Most recently travel startup “Stayzilla” has shut down its operations after raising around $33 million in funding from investors like Nexus Venture Partners and Matrix Partners across multiple rounds. While addressing to employees & investors, Stayzilla CEO Yogendra Venugopal (Yogi) has said “The initial 07 years were all about having negative working capital, positive cash flow and a sustained ability to fund our own growth. Those were the only metrics we tracked. In the last 3–4 years, though, I can honestly state that somewhere I lost my path. I started treasuring GMV, room-nights and other ‘vanity’ metrics instead of the fundamentals of cash flow and working capital.” Shut down can be seen as a normal business practice but what more concerning is the logic given by the CEO of the startup to which Ratan Tata funded YOURSTORY once called “Godzilla of Travel”. (Till writing of this article, Stayzilla CEO was in Chennai Jail for non-payment of outstanding vendor invoices).

Stayzilla episode is not just a case of startup malfunctioning. Amid financial crisis, last month Snapdeal founders announced 100% salary cut for themselves to trim costs along with reduction in compensation for some other top brass of the “yet to make profit” billion dollar valued startup (on the day of writing this article, snapdeal major investor Japan’s Softbank was reportedly involved in orchestrating a possible merger between Snapdeal’s close rival Flipkart). In an email to Snapdeal employees, Co-Founder Kunal Bahl, has admitted the mistake of the business expansion much before “the right economic model and market fit was figured out” (In 2015 Snapdeal has acquired mobile recharge & bill payment website (now an e-wallet) Freecharge in $400 million and has invested Rs 200 Crore in 2016 on its own brand makeover). On the other hand, last year in December, Snapdeal’s rival & India’s largest ecommerce platform Flipkart has been devalued for the sixth time, pegging its worth at $9.9 billion (company reported a loss of Rs 5,768.8 crore in FY 16 & is reportedly in talks to acquire loss making Indian operation of eBay).

Last year, grocery startup PepperTap after raising almost $50 million shut down it shutters (PepparTap was once compared with US Instacart) whereas the closure of market place “Askme” has been considered as “most iconic and prolific shutdowns of the year 2016” as $300 million of VC funds evaporated into thin air, overnight. According to Mohan Kumar, ED, Norwest Venture Partners India “This is a natural progression,” “When you look at the ecosystem, not more than 20% of the startups succeed. Two to three years after a startup’s inception is a time when you see high mortality. There is too much competition, and only a few survive”.

Success is not sure even when sincere efforts have been given but such a coronation to declare fundraising as an entrepreneurship is a problem, creating unnecessary fuss. Today, every new entrepreneur wants to become either Bansal or Bahl, not to address the real world issue through sustainable products but to raise funds & enjoy a corporate stardom.

As somebody has said “profit is the only sanity while rest all is vanity”, I strongly feel Indian startups will realize this, sooner or later.

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Disclaimer – The characters in this story are very much real (may be with different names & entities) & its resembles with the real world people (Founders or Angel Investors), companies (Media Houses, Investors or VCs) will not be coincidental. 

Person-1 to Investors: Give me seed funding i want to start a business. Investors gave him money

Company established. Person-1 immediately starts getting huge media attention, starts giving lectures on Entrepreneurship, Business Values, Ethos, Vision, Growth, Chasing your passion etc…

Person-1 to Investors : Give me round-1 funding, i want to expand >>>> Money given

Person-1, wins “entrepreneurship award”, invited by B-Schools to deliver thoughts, newspaper titled him “change maker”, “icon”, “tycoon” blah blah….

Person-1 to Investors : See, people are downloading my app, give me more money; I want to diversify >>>> Money given

Person-1 is now a Business Leader, starts talking about country’s economic policies, REPO Rate, Trade deficit, US Visa rulings, Trump’s Victory, Chinese Economy etc on TV Channels & News Columns

Person-1 to Investors – Give me money, i want to do an acquisition, money given >>>> Acquisition done

Person-1 is now a part of industry lobby groups, government panels

Person-1 to Investors – Give me more money, I want to pay salaries & clear invoices

Investors to Person-1 “Show us Revenue”

Person-1: I am going for my salary cut, working on revamping business model, getting away with non-core businesses, firing employees, reducing agent commissions, moving to a co-working space & asking government support against foreign competitors.

Investors to Person-1: Move to the CHAIRMAN seat, let us appoint a professional COO

Person -1, Sells his entire stake to the investors & moves out. Become a full time Twitter centric “business thought leader”, philanthropist & an angel investor. Newspaper & TV Channels are now looking for new fundraisers for coverage.

Moral of the Story : Entrepreneurship is more than fundraising

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“Today startups are built for investors not for consumers”

Recently I have seen many startup founders either with a seed or first round funding, been glorified by some prominent sections of media as “Top Entrepreneurs”, “Entrepreneurs with Impact” “Inspirational Stories” & similar headlines with “CAPS ON, Bold” fonts. Even some publishers have covered success mantra tips given by these “Top entrepreneurs”. So, was randomly wondering whether entrepreneurship is about generating revenue out of business or investment for the business.

Raising external funds in a competitive startup space is definitely an art. But, when we look into the list of “Startups That Shut Shop in 2016” where startups like “Pepper Tap” & others those who despite making millions of dollars (ofcourse not through sales) rolled down their shutters in just few years of their market debut, my understanding about the concept of Entrepreneurship goes into dilemma.

Entrepreneur India Magazine once compared Pepper Tap with US based hyper local player Instacart & called it as a “unique business model”. TechInAsia magazine has featured Rahul Yadav, the “bad boy” of Indian startup space in the list titled “India’s top 30 startup founders” much before his venture Housing.com made any remarkable market traction (even today Housing is nowhere & his second inning with Intelligent Interfaces also failed badly).The same list has also featured Pranay Chulet, founder of online classified website Quikr in the 5^th position. Need to mention here that Quikr has recorded a revenue of Rs. 95 crores against a loss of Rs. 534 crores in FY 15-16.(Source – Next Big What). In November 2015, Inc42 covered the story of Rashi Choudhary, co-founder of “abruptly closed” online supermarket store Localbanya.com in its article titled “Inspiring Stories of Some Amazing Women Entrepreneurs of the Indian Startup Ecosystem”.

Shutting down of these so called “game changers” startups may be because they were not been able to raise further investment to sustain or some issues with the business model itself. But, the question is why such a hurry to promote them as “game-changers”, “wave riders” etc. Reason may be because the new age entrepreneurs & their business investors relies more on PR activities than creating an impactful enterprise which can really solve consumer problems.

Biggies of Indian startup ecosystem like Snapdeal, Flipkart, Ola all have been making huge losses since inception & are solely surviving on the investors’ money even the latter two called for government protection against their foreign rivals.

My point here is by glorifying such early stage entrepreneurs & portraying them super successful is injustice with the entire ecosystem & with the people following them. Success of entrepreneurs should not judge by the funding received but the way they have sustained a business model.

Image Credit : Google / VCCircle

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The seven seasons of famous American reality television series “Shark Tank” has witnessed business pitches from thousands of entrepreneurs looking to raise fund for their business ventures. Among these, majority are of new age entrepreneurs looking either to scale their business idea / beta product or expansion for an early stage venture. But out of these several pitches only few of them get success in convincing the “Sharks” & secure funding.

If we analyze the successful pitches closely, we can draw some common points among them, as

1. Big Market – Investor’s first point of consideration for a startup funding is its “scope”. For investors, startup should be addressing a common problem impacting a wider audience. This helps them to visualize the size of the market & growth opportunities.

2. Founders Fondness – A passionate founder/s is another trigger point for investors to consider the startup. Founder/s without the knowhow of the industry & business basics has less chance to secure funding. Founder’s background, education & work experience also plays a vital role during business pitches.

3. Show me Numbers – Investors love to hear about the business numbers like Production Cost, Net Profit , Gross Profit, Margins, Revenue estimate for next 12 months etc., hence should be at the fingertips of the founders.

4. Protection for Money – Another important aspect that investor considers while hearing pitches is the protection for their investment. Businesses with proprietary techniques, patents, have significant chances to grab the funding.

5. Value PLUS – Majority of investors like to hear about the pitches those can add value to their existing investment or business portfolio or sometimes based on their liking for a particular industry.

According to Robert Herjavec, Canadian businessman & an active Shark (investor) on the show, “there are also few parameters based on which he personally judges the entrepreneurs”, like

• Professional dressing

• Body Language & zeal
• Insights about own company & clear vision for growth

The above findings are applicable in all the business scenarios be it Shark Tank or other business pitches. Such shows are great opportunity for budding entrepreneurs to get motivated & learn cutting edge skills before approaching the investors.

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What do you think the entrepreneurs had in them? You might have an MBA but do you really wonder so! Read on to find out 7 signs that may help you find out!

Eager and Enthusiastic: You are jumpy about everything! You want to participate in extracurricular activities, college events as you hate to be the part of audience.  This is the entrepreneur streak that will make you will keep trying new things and want to deliver the best. You want to do more and keep learning from it.

You have the vision to change the world by doing something innovative: You don’t feel the desire to be stuck into a fixed routine assignment. This is because you have goals to accomplish something higher and better. After all the MBA is not for the sake of a degree or a double digit salary package, for you.

Learn from failing– You are not disappointed by failure or wrong choices. This is so because you don’t care about the double digit salaries by being an investment banker! You want to take a risk and learn from it.

Autonomous & Self Driven: Do you despise the idea of a boss? Then yes, you want to be your own! You are go – getter & don’t need hand holding to start.

Self-confident and Aware– You are extremely self-confident and do not need assurance about what are you upto. You are determined and confident to put your word before the world, even if you fail. You do not fear criticism and challenges from anyone as it would make your pitch a better one.

Competitiveness: The ones who really have that in them will not be competing in a rat race. And yes you don’t want to compete but rather just simply focus on winning. You are far more ambitious to make your idea a success be it with as many challenges as possible.

In case feeling the heat of any of the below trait, you may be into the path of entrepreneurial commotion

The post 7 Signs to find out a Prospective Entrepreneur in You appeared first on Education & Career Advice.

The startup economy has created a number of new terms for entrepreneurs. This article will help you to understand the language of the new age business environment.

• Seed Funding – It is the initial funding given to any startup to start or accelerate the business operations.
• Angel Investor – Individual who provides a small amount of capital or funding to a startup for a stake / share in the company.
• Venture Capital – Funding by a venture capital firm to an startup
• Venture Capitalist or VC – An individual investor, working for a venture capital firm, that chooses to invest in specific companies
• Incubator – An organization that helps develop startups usually in exchange for equity / stake in the company
• Stake – It is the pie or portion or share of a company
• Liquidation – The process of dissolving a company by selling off all of its assets
• Portfolio Company – A company that a specific Venture Capital firm or a Venture Capitalist (VC) has invested in is considered a “portfolio company” of that firm or VC
• Round – Depending upon the stage or phase of the company, investors fund an startup. Initial funding is called as seed funding followed by Series A, B, and C rounds if necessary. In rare cases rounds can go as far as Series F
• Disruption – It is the terms used when a new technology challenges & replace an old technology.
• Bootstrapped – A company is bootstrapped when it is funded by an entrepreneur’s personal resources or the company’s own revenue i.e. without the use of outside funding or capital.
• Acqui-hired – buy out of a company primarily for the skills and expertise of its staff, rather than for its products or services.
• Hackathon – an event, in which a large number of people meet to engage in collaborative computer programming to develop assigned product.
• Crowdsource – obtain (information or input into a particular task or project) by enlisting the services of a number of people, either paid or unpaid, typically via the Internet.
• Burn Rate – Amount of cash used each month typically for working capital & other expenses.
• Deck: A slide-based presentation that can be transferred digitally. Typically associated with investment pitch presentations.
• Pivot: A course correction for startups based on findings in user testing and analysis.

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Arihant Saxena, MBA 2^nd year student from a famous B-School in Mumbai, has already floated a Private Limited company with the help of his two friends. Currently, Arihant & his team have been working on developing company’s website & other digital assets & the business will be operational immediately after the completion of the MBA course”. Similarly, Shakshi Tewari, final year student of PGDM Tourism course in Pune is all set to join her family business of Tour & Travels with her father & brother.

But, entrepreneurship is not a natural choice for many other students. Family support & financial stability plays an important role. Ashwini Kumar Sharma, a final semester PGDM HR student from a private university in Noida, has recently enrolled for a GD / PI preparation course in a famous coaching institute in the city. According to Ashwini, “he is from a service class family & after spending a big amount for the MBA course, he immediately want a good job hence like to be skill ready before the final placements”. This is a common situation for a number of students across the country.

But for a student open for any of the way, the choice is really difficult. On one hand, a job can provide new learnings with a fixed salary whereas entrepreneurship can offer opportunity to apply the classroom skills in a real business scenario with or without an income.

So, the answer to the question whether entrepreneurship or job, depends upon student’s priority, career goal, family expectation & financial stability and ofcourse the skills.

The post Entrepreneurship or First Job! Where to Go? appeared first on Education & Career Advice.