How to raise funds for a Start-up? (A Workshop)

Fact. Bangalore is putting India on the map as a global start-up destination. Fact. Bangalore ranks among the top 20 cities in the Global Startup Ecosystem Ranking 2017. Fact. India continues to harbour the third largest start-up base in the world and is marginally behind second ranked UK, according to Nasscom. Fact.

The aforementioned Nasscom-Zinnov startup report titled "Indian Startup Ecosystem Maturing – 2016” also predicts that the Indian startup ecosystem will grow by 220% to reach more than 10,500 start-ups by 2020. Esoteric words such as Healthtech, Fintech, and Edutech are now entering popular vernacular, with total funding to 650 start-ups reaching approximately $4 billion.

What are some of the major threats that the budding Indian start-up scene faces? Where do the opportunities lie? And what about the nitty gritties, such as obtaining funding, managing Intellectual Property (IP) regulations? Having an idea is not the ultimate way to get rich and successful, but the first step towards it. On the way, budding entrepreneurs will need to engage an army of experts in different fields, people who can guide them through the various processes and guide them well. TechSci provides a background to the start-up scene in India and what TechSci can do to help entrepreneurs.

Ease of Doing Business

Face it. India hasn’t been doing well in the Global Ease of Doing Business rankings. Since the 2014, when the country rose by 5 places, vertical movement on the same has been lacking. A variety of factors are at play here, not just the rate of reforms. While India is slowly reforming the economy, other countries are as well, and so stagnation in global ranking must be seen from that prism.

However, the relativistic nature of the ranking still shows that while business climate in India is improving, it isn’t improving fast enough. There are a lot of hoops through jump through, a lot of rules and regulations to adhere to. Budding entrepreneurs need guidance to see an idea through. They need experts to explain the various legal, social, financial etc. aspects doing business in India to run a full-fledged start-up.

In lieu of the problems being faced by gifted young innovators, TechSci has decided to hold an event “Valuation & Fundraising of Tech Start-ups” to try and address some of the major problems being faced by people in the industry today. As a market research and consulting firm, TechSci realized that a lot of the problems being faced by our clients were being faced by the start-up industry as well, except that they were amplified.

This event is a way of getting top talent on stage to answer the innumerable question that may arise in the minds of people from the industry. The idea is to get recognized thought leaders and have them walk the inexperienced through the various processes that go into delivering an idea from its conception to culmination.

The Indian government has vowed that it will make India climb 40 places in the next year and 20 places the year after in the Global Ease of Doing Business rankings. While it remains to be seen whether or not these endeavours are successful or not, fact is that regulations must never be an impediment to success. TechSci tries to ensure that this mantra is actually put to work.

FDI and Start-Ups

India has performed phenomenally in terms of FDI over the past few years. Foreign direct investment inflows hit an all-time high of $60.1 billion in 2016-2017, up from $55.6 billion in FY15, which was again a record as far as FDI inflows are considered.

Recent easing of FDI norms in a multitude of sectors, from 26% to 49% in many cases and even 100% in retail trading of food products etc. has massively helped attract the attention of investors. By solidly positioning itself as a leader in terms of FDI, India is signalling itself ready as the new engine of global economic growth.

It is an interesting insight; to gaze a little bit into the past, China too, before it hit its double-digit GDP growth spurt, was receiving around $60 billion worth of FDI, from 2003 onwards. From $57.9 billion in 2003 where it clocked 10% GDP growth rate, China’s consecutive double digit run ended at 14.2% GDP growth with over $150 billion in FDI in 2007.

This becomes important to point out because if India’s FDI inflows scale as China’s did, India too could see double digit growth. And it would be Indian start-ups driving a bulk of this growth. Sobering thoughts to consider.

However, the raw numbers hide the real caveats. Just FDI inflow isn’t enough to ensure that some of the funding trickles down to the lowest common denominator. A lot of Indian FDI for example, goes to brownfield ventures rather than to greenfield ventures.

Brownfield refers to foreign companies investing to take over existing capital infrastructure through merger and acquisitions and reshaping it to suit their needs. Obviously, most start-ups are interested in greenfield investments, which refers to production of new capacities, rather than just taking over and retooling existing capacities.

Moreover, the fight to the funding is still quite as ferocious today as it was when funding was scarce. A bulk of the investments made in start-ups go not to the ones with fresh new ideas, but start-up unicorns that everybody wants a piece of. Yes, the funding is plenty, but young entrepreneurs need to play hard, and smart.

TechSci has provided counselling and worked in a consultative capacity with some of the biggest global brands in existence. We understand the valuation and funding problems from both sides, the investors and the geeks. And we understand the importance of having an expert watching our backs. Believe us, we are such an expert.

Valuation and fundraising may just represent one of the easiest and trickiest aspects of taking a start-up to the next level. And we are here to help. And with us is a phenomenal supporting cast of people who deal with these issues on a day-to-day basis. Catch us at the “Valuation & Fundraising of Tech Start-ups” event, and get a comprehensive inside view on the dos and don’ts that all entrepreneurs must follow to separate themselves from the chaff.

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