This summer holiday, woo investors for your start-up idea
Having a business idea isn’t enough. This summer, create a prototype, collect feedback and network with potential investors to build on itUpdated: Apr 02, 2016 14:55 IST
Along with his final-year mechanical engineering exams, 21-year-old Shubham Bhartiya is working on a business plan: a self-monitoring plant-watering system, which requires no human intervention. With a team of three classmates, he has also developed an app, through which the user will get notified when water levels recede and a capillary tube needs a refill.
Currently at the prototyping stage, the biggest challenge the group faces is to find the right mentors. “The business is in the agrarian space, and it is becoming difficult for us to connect with a mentor who understands the technical aspects of the product, as well as the consumer’s mindset,” says Bhartiya. The group is enlisted with IIT-Bombay’s entrepreneurship cell (E-cell), which helps them network with industry experts and convert the idea into a commercial product.
Like Bhartiya, several students are ditching the conventional placement process and choosing to work on start-up ideas. With the summer holidays coming up, now is a good time to chase your passion, and turn it into a possible career, say experts.
In 2011, when Eshwar Vikas and Sudeep Sabat, third-year engineering students of SRM University in Chennai, were looking for investors for their start-up idea — an automatic dosa machine — they were shrugged off as college students. The next year, in 2012, they got incubated by the Indian Angel Network (IAN), while still in college.
Five years in, with investment from the IAN, Vikas and Sabat have shipped an industrial version of 250 DosaMatic machines to 16 countries, and after constant revision, have a working household model too. “We worked and re-worked on our model and the final product is nothing close to the first prototype,” says Vikas. “Once you have an idea, stick to it. It is difficult but totally worth all the hard work and time.”
Experts say that having an idea just isn’t enough. “Students often get too excited about their idea, and don’t think of whether it actually solves a problem,” says Amit Karna, chairperson of IIM-Ahmedabad’s Centre for Innovation, Incubation and Entrepreneurship (CIIE), which helps entrepreneurs turn ideas into viable businesses by incubating, accelerating, mentoring and funding innovative start-ups.
In such cases, when students approach an investor, they aren’t ready for commercial exposure. “We look for propositions that are unique, simple and are needed in the market,” says Padmaja Ruparel, president of IAN, which is a network of angel investors that invest in innovative start-ups. “Above all, we see if a student has already made a prototype, to give us an idea of how serious and passionate they are.”
“The problem is that students come with no education or understanding of the entrepreneurship space,” says Vineet Rai, founder of Avishkaar – Intellecap, a venture capital fund. “Thus, it is important to get the right mentor from your specific area of interest and understand where you want to reach with the idea.”
Step 1: Ideation
Most industry experts and investors say that students are often confused at the ideation stages and do not know how to narrow down to one viable idea. For instance, Abhiram Thejus, 25, a recent graduate of IIM-Ahmedabad, was working on an apparel delivery service until October last year, when he realised that there is no market for it. “This was a great learning experience. I understood how important market research and consumer feedback is at the ideation stage,” says Thejus. He is now doing a summer internship at CIIE, and working with three other teammates to build a financial product that could reduce the monetary cost of moving into a rented property. He has also opted out of campus placements to concentrate on his venture.
“Don’t sit on a computer and search for an idea. Go out, talk to people, collect as much knowledge and information as you can from experienced people, and build a credible network if you wish to take your idea forward,” says Karna of CIIE.
Also, experts say that students often come with ideas that are disconnected from their field of education. “Even if it is from their field, they often have no concept of the market, and do not know how to take it forward,” says Rai of Avishkaar. “They need to understand that we look for the lucrativeness of an idea based on what have you done with it already.”
Step 2: Market research
Once you have an idea, you need to validate it. For this, the foremost requirement is market research and consumer feedback.
“It is important to test your prototype among people who are your potential customers,” says Ajay Ramasubramaniam, director, Zone Startups India, an international technology accelerator. It is an Indo-Canadian joint venture of Ryerson Univeristy Canada and Bombay Stock Exchange Institute. “After you have approached at least 100-500 consumers is when you will have a vague idea of the demand of your product.”
Experts say that a prototype needs to be validated by several sections of the fraternity too. “You need to talk to clients, suppliers, even competitors to know if it is a commercially viable option. Also, meet alumni who have gone through the same stages to understand the challenges of early-stage start-ups,” says Karna.
Experts say that students approach investors with a lot of enthusiasm but often without having actually worked on their startup. “They need to realise that the story of idea-stage ventures getting backed is an exception and not a norm. They need to have a very strong focus on execution, and should not only concentrate on getting investors,” says Abhishek Agarwal, co-founder & CEO of Bold Kiln, a start-up solutions firm.
Step 3: Get connected
While doing your market research, make sure to connect with the right people in the industry, to get a mentor, and eventually, an investor. And how should you do that?
Doing summer internships is a good way to start, say experts. “Holidays are the best time to intern at other start-ups, engage with start-up support organisations such as The Indus Entrepreneurs (TiE) and National Entrepreneurship Network (NEN). You should also visit shared workspaces — this is where you will get to meet people who share your interests, industry experts and potential investors too,” says Ruparel of IAN.
Successful student entrepreneurs say that B-school competitions are a good way to gain exposure. Priyanka Amar Shah, 29, co-founder of iKheti, an urban farming enterprise, bagged her first investor through a pitch at a business reality show, while she was pursuing her MBA from WeSchool in Matunga. “I immediately got noticed and got to present a workable model of self-watering herb system to the former President of India, Pratibha Patil,” says Shah. “Several colleges promote entrepreneurship and have incubation cells. Especially at the screening stage of your idea, college faculty can be big help.”
It is also important to have a mentor who understands the field. “A mentor should be an entrepreneur and available to you through the entire process of ideation until the launch of your product,” says Vikas. “You could offer the mentor a minority stake in the company.”
Do it right
Follow these tips to attract investors for your start-up
*Get your idea validated by industry experts and potential consumers
*Network with potential suppliers, consumers and investors at all places possible. Participate in B-school competitions, attend conferences and visit shared workspaces
*Choose a mentor for yourself. Make sure they are entrepreneurs and from the same field as yours
*Set milestones and objectives for yourself. Work under a strict calendar
*Build a prototype, work and re-work it and collect consumer feedback
*Don’t start with thinking about revenue and investors. Prepare and work hard to validate your product
*Show your strengths and hide your weaknesses when approaching an investor