While there is a great deal of excitement generated by new consumer products – smart glasses, activity trackers, smart watches, arm bands and companies that make them – jawbone, google, square, leap motion, etc, entrepreneurs and investors still are shy of venturing into the space. There are some common misconceptions but I won’t get into that right now. What I wanted to show is a 30 part series that engineers, product managers, manufacturing, marketing and servicing teams in my company have created to show how consumer products are designed and developed from scratch. Hardware product design is influenced by not just user experience requirements, but also by industrial and mechanical design considerations, electronics design, test requirements for mass production, and manufacturing processes. I have personally learnt a lot in the last few years and I hope you find these short videos useful. They are not thorough tutorials or anything of that sort but they show all aspects of building products from scratch end to end. I also do not want to spam readers of this blog every day, so I will add videos in this post itself. You can also follow us on facebook and twitter or post a question here if you have one.
Author Archive for Kallol
I am happy to announce the first set of startup workshops from August 20th till the 29th in Bangalore. The agenda is here. The objective is to find startups the HeadStart Ventures team can work with from now on. These will also form the pool of companies the fund that we are setting up can potentially invest in. We will also actively promote qualified startups to our industry partners – eight of them will present opportunities, ideas and interest areas on the 20th and 21st.
All startups are welcome to apply but we will select 15-20 startups to attend the camp. Domains our team is strong in are – telecoms/mobility, semiconductors, consumer media, financial services, and healthcare. HeadStart Ventures is not a pure play mentoring organisation and neither it is a venture capital fund. It is a small group of people who will work hands on with startups and will seed invest in selected qualified startups. So, whoever submits proposals to work with us should be open to working with a bigger team of experienced people, be willing to start out small in terms of money and expectations but should not be limited by vision and ambition.
If you have any questions, do send an email to email@example.com
I am an entrepreneur working on my third product venture. I also helped bootstrap one of India’s largest entrepreneurial platforms. In the past 3+ years of interacting with hundreds of startups in India, I found that the three biggest gaps in the ecosystem are – 1. seed capital (anything between Rs 20 lakhs to Rs 2 crores), 2. well balanced teams (saw either too focus on tech or too much in-the-air business concept), 3. early customers (products are never really managed with customers in mind !).
So, as an entrepreneur again, I am in the process of bootstrapping India’s first angel fund. At HeadStart Ventures (not related to HeadStart Network Foundation btw), we are getting together a great team of people from a variety of operational backgrounds and domains to help build startups. We are also raising a seed fund where contributors are high networth individuals and the fund will target startups that could be pre-revenue and require seed capital, a great team to work with and access to early customers (often, industry partners HeadStart Ventures partners with).
It has been a completely new experience for me. For the first time, I am pitching to high net worth individuals from a wide range of business backgrounds. Pitching to corporates to work out processes to collaborate with startups. Hearing from VCs about what they think about small funds. Some of my findings are surprising, and I am not so sure about what to think of some others. So, I thought I will put them out here and listen to what you have to say.
1. finding Angels : I started out a list of around 25 people I want to go out to from across India. After a month and half, I and my partners have met 20 of them from Bangalore alone. I have not exhausted my list of 25 yet (wrote to only eight) and around 10 well established individuals wrote to me by themselves when they heard of our efforts. I am wondering – what was stopping anyone from organising this before ?
2. levels of Activity : Reason I felt that organising angels and pooling funds and managing them was important is because I felt that not all individuals in a network may have the time or confidence of managing investments. But everyone (except 1) we have met up want to be ‘active’, perhaps not as investment managers but active in the process of building startups. This must be good for startups ? for us as 3 people managing expectations ?
3. network or Organisation : because, money alone is not sufficient to make a startup succeed and mentoring and customers and lot many things are involved, I thought organising angels and pooling money into a ‘fund’ is better. That way, we can act when we want to and its not arbitrary and very individual angel dependent. But then, an angel told me the other day ‘an organized angel is an oxymoron, angels are supposed to be free wheeling, you know’ ! ‘free wheeling’, what does that mean ?
4. how much is Seed ? : we felt Rs 20 lakhs – Rs 2 crores. a large sum for family and friends, small for VC, yet sufficient run way to launch product and get first customers. Agree ?
5. annuity or capital Exit ? : I personally have always scoffed at investments that just focus on the India cost advantage and local factors. Bollywood movie review site, Process outsourced to Indian startup to count beans, etc. I do not think that is the way India will ever produce a Google or Microsoft. But with seed capital in hand, I know I can not wait out on a venture to make big forever. Should we think more about building startups to sell and exit ?
6.Â users and Buyers : thanks to 10 years of struggling, selling and trying to sell products, when I see someone, all I can think of is ‘what do I sell him ?’. We are therefore putting a lot of focus on getting a network of corporates to partner us to identify ‘problem spaces to work on’, validate ideas and work in progress, and build traction early on in the product lifecycle. And then I think of Twitter and Zynga. Can a true user driven product come out of India, I wonder.
7. startup Quality and Focus : hope we will not get massively disappointed on this one. I have seen 45 proposals come through in the last 3 weeks. See 30% non tech as well. But I guess, seed stage investing is a lot less to do with what is there and a lot more to do with it ‘what can we do and how can we help with building it’. I wonder if most entrepreneurs are open to working together ?
8. expendable Idiots, us ? : when a startup we help seed and build goes for a bigger investment from a VC, we will be the first ones to be shown the door – whew ! at least, that is what one VC told us ‘we will take 70% of the company, give 30% to the founder because he has the ‘IP’ and throw you guys out’, ‘you are expendable, you know’, ‘you are part of the food chain (said menacingly)’- I am already shaken
9. is it Competition ? : ‘but you know, you are competition’, one VC told me. Hey, are these guys feeling uneasy or what ? (well, to be fair, many VCs have encouraged us too, its kind of 50/50 right now).
10. the easy VC life ? : I heard of a new term in my new avatar called ’2/20′, believe me, I got confused when I first heard it. 2 is the 2% asset management fee, and 20 is the carry. 2% of Rs 25 crores (our target size) is Rs 50 lakhs a year (to cover expenses and all). But then,Â 2% of the $100 million VC in India is $2 million a year – whoa ! what are all these guys spending the money on themselves for ? I am wondering, if you get paid so well to be a VC, why bother about finding startups to risk your life ?
We are still finding out new stuff every week, so will write more. But it will be great to hear from you folks about what you think of these.
My last post here on VentureWoods dwelt on the problems that early stage companies face in India and their requirements. One comment made on the post reminded me that all we are doing is analysis and seldom anything else (well, to be fair, HeadStart does quite a bit, it hosted 60 Startup Saturdays since last year and over 10k people have engaged in a variety of ways).
Well, here is something we also have done -I worked out a business incubator set up at the Centre for Electronics Development and Technology (CEDT) at the Indian Institute of Science (IISc) Bangalore in partnership with the HeadStart Foundation.
The focus is very much on application areasÂ where CEDT has expertise, applications where engineering and research requires investments in labs (that are provided free by CEDT) and expert project staff, and where we could engage prospective customers early on during incubation. The application areas are
1. Personal area networks: Multimedia delivery, Home security, Personal guidance systems, Authentication and Access control, Healthcare, Information synchronization
2. Automotive systems: Guidance and driving assistance, Entertainment, Traffic control and C2C (car to car) systems
3. Low cost embedded computing: Communications, Access control, Transactional systems (eg, ATMs)
4. Environmental monitoring: Energy management, Safety and Security, HVAC systems, Forestry and Farm management, Disaster management systems
5. Clean energy systems: Phantom power reduction, Distributed clean energy generation, Energy management and reduction
The incubator will admit its first batch of companies from June 2009 and it is hosted online on HeadStart’s collaboration portal here. Do pass on this information to people you know who can benefit from this initiative.
Prof Jamadagni, Chairman of CEDT, Jagannath Rao, advisor to CEDT and formerly Director of Motorola India’s mobile handsets business will help manage the incubator (I will be there as well) assisted by selected people from industry.
You can expect more such initiatives this year around establishing business incubators, industry linkages and investment support.
In the last few months, I have had the chance to sit down with a few fellow entrepreneurs and discuss business plans, thanks to me wearing my HeadStart foundation hat. I noticed a few things that were common – entrepreneurs knew their product very well but not really their target customers, most of them had not spoken to more than a handful of prospects and when it came to fund raising, everyone first indicated they need a couple of million dollars. When we jointly ripped the business plans and re-worked them through, the fund requirement came to a few hundred thousand dollars (most of these companies were pre-revenue or have revenues of upto $300-400k per year, thanks to some related project work) except a couple of them.
Intrigued enough, I ran a survey trying to understand how much startups think they need to get to the next stage (pre-revenue->revenues->profits) and the survey results are very revealing (see here).
I asked a lot of entrepreneurs why they chose a ‘couple of million dollars’ as the figure to ask for and this is what some had to say
1. VCs in India expect a particular % share of a company, no matter what they invest, so better to raise more money than less. Funnily enough, some of them said a couple of VCs (do not want to take names publicly) indicated they will need 25-30% no matter what investment within the $1-2 million range.
2. Some entrepreneurs do not know what to ask for. In the absence of any sales plan and rickety financial models, they go by the million dollars story just because thats what everyone is raising.
I also looked at the E&Y VC Report of 2007 and 2008 and found that Indian startups raise, on an average, similar amounts of money (think it is around $5 million per startup on an avg) compared to Europe and the US; this when, we think India is relatively inexpensive to build products. Is it because VCs in India invest much later in the startup cycle or is that fresh US returned/US mandated VCs have not somehow grasped the Indian ‘value for money’ or is it something else ? Maybe, all of you can throw some light on it ??
Whatever it is, there is a huge hole in the pre-revenue/early stage ‘small deal’ (Rs 1-2 crore per startup) demand and supply for funding. And I hope this gap is filled very soon so that real innovation is not stifled.
Note: the survey results are taken from the Mint article where I put my thoughts on these numbers. 105 startups responded to the survey.
For the past 3-4 months, I and a couple of my colleagues at the HeadStart Foundation have been involved in creating a framework for formal collaboration between corporates and startups for jointly identifying, pursuing and executing business. The HeadStart Foundation is launching that initiative on the 9th at the HeadStart and Compute 2009 event in Bangalore and we have got 5 companies confirming as launch partners (names to disclose on 9th) and 20 more (evenly split between companies in India and abroad) in discussions.
This collaboration initiative takes the form of both online and offline interaction. The online bit is a simple process – corporates identify areas of interest and issue RFIs, startups and SMEs submit proposals that a team from HeadStart initially filter and then route to designated individuals in partner companies. There is also a process for regular offline interaction and doing reviews of the programme from time to time.
Since this is a new initiative, your views would be appreciated
1. Do you think that such initiatives will help innovation and business ?
2. What do you think are important things to make such an initiative a success ?
3. Where would VCs fit in to all this ? How should we engage investors ?
See you on 9th and 10th for those of you who can make it to Bangalore. Even otherwise, the Startup Saturdays are always there. And the online collaboration platform is an open one, so it will be available from the 9th for startups to join.
There are four special Startup Saturdays across the country, ie, Delhi, Mumbai, Bangalore and Hyderabad, this coming weekend 13th December. Startup Saturdays are monthly meetups organised by the HeadStart Foundation that promote interaction among entrepreneurs, advisors, investors, corporate adopters and professionals. So far, in 2008, more than 30 meet ups have taken place in India.
The agenda for this weekend across the four cities are
1. Bangalore, venue : Honeywell Technologies, Bannerghatta Road, opposite IIM Bangalore; 10 am – 1 pm, register here
- Announcement by Honeywell on the startup collaboration initiative in partnership with the HeadStart Foundation, speaker is Harsha Angeri, Head, Strategy & Initiatives, HTSL
- Talk on ‘SaaS to Cloud computing’ by Vikram Murdeshwar, Akamai
- Product demo by LifeMojo (www.lifemojo.com)
2. Mumbai, venue : Dome 2, SP Jain Institute of Management, Andheri (West); 3 pm – 6 pm, register here
- Product demo of Librarywala (www.librarywala.com) by Hiten Turakhia
- Product demo of Adoroi (www.adoroi.com) by Mitesh Thakkar
- Panel discussion on ‘The effect of the economic slowdown on startups’ involving Mahesh Murthy, SeedFund and Hemir Doshi, IDG Ventures, Gopal Krishnan, ex-CEO of Mobile2Win, and Rohit Nalwade, ex-CEO of ConsumerVision
3. Delhi, venue : American Center, 24 KG Marg, Near Connaught place; 2 pm – 5 pm, register here
- Product demo by Eko (www.eko.co.in), Anupam Varghese, VP Technology
- Talk on ‘Why Startups should not have a HR department’ by Narendra Nag
- Panel discussion moderated by Nikhil Pahwa of Medianama on ‘The future of consumer services business models in India’ involving Sanjay Sindhwani, VP New Initiatives at IndiaTimes and Harish Bahl, Founder, Smile Technology Interactive Group (promoters of Tyroo and Quasar Media)
NOTE : Registration for American Center closes on 11th December 2008, so hurry up !!
4. Hyderabad, venue : Taj Deccan; 12 noon – 7 pm, register here
- Product demo and Talk
- VC meet up : Ranjith Menon, IDG Ventures
- followed by HYSEA Technology Day : featuring talks on Azure (Microsoft), OpenSocial (Google), GWT (Google), Research and IP creation (IDG Ventures, IIIT-Hyderabad)
These Startup Saturdays are a run up to the HeadStart and Compute 2009 (www.headstart.in) annual conference co-hosted by the HeadStart Foundation and ACM Bangalore on the 9th and 10th January 2009 at the NIMHANS Convention Center, Bangalore.