Prajakt Raut, cofounder of Applyifi and founder of The Hub for Startups says, “If you can stretch with your own funds it’s the best. Only when you need external funds should you assess the need then decide whether you need an angel investor or a VC investor. Bootstrap while validating your idea, seek angel funding which usually ranges from 3-5 crores at growth stage, then go for VC when you need you’re ready to scale fast.”
Rajat Tandon, famed by 10,000 Startups initiative of NASSCOM speaks of the shift in preference for bootstrapping companies even in Silicon Valley. “Some time back, when you went to Silicon Valley, they ask ‘Why are your companies bootstrapping? What’s wrong with them?’ Now even the Valley looks for bootstrapping companies. Bootstrapping is an attitude, it’s a differentiator spark.”
Then the topic turned to
what each of these investors, mentors and accelerators look for when choosing startups.
Gaurav Kachru, founder and managing partner 5ideas Startup Superfuel, picks these points. “Does the area interest us? Does it have stickiness with established customers? It must have some revenue. How much has the founder committed, in terms of money and time. If a founder asks for 2 crores and plans to take 60-80 lakh as salary, it’s a no. A founder should draw a minimal salary until series A or pre series A. We also prefer a multi founder team to a single founder.”
Prajakt Raut considers questions like, “Can this team manage the funds? Are they passionate or opportunist? If they are opportunist they will give up as soon as the business hits a bad patch. Do they have the street smarts? Are they quick learners? Do they get along with each other? Business plans are not set in stone so investors don’t bet on business plans which may change but more on the team.
Anurag Kapoor the executive director of GHV Accelerator says this. “We look for a good team with execution capability in addition to scalability of idea, tech disruption to scale investment, proof of concept with customer base to build on. Also we ask ourselves if the founder/founders are raising money to make money or just for the sake of it.”
Rajat Tandon says, “10,000 Startups gets a 1000+ applications a month. It looks for realistic projections vs. fancy projections. The latter are not considered. Teams directly asking for money and valuation but won’t speak about their startup, business plans, goals etc., are also not considered.”
“Before we put startups across to venture capitalists we evaluate their readiness to receive VC funding. Some questions are what is the founder’s business style? Do they move fast with decisions? Can they handle the pressure of managing other people’s money?”
As an ex entrepreneur Gaurav cautions any entrepreneur trying to raise VC funds to think very carefully about it.
“Partnering with a VC is like a marriage. It’s foolish to think you can do what you wish with the money. There will be interference and questions. If you can’t handle this kind of partnership then money will start meaning less and less to you.”
BW Reporters
Regina is a reporter for BW Businessworld. In her previous assignments, she has worked with Independent television Network as a news anchor and reporter in Sri Lanka
