The Big Daddy: Funding

Now, this is one thing that every entrepreneur talks about. Obviously, it is the most crucial of things. Who does not try reaching out to Angels and VCs?

But, just like 80% of Engineers passing-out of college each year are not job worthy, the reality is that 95% of entrepreneurs are not fund worthy.

And the good news is that, it is 100% in the entrepreneur's hands to identify that s/he is in the 'not fund worthy' bracket and work towards over coming it. You would be surprised at how easy this is, once you have gauged yourself and realized where you stand!

So, how do we know if we have scaled the wall and entered the worthy 5%? Where do we stand now and how do we improve? Is there a framework to follow? Can there be one at all?

Phobia for MBA jargons

I used to have (and still have to some extent) a phobia for MBA jargonic terms.
Of course who can make out anything of "Paradigm shift in the market cap as per the prototype studies shown by the co-branded channels is going to drive incremental time-phased growth in the emerging alignment of resources." 
(More of such BS can be found at Gobbledygook generator)

Driven by the instincts, accompanied by the jargon-phobia and assumptions on how people and businesses behave, I started the business while ignoring the usual adages of doing market research, validating ideas, having some business plan etc.

It appeared that everything should be driven by common sense*. Just like you would expect volume to go high when you turn the knob, one would expect to make business on doing good work. It seemed that MBA jargons would only lead to analysis-paralysis and prevent us from taking the plunge.

That was not best of the decisions I made.

Having been there and done that, I now understand how those jargons and doctrines have been arrived at and why they are important.

There are guidelines like Don't think too much. Just do it. Those are in general suitable for people who tend to over analyse or are too cautious to take plunge. But not for people who are ready to take plunge into anything if their instincts tell them to do so.

I think a new entrepreneur should definitely look at following in the beginning:

• Do the market research and competition analysis. See what are the unmet needs and how strong are the needs.
• Don't just check if people would like the service/product you are offering. Also check whether they would be ready to pay for that, and if yes, how much. 
• Do think of how and how much money can be created this way. (Business plan) 
• Do talk to lot of people of the industry (if existing) or the relevant industries with open mind. Just let them speak about their experiences and learnings. Best if they are entrepreneurs too.
• Do listen to all these people. But then do what your instincts and mind tell you after ingesting what they shared.
• Try quick prototyping and iterative validations with your potential clients/users and focus groups.
• Do read up a lot on stories of other businesses and do not shy away from business jargons (Of course the trick lies in finding the right balance)

Have fun.

Best.

*More on how can possibly common sense fail, later

An Ideal Market Profile to Start Up in

Every start-up in gist, is an idea extrapolated into a product/service, eventually building a brand/property for the company which can generate sustainable revenues for the company.

This is a very standard and cliched line. Make sure you read behind and beyond the words and not just between them. I learnt 4 key questions to answer there

• Is the idea solving a critical problem or wish of a large enough market?
• How educated is the prospective customer group about the feasibility of your product/service and does it help them overcome the inertia?
• Is the brand or the property that you're building not-so-easily-perishable due to factors external to yourself?
• How big is the revenue pie that you're biting into and how big is your mouth?

 I didn't have answers to them when I was struggling with a small start-up and that because, I hadn't even questioned myself on these lines back then. Now since I know the questions let me try and answer them.

Answers to them lie in selecting <insert the blog post tile here>

• Chose a market which you are a part of or are striving to be part of, so that you know or even better if you have experienced the pain points. For example, a geek is usually a better technology entrepreneur than the CEO of a retail company. Similarly an aspiring author is more suitable to start a publishing services company than a technology enthusiast.
• If you think your child's education is costly, educating a market is going to cost a start-up its fortune. Make sure your prospective consumers know what you want to sell to them. Let them tell you their problems and what they think will solve them. And, Tada! you should have it delivered to them. Period.
• All entrepreneurs are intrinsically control freaks, I consider it good. Along the same lines, make sure your business model is as fool proof to as many external factors. No point bothering about everything in the world out there, but some of the things you should insure against in your business model are, dependency on other businesses, offshoring or outsourcing, expansion plans and more importantly your people resources. Also make sure that the competitive nature of your target market doesn't restrict your business. For example, if you are a vendor to amazon cloud based products then make sure, you cater to rackspace products as well as private cloud infrastructure.
• In my opinion, an ideal market profile is something of current sizing of 25X if its full potential is 100X. If you can plug in at a 25X sized market, by the time it grows to even 50X, your aspirational market share should be atleast 20%. Although this one factor is also about the persoanl comfort zone of an entrepreneur, whether he wants big piece of a small pie or a small piece of a big pie.

Disclaimer:

PV = nRT

 Being a Chemical Engineer by education, I would compare this juggernaut of Ideal Market Profile to something like the Ideal Gas Equation. Although there is nothing called an ideal gas, we all build out models and solutions trying to come tantalizingly close to it. Just like in the equation, for as many variables, there always is that eternal constant R, that in a Start-Up is you, the startupper.