· Pitfalls in new Ventures
o Objective evaluation-see with rose tinted glasses!
o No real insight-not knowing their target customers well.
o Inadequate understanding of technical requirements-shop floor experience not well.
o Poor financial understanding-cash management/working capital management
o Legal issues ignorance-especially IPR when people go global.
· Why Product failure
o Poor timing-someone opening SMS based venture when market dying due to data growth
o Design-product poor design(Android phones for example-my observation)
o Distribution-especially for
o Unclear business-if your strategy B2C and you target B2B, it’s a mismatch
o One customer dependence-my observation-Infosys/GE episode.
· Financial Failure recipe
o Undercapitalize-have cash for time before you can figure out your first customer
o Debt too early-Inmobile($500K investment, concept of search through SMS mode-changed concept in 6months-but 3rd idea by that time co down to last 20% and no money to execute that idea of smart phone advertising-so the guy used his personal credit card)-success story but risky.
o VC relations-each get 10 bplans/day and limited bandwidth-LP relations, investee companies etc. hence his advice is referrals and networking
· Typical problems
o Cash flow most often/crucial.
o Leverage your own network for sales
o Social Media solution for PR issues?
o His view that never go for half cooked(my view is that most can go like Google) and ensure back end(customer service etc)
o Never hesitate to seek help from others for functions(making financial projections etc). Especially must for quarterly returns under tax laws.
· Making your business plan standout in the clutter
o Define your market
o Demystify your market in non technical market
o Market Size
o IP involved
o Execution Ability/Past record
o BE realistic(example 1Cr-100Cr in2yrs is ambitious)
· Its not banks/VCs who fund your business, it is customers. So never ignore them.
· Opening doors not only for customers, but also vendors/marketing help..hence angel money termed as smart money can help for B2C also.
· Business plans don’t get funded people get funded. Don't ever forget that.
· New trends of ventures-specific verticals like education, optical, health, finance etc, gaming, e-learning, healthcare