep in 900 pincodes across 14-15 cities.

It’s now got over 190-200 customers mostly in the e-commerce space (companies like Red Bus, Cleartrip, Times Classified and Fetise) and reaches out to about 15,000 people a month. Gharpay collects about Rs.4 crore of cash every month on behalf of its customers and collects a fixed fee plus a percentage, depending on transaction volumes. It specialises in dealing with companies that have digital goods such as tickets, coupons or classified bookings. “We’re a payment solutions company rather than a logistics player,” says Nayak.

Mobile payments are not secure

I am talking about the dangers of mobile payments services. According to 900 members of Isaca (an association of IT professionals and risk managers, mobile payments are not secure. The boom of mobile payments is creating opportunities for hackers and thieves, and security gaps in some of the apps are leaving buyers as well as sellers exposed. According to a September report by researcher LexisNexis, merchants reported that "alternative payment methods" a category that includes PayPal and other non-bank financial companies, accounted for 21% of all fraud in 2015, up from 13% the previous year. 

Along with a handful of well known companies such as Apple, Google and Samsung, the mobile payments field has attracted thousands of thinly capitalized startups. Mobile app security provider Bluebox found vulnerabilities in all the roughly 10 unnamed US mobile payment apps it examined last year. On march 2 the consumer financial protection Bureau levied a $100,000 fine on Dwolla, a service that allows people and businesses to make and receive payments via a website or mobile app. 

The bottom line- Mobile payments technology is evolving faster than regulation, leaving some users exposed to fraud. 

Something about entrepreneur

However, sometimes, entrepreneurs are so focused on getting their businesses off the ground that they don’t always get the big picture right. “In the first phase, entrepreneurs are very eager to sell their idea,” says DFJI’s Andra. “They wake up only during the second phase to realise that selling profitably is more important than getting customers.” Andra feels that if the entrepreneur doesn’t analyse his business enough, or if he gets too much money early on, he may end up pushing the accelerator too soon. He adds, “If you are not evolved as a company, it could lead to huge problem in execution.”

Indian entrepreneurs are a lot more mature now than they were when we started 10 years ago — Kanwal Rekhi, MD, Inventus Capital

Naukri’s Bikhchandani says it is keeping a tight lid on costs that helps in the long run. “We had bootstrapped [self-funded] the company for 10 years before we took venture capital,” he remembers. “We had to earn money to break even so we were very frugal and that helped us keep afloat during the market meltdown after 2000.”

Trying to keep afloat is exactly what some e-comm firms are doing today.  Start-ups were set up at a frenzied pace as entrepreneurs and investors wanted a bite of the e-commerce pie that is tipped to double to $20 billion by 2015. But here’s the catch. “Only a few million users are consistently buying from online stores,” says Subrata Mitra, partner, Accel Partners, which has funded some of the leading Indian e-commerce start-ups, including Flipkart and Myntra.

“The number is growing, but from a relatively small base, and [the market] can, therefore, sustain only a few such start-ups today.” Deal site Taggle, which was kicked off in June 2010, shut shop last year and Flipkart bought out electronics site LetsBuy. VCs say more e-comm portals will crash and burn before the dust settles.

Mentoring is the most important input that a young entrepreneur can get today to stop him from going in the wrong direction — Deep Karla, CEO, MakeMyTrip

That’s why a team that can adapt quickly is important. A few venture capitalists say they always put the team ahead of the idea. “It’s always better to fund an A-team with a good idea rather than a B-team with a brilliant idea when it comes to investment,” says Deshpande. “Most companies end up doing things a little differently than when they started off, so it’s really important to find the A-team that can navigate through that process.”

Early-stage investing is an art, experts insist. Since there are no numbers, no customers and no spreadsheets to validate everything, it becomes a challenging task. “More often than not, it’s like a roller coaster ride and unless you have been an entrepreneur yourself, it will be difficult to understand the early stage dynamics of a business,” notes Inventus’ Rekhi.

So his firm sets up filters that help it whittle the 800-odd proposals they get every year down to about six in which it invests. Inventus believes every entrepreneur must have some skin in the game so it only funds entrepreneurs who have been bootstrapped, and who have been in business for over a year. “We don’t invest in companies unless we see at least a 10-times return on our investment,” Rekhi says. “So we develop that vision with the entrepreneurs and work with them to realise that goal.” 

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Startup Story- Droom

Starting up is not for the faint of heart
   --- Sandeep Aggarwal, CEO, Droom

Sandeep Aggarwal studied at Kurukshetra University. He worked at multiple investment banks in the US, and returned to India to start e-commerce portal ShopClues in 2011. He also founded Droom, an online market place for used automobiles, last year. 

Startup Story- Industrybuying

You simply go where your imagination takes you.
                                               ----Swati Gupta, co-founder, Industrybuying

An engineer from Delhi Institute of Technology, who hold an MBA from Carnegie Mellon, Swati Gupta left her job with a New York based analytics company and moved to India to found Industrybuying, an online market place for industrial supplies, with brother Rahul in 2013. 

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Startup Story- SenseGiz (technology based)

Once in 2011, Abhishek Latthe had to take a train at Liverpool in order to go to Southampton. He boarded the train, placed his luggage in the compartment, and then got off it to beat the boredom. There was still some time for the train’s departure. By the time he re-boarded the train, the cops had come in on a routine check, noticed the unattended baggage and took it away and put it in the lost-and-found centre. That was when Latthe first contemplated a venture in the lost & found space. He was then doing an MSc in mechatronic from the University of Southampton, studying advance digital control, sensors & signal processing and instrumentation. Soon after his post-graduation, he worked as a management trainee and then moved to become the head of operations in his family-owned business in Belgaum that was into alloy castings and manufacturing.

In 2013, he decided to revisit his lost & find idea, and launched a venture called SenseGiz in Bengaluru.

He decided to experiment with sensors and wearables, ideas that were just emerging at that time. “People thought I was pursuing a bold experiment,” he says. Last year, Latthe’s team launched their first product called Find, a Bluetooth based tag that can be used to track and find keys, pets, laptops, mobile phones or luggage. The small square device can be synced up with your smartphone through an Android, iOS app. Find consists of 25 different components including micro controller, sensor, buzzer, and a battery unit, and is manufactured and assembled in Mysuru. Some 20,000 customers have been using it. Among the customers are some US retailers. One uses it for geolocation, for pushing notifications on your phone-if you are looking for shirts, it will alert you on the best deals on the shop floor. SenseGiz recently floated a subsidiary in San Francisco where it employs a few sales professionals. It has also raised $600,000 from Japanese investor Indigo Ventures and Karnataka Semiconductor Venture Capital Fund.

Startup Story- Fxkart (An online foreign exchange dealers)

Soon after returning to Bengaluru from his honeymoon in Dubai in 2013, Abdul Hadi Shaikh went to his preferred vendor on Commercial Street to exchange the few dirhams he had left with him. While he was at the store, his wife took a stroll, checking out the other stores in the vicinity. Just when he had finalized the exchange rate, his wife returned and told him that the money changer next door was offering a much better rate. This was an embarrassment for Shaikh, because forex markets was something he dealt with, having been head of research at Ratings Intelligence, a research intelligence firm for Islamic investors headquartered in London. “Quite deservingly I was jacked in my area of expertise, much to my wife’s amusement. But this incident left me wondering, why not create a web-based comparison platform for getting the best forex deals,” he recalls. The banks charge was more than the interbank rate, while the authorized money exchangers have small stores, untrained staff and no visible branding.

That was the beginning of Fxkart, an online aggregator of foreign exchange dealers, which started with Mushtaq Shah, the founder of Rating Intelligence. Shaikh had worked for Shah for more than seven years after passing out of college. Shah, who is also co-founding partner of hedge fund Quantmetrics Capital Management, was earlier an executive director at Goldman Sachs International. Shaikh graduated in commerce from Mahaveer Jain College in Bengaluru and joined Ratings Intelligence to start its Indian operations. “My father was wary. I could have easily secured a job at E&Y (audit firm Ernst & young), having interned there during my college days. I told my father I wanted to try out this (Rating Intelligence) option for a couple of years and see how it goes. I guess my seeds of entrepreneurship were sown during that time,” Shaikh says.

Fxkart’s services are free for consumers, but the company charges the 100 odd money changers on its platform. When consumers feed their requirement on the platform, forex dealers will offer their rates, and the consumer can choose to go with the best rate. Fxkart earns a commission on every successful transaction. The platform sees about 35 transactions of about $2.5 million since it went live in January. “When you are running your own company, there is no start time and end time. You are always engrossed in it. My wife is a doctor, and she was not keen to marry someone in her own profession as the schedules are hectic and the working hours are odd. She chose to marry me as I had a five-day work week and fixed work timings. Six months into the marriage, Fxkart started taking shape, leading to long working hours, weekend work and a whole lot of travel. Now she says I tricked her in to marry me,” Shaikh laughs.

Startup Story- Socialblood (blood donation platform)

Karthik Naralasetty’s Socialblood started as a Facebook group for blood recipients and donors and was later made also into a website. People who require blood post the request on the Facebook page or website and donors respond. Each blood group has a different Facebook group. The Facebook groups saw more than 10,000 joining and actively participating within a month of its launch. Many around the world noted the success and Naralasetty received invitations from organizations in more than 20 countries to start operations in those regions. Bengaluru based Naralasetty, who was then running a startup that built and managed third party websites, decided to convert his side job into a full-fledged NGO. Thus was Socialblood born, in 2012. Today, the platform is available across several platforms, including app, website and Facebook, and its vision is to build the largest network of blood donors, hospitals and blood banks on the web.

Once on a trip to the United States, Naralasetty met Facebook founding president and investor Sean Parker and the two happened to discuss the former’s plans for Socialblood. “Parker advised against making it a non-profit as it would then end up looking for grants and funds all the time. So we decided to generate income that would be enough to sustain us,” says Naralasetty, who now splits his time between the firm’s New Jersey (US) and Bengaluru offices. “if there is value addition,  there will be revenue,” he notes.

The company today has more than 150,000 users with big user bases in India, Brazil, Bangladesh, and the United States. The company does not see any revenue potential in India as requests for blood are from individuals. In the west, in contrast, blood banks have an advertising budget to solicit blood. Socialblood helps the blood banks do the donor acquisition at one tenth of their usual marketing spend.

Naralasetty was born and brought up in Guntur in Andhra Pradesh. His father wanted him to pursue a career in the United States. But Naralasetty returned mid-way through his computer course in New Jersey to start something of his own. He, however, chose to come to Bengaluru. “I did not see my future as a person repaying loans and getting an H-1B visa,” he says. “Of course, my parents were upset. But now they look at me with respect. A lot of my father’s friends tell him that they read about me in a newspaper or saw me on television, and that makes him happy,” he adds.

The Socialblood homepage greets you with a quote from Hollywood actor Will Smith: “If you are not making someone else’s life better, then you are wasting your time….” Naralasetty is driven by this value. “Despite the many serious problems the country faces, educated Indians prefer building billion-dollar consumer companies rather than aiming for social impact. Success has to be measured in the number of people you are impacting rather than the revenue you are generating year after year,” he says. This could change, Naralasetty believes, if more Indians enter the social space. Many say investors are not as interested in social startups as they should be. “There are several impact-focused funds, but regular VCs do not want to invest. Raising money is always going to be tough,” says Naralasetty, whose Socialblood is backed by Google India and South East Asia managing director Rajan Anandan, Nasscom product council chairman, serial entrepreneur and angel investor Ravi Gururaj and seed fund Blume Ventures.

Startup Story- MoEngage/SaveZippy (A leading coupon network company)

Raviteja Dodda and Yashwanth kumar started their first venture together in 2009 when they were just 20. They were in their third year of college with a dream to be successful entrepreneurs, build an awesome company and influence the world. It was a marketing software that they built a platform to help event organizers co-ordinate and communicate. But no! It didn’t pan out that way. It made a little money, but eventually had to be shut down. “It didn’t scale, and we realized we couldn’t take it further,” recalls Raviteja. But the two classmates from IIT-Kharagpur’s 2006-10 computer science batch was determined not to give up. After working in two different companies for a few months post their graduation, the two got back together to start again this time a venture focused on developing cool mobile, social and location based products. SaveZippy one of the leading coupon networks in India, was their main product. “We managed to get between 100k and 200k downloads for SaveZippy. We were trying different strategies then, trying to get as many installs as possible. But somehow, we couldn’t engage our users. We knew it was not doing what we wanted it to do,” says Raviteja. It was then that he and Yashwanth took one of the most important decisions of their lives to ditch SaveZippy and move on. “We wanted to solve a global problem. And what we faced in SaveZippy was a global problem the struggle of app makers to engage users who have already downloaded their app. So we thought we would do a venture to help app makers tackle that problem,” Raviteja says. 

That was the genesis of their platform MoEngage, which they founded in July 2014. Raviteja says getting the first customer is always the biggest challenge for any startup. “Fortunately, we got TaxiForSure as a client in our initial days, which propelled our journey,” he says. 

MoEngage was also selected by Alchemist Accelerator, a Silicon Valley based accelerator dedicated to enterprise solutions. The venture received seed funding of $750,000 in 2014 itself, from Helion Venture Partners. In 2015, it raised $4.25 million in a Series A funding led by Helion. The platform continuously analyses smartphone users and the information is used to send periodic customized notifications to get users to use particular apps. MoEngage today has clients all over the world. His years of entrepreneurship have taught Raviteja a couple of important lessons. Do things lean, he says, and get to the market as soon as possible. “Second, get mentorship. Get ideas from experts, the best in the industry, and guide yourself to the right path,” he adds. 

Startup story- Tinystep (parenting platform)

After passing out from IIT Kanpur in 2006, Suhail Abidi joined PricewaterhouseCoopers (PwC) as a senior consultant. But at some point during the three years with PwC, Abidi realized it wasn’t what he wanted to do in life. “I didn’t feel settled. I was just doing it because others were doing it. There was no higher purpose to it,” he says. He then went to do MBA at Stanford. There he was exposed to the huge potential in entrepreneurship. But he quickly realized that one cant just startup without being close to the problem. “You need to be connected to a particular problem and really have to be persistent to find a solution to it,” he says. That realization came after he started an app development company in Silicon Valley. Within a year of starting it, Abidi ran into problems. “It was difficult connecting with the American customers and understanding their demands,” he says. In 2014, he left the company and returned to India with his wife, and among their priorities was to start a family. But they realized that was not going to be easy. “We saw many of our friends take the plunge without a good enough support system to raise a kid. Many of them were nuclear families. Even finding a good nanny was a three months process,” Abidi says.

And that gave him the idea for his next venture. Keeping their family plans on hold, Abidi started a platform to help parents connect with each other and ask questions and share experiences related to parenting. He called it Tinystep.   

Again, the biggest challenge was to understand his users. “None of us were parents in the team. So we had no means of understanding what parents really wanted,” he says. Another challenge was to get mothers to understand their app features. “Many of them don’t update the app, so rolling out new features also proves to be difficult. Mobile app is a new concept and not everyone knows how to use all features,” he says. It took a strong analytics team and a lot of time to make users become comfortable with the app. To solve the first problem, Abidi got many mothers as advisors on board. Their suggestions proved invaluable. Abidi says it is important to surround yourself with people smarter than you. Having a set of people one can learn from, helps the company grow. “Almost all my team members are younger and smarter than I am. All the decisions are made by them, I am simply the facilitator,” he says.

Tinystep is hoping to become a WhatsApp for parents. It has seen 20,000 apps downloads and has received backing from Flipkart. And it doesn’t work out; Abidi won’t be going back to the corporate world. “I will either join a startup or a smaller organization that is looking to solve a problem,” he says.

Startup story- Exotel (cloud telephony firm)

In 2011, when Vijay Sharma headed marketing in doctor appointment booking platform Practo, he was given an assignment to hire people. The chemistry post-graduate from the Birla Institute of Technology and Science did an earnest job. He trolled social media profiles of potential hires. He scanned not just the big three social media- LinkedIn, Facebook and Twitter- but other social communities like Quora, Angellist, Github, Dribble, Foursquare and Instagram. He made cold calls based on candidates’ profile. Soon he was sitting on a powerhouse of candidate data on an Excel sheet. And using that data, he hired 50 people for Practo for marketing, engineering and technical roles. But he didn’t stay in Practo long. Within six months of joining the company, a desire to start a venture of his own pushed him to co-found cloud telephony firm Exotel. As a co-founder, he had to wear many hats and recruitment was one of major ones. But the excitement of Exotel started wearing away by the third year. “I switched off. I used to tweet, and put up Facebook posts at least twice or thrice a day. But that drastically reduced,” he says. Sharma’s mother, who follows him on twitter, realized something was amiss. One day, in 2014, she told him: “I know you will end up doing something stupid. But if you really want to do something good, do it where your heart and passion lie.” That was a turning point. He decided to start a venture in recruitment solutions, one that would enable companies to hire by analysis a candidate’s profile on social media platforms and other public sources using data science and predictive analytics.

He roped in his BITSian junior of four years, Sudheendra Chippagari, who in turn brought with him two other BITSians, Saiteja Veera and Rishabh Kaul. “It was a BITSian mafia of sorts. In fact, 30 out of the 70 employees are from BITS Pilani,” Sharma laughs. They called their venture Belong. “It was clearly my calling. I realized being an entrepreneur today is relatively risk-free. You will find other entrepreneurs wanting to hire you in case you don’t make it. The experience is invaluable. Besides, I thought persistence always pays,” Sharma says. By the middle of 2014, Belong has raised $5 million in Series A funding led by Matrix Partners India. The venture also has high profile investors like Snapdeal founders Kunal Bahl and Rohit Bansal, Blume Ventures, redBus co-founder Phanindra Sama, and Sierra Atlantic founder Raju Reddy. Belong’s clients include Ola, Practo, and Snapdeal, for who it has hired over 130 people in the past few months with an average salary of Rs 24 lakh.

“In one case, our algorithm identified a candidate for a company and it turned out that the candidate had on social media pointed out a technical flaw in a product developed by that same company. The company promptly hired him,” says Sharma. He said his objective is to make the recruitment engine mimic the human mind, and support it with data. 

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