One interesting discussion I had at the Young India Fellowship was with Prof. Mekhala Krishnamurthy, an anthropologist affiliated with UPenn’s Centre for the Advanced Study of India.

I was discussing various topics, from which I would select one that would become the basis for my ethnography research proposal (I finally went with understanding the Indian early stage entrepreneur’s mindset).

The discussion turned towards women in corporations and what they brought to the table apart from raw intelligence. I mentioned how I would assume that having a woman in senior management, and more specifically, the board of an organization brought in more empathy and receptivity towards looking at the big picture, drive values and ethics and ultimately bring in more level headed decisions instead of rash ones (Garage Venture’s Guy Kawasaki refers to Man’s Killer Gene in the business context here). The rash decisions might make sense in the short term, but might be hazardous in the long term.

I expected her approval at my assertion. However, she said that ostensibly that did seem like a likely thing, however, based on the research (of corporations) she was exposed to, it wasn’t necessarily the case. I was perplexed and I prodded her further on this.

She was trying to make the point that while we’d all like to believe in the “one person can make all the difference” story, when it comes to minorities, in reality, evidence doesn’t seem to support that. So in case there is just one woman on the board, or one woman in the senior management, the chances of her doing all that I elaborated upon earlier, might not happen. She might just go along with the rest of the group and come to believe what they believe in. Or she might resist, continue to propagate what they believe in, and eventually might get sidelined (Remember Carly Fiorina?). I’d think that the real change comes when you have more than one person and they find that resonance. Again it’s not necessary, but just makes it more probable.

This is a crucial (and morbid) point which I think has merit and applies to a larger context of working in teams.

I have often seen how people with a particular ideology or value system might trade that for the sense of being agreeable with the larger group in case they don’t get any support. Being the sole devil’s advocate can be a bitch (also because their loyalty can be questioned at any time). It’s just so much easier (at first at least) to just agree with the group, also perhaps because in case you have no one to talk to about your opinions (and why that is in the best interest of the organization), you might just end up believing in what the group as a whole feels. Or just dissociating from the group and risking getting marginalized.

Perhaps when organizations are constituting their board, and their senior management, they do need to keep this aspect in mind. That certain decisions while, are meant to promote a certain quality, they should be executed in a way which makes the promotion of those qualities more enabling.

Because democracy, as we find out time and time again, does have a brutal angle to it too.

End note: Facebook has 2 women on their board.

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What a jam packed three days it was at Sankalp!

Some thoughts from the event:

1)      The Aavishkaar peer learning session took place pre-Sankalp,  bringing together all our portfolio companies to learn from each other. While the main agenda was on fundraising for subsequent rounds, there were also sessions on company culture, values, transitions in team (Promoter vs Management). Our portfolio companies have over the years have raised over 100+ million USD in subsequent rounds post our investment and this was a way for young companies who are raising their new rounds to pose questions to those have done it before. There was gyaan on dilution from an entrepreneurs perspective, handling multiple investors (Vasu from Equitas has 10!), the importance of cash in the bank and the larger macro economic landscape. In one way, it was apt to let the folks from microfinance sector field the questions on dilution given how quickly they (or any other lending business) gets diluted. The Founder’s Dilemma by Noam Wasserman is a useful post that also speaks about this phenomenon.

2)      One of the tweets that I noticed during the event lamented at how Sankalp was filled with suited folks, instead of the jholawallas.

Does that mean that maybe there were more investors and enablers than entrepreneurs at the event? My thoughts are that it was somewhere in between. There surely were many enterprises, however, at the same time, these were enterprises that many of us at Aavishkaar had met (and were engaging) prior to the event. I wonder if this means some sort of a “coming of age” of this sector. Or perhaps it could mean that artificial barriers like the cost to attend the event (16000 INR) prevented some of the more nascent start-ups to come. Could be. However, what was more important was to listen to some of the companies that we had spoken to a while back, and learn some of the challenges and accomplishments since then. I try to store these typically as case studies in my head.

3)      There was a lot of discussion on what the Companies Bill 2012 (page 80 onwards) could mean for enterprises. I have increasingly started noticing some start-ups mentioning the bill as a key driver for their industries. To add to that, folks sought clarity on what exactly can this 2% be used for and what are the implications of that. There are numerous activities mentioned towards which these proceeds need to be directed, including promotion of education, eradicating extreme poverty, promoting social businesses etc. What about the companies that are already working in this sector? To add to that, it will be interesting to see the response of the government on what constitutes a “social business project”. Would impact investing come under this definition?

4)      One of the interesting things that I noticed was the rise in early stage and seed funding agencies that were present. Both on the equity front as well as debt. More and more accelerators, incubators, co-sharing places are springing up in various parts of the country. While everyone were making merry, one investor did mention to me how they were saving capital for a possible Series A crunch they were expecting (with the elections looming). To add to this, I met enterprises, that had reduced their ask from the last time we had met.

5)      To cap it off, it was wonderful meeting folks who I had over the years had numerous online interaction, but never had the chance to meet in person.

P.s: It was good to see a strong BITSian representation. I met at least half a dozen folks from BITS (all of course more experienced than me).

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Was reading a very interesting interview of Ethan Zuckerman, posted at the Carnegie Council site:

If we’re just dealing with each other by throwing stuff at each other, it’s something like a cargo cult. We have the goods, but we don’t have the people. We don’t have the ideas. We don’t have the logic. We don’t have the solutions.

A comment by Ethan in context of globalization. He says that we are globalized in the sense that we can have products from across the world at our disposal through supply chains, but the current media doesn’t allow us to get a nuanced view of the global world we live in and hence in our current systems, unless we go to a place and listen and observe how life works there, we can’t imagine to improve the lives of people in a particular place. I highly recommend you read the interview.

Ethan and Paul Polak, who I met last week, both have been advocating the important virtue of listening before you decide to act. It has to be in that order. One is doing his bit by heading initiatives at the MIT Media Lab, providing thought leadership on cyber society, globalization and media. The other has set up an organization that makes low cost innovations, which has directly resulted in the rise in incomes of close to 10 million people in the last 25 years.

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A few days back I met a young entrepreneur running a very exciting company. Personally, I thought it was an emerging space; not yet very hot, but getting there. As our discussion progressed, we discussed his thought process, how would he go forward, the team he required to execute his expansion plans. By the end of the discussion I was thinking that the niche he was targeting was something which had scope for more players (there were a couple early folks already in this space) and if executed with the right partners in place, could become big. Lots of if’s, but I found the space and the work the company did exciting.  But would it mean that it would be the right investment for the firm I work with, to make?

It’d be easy to think that the typical investor entrepreneur interaction can go something like this famous scene from Jerry Maguire:

The folks at Garage get it right when they say:

What is the investor most interested in? Contrary to popular belief, the venture capitalist sitting at the other end of the table glaring inscrutably at the presenting entrepreneur is not thinking, “Is this company going to make a lot of money?” That is the simple question that most entrepreneurs think they are answering, but they are missing the crux of the venture capital process. What the investor is really thinking is, “Is this company the best next investment for me and my fund?” That is a much more complex question, but that is what the entrepreneur has to answer.

And that’s complex.  Why?

Here could be some of the reasons:

  • Because the investor has to think of the timing.
  • Because the investor has to think of potential exit routes.
  • Because the investor has to also think of sector wise allocation of capital.

Let me elaborate on each of them.

Timing: Every fund has a life. Every fund (I hope so) also has an investment strategy. Life is normally around 8-10 years. The strategy can vary. For early stage funds, based on the type of fund, one can decide their investment strategy, how much to allocate to follow on rounds etc. So if you come to an early stage fund when it is at the end of its investment period, their reaction might be very different from had you come to them a couple of years earlier when they had more capital to deploy.

Exits: That’s the only way the funds make money. Not every company is going to have an IPO. Acquisitions and secondary sales are possibly the most common exit routes for early stage investors. Questions arise as to, who will invest in the next round? And why? And at what valuation? Some startups exactly know the answer to this (I’d reckon Bazee.com knew from the start that if executed, they’d be an attractive acquisition for eBay), others have to figure it out. The investor however, would always like to know how likely an exit is and what are the possible routes. This question becomes more pertinent, when the amount you’re looking for is relatively significant, say in crores.

Sector focus and capital allocation: 99% of all VC firms clearly list out the sectors they are interested in. Some mention this in the affirmative, “We like to invest in X, Y, Z”, some mention it in negative, “We will not invest in this”. Inside the VC firm, the fund manager is thinking of how to allocate capital which somehow goes in tune with the investment thesis. LPs (the funds of funds) don’t take kindly to deviations from the plan. The entrepreneur doesn’t know it, but I think being aware of some of the challenges inside the VC firm would make them more aware of the larger system they are choosing to be a part of.  Have a look at Info Edge’s portfolio of strategic investments. Save one or two, all the companies have something in common. Yes they are all digital, but they are all bound by a common thread of listings or directories. At Aavishkaar, we’re looking at companies which will strengthen  rural, semi urban and underserved India’s social infrastructure. True, there exist sector agnostic funds, but even within those funds, there’s a rationale as to how much of the capital they’re willing to allocate to a particular sector and a sub sector.

We often hear comments to the tune of  ”Only 5 out of 1000 startups get funded”, and the reasons for this phenomenon are cited as, “Because every company isn’t a VC type of business”. Apart from reasons like ability to scale, the above are some of the reasons to keep in mind as well.

So at times, it’s not you, it’s us.

What can you as an entrepreneur do:

Find out more about the fund:

  • What is the fund’s investment philosophy? Almost every fund has this clearly mentioned on their website.
  • Learn if they have raised a new fund, the vintage of the existing funds.
  • Talk to the portfolio companies and gather data on their experiences whilst interacting with the fund.

Sectoral allocation: 

  • What does the fund like to invest in? For e.g: Cervin Ventures (started by the Co-founder of Akamai) has made it explicit that they will not consider B2C plans.
  • What does the current portfolio look like?

Risks the fund is willing to take: 

  • What kind of risk the fund is willing to take?
  • And the risks that the funds are hesitating to take. Execution risk? Technology risk? Political risk?

What has been your experience? Would love to hear them, either through the comments below or in mail (rishabh [at] aavishkaar [dot] org) 

Note: This post is speaking specifically of VC firms, and not the angel syndicates/networks, who might operate differently.

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So…the other day I signed up for a service called Superhuman.io, that I wanted to check out. The CEO was kind to reach out (as I presume he would have to everyone on the waitlist) and tell me that they’d be launching soon. One of the suggestions he gave me was to inquire from my friends if anyone had an invite.

Now I don’t mean to sound like a jerk, but, frankly given the volume of connections I have on various networks, it would be tough for me to individually reach out to everyone. At the same time, broadcasting a message like, “Which one of you has an invite for XYZ” can either result in people treating it as just another message or finding it not relevant to their interest. I could go to someplace like Hackerstreet India, Twitter, HackerNews to beg for an invite, but again, too much effort, once we take into account that there would be numerous products that I would have signed up for.

So its either this:

 

Or this:

 

What would be ideal is this…

An app which tells me, who among my various contacts on the numerous social networks is a user of a particular product. Just like when an app on FB, I know which of my friends is using it.

Ideally, it should a service say X which any site can integrate into their system. And when I visit the home page of X, I punch in the product name. It then scans all my networks that I ask it to, to tell me that, these are my contacts, who have received an invite for this product. A higher level of sophistication could ofcourse be that X would tell me, how many invites do each of these friends have remaining for a particular product.

There’s Betalist, sure. But that is approaching the problem from the opposite end. It lets me discover new startups. But at the end, its more like a buffet where I choose the startups. I am talking about the case, where I have found the startup, and am waiting for the invite.

Now, the important question, does something like this exist already? No? Yes?

If no, what could the challenges in creating such a system be?

  • From a technical viewpoint?
  • From the startups viewpoint?

Image credits:

http://www.gomeangreen.com/forums/topic/71694-it-seems-like-i-have-missed-a-bunch/

http://i226.photobucket.com/albums/dd144/breber99/Belly/pulling-out-hair.jpg


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When Rajeev Kher started Saraplast, there were others who were making public toilets. You wouldn’t dare go to those toilets. The disruptive idea he had, was to maintain these toilets. So every day Rajeev’s company cleans the thousands of mobile toilets that he’s deployed across the country.

The more and more time I look around, the more prominent the maintenance problems seems to appear. Post independence, every village got one of these:

I am sure you have seen them. The good old India Mark II, the most widely used hand pump in the world. Great proposition when it was invented, but today looking back, it has serious flaws.

You might also have seen these in exactly the same condition. Just chilling there. With no maintenance (and this starts rusting in less than 2 years), it becomes just an ornament for your village.

One of the major value additions that players like Sarvajal, WaterLife and other community based RO water projects that are coming up around the country provide, is the AMC that is part of the agreements.

Where ever there is technology, there is going to be maintenance. And that is a potent business opportunity. Technology manufacturers might not think of it as their core business and hence might not focus on it. Or at best, might provide a service only as long as it is within a narrow geographic reach. The common complain can be that they don’t have sufficient volumes to cater to maintenance demands.

One place where the need is rather vivid is the medical devices industry. PHCs all over the country have medical devices, some bought by the government, some donated by aid agencies. Most of them lying lifeless, with no one to maintain them. Just like how eTechies is providing maintenance for your computer peripherals, just like how Babajobs is providing maintenance to your home, there is a huge market in providing maintenance services for these medical devices. Coming back to the volumes argument, I heard a story of when LV Prasad, a pioneer in eye care, got an expensive machine from Canada and it broke down in a few weeks. They contacted customer supported only to be told that maintenance would arrive only when someone else form India would order this machine. LVPEI was the only one in the whole country to have this at that time. This machine’s cost was approximately 200,000 USD. LVPEI realized that they must take matters into their own hands. They got folks from Orbis, the flying hospital, to train the locals in Hyderabad to fix this machine. Sure, they’d have put them up in the Taj, but it was an investment worth making, because LVP reaches out to crores of people annually J The next machine came to India 8 months later.

The next time you see something broken, just think of how large an opportunity it presents if you can set up something to maintain it. During my talks with innovators, I see the passion to replace the old with a more efficient new. But the new (as well as the old), all require maintenance at the end of the day.

There will be challenges, it might require an apprentice model (something which we don’t seem to value in today’s day and age), it might require tons of collaborations (especially if you are working within the government apparatus), but there’s no doubt that it is a massive opportunity.

Parting note: This post was inspired as I was travelling in interior Maharashtra and came across the only facility offering pre natal incubation facilities within a hundred kilometre radius.

Full disclosure:

  • I interned at Sarvajal in 2010
  • Aavishkaar, the firm I work with, is an investor in Waterlife and Saraplast.
  • My mother, Dr Subhadra Jalali is an employee of LVPEI, where I also interned in 2009 
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A few weeks ago, I was having a chat with an entrepreneur.

He was in a fix.

Here are the reasons:

  • It was a product company and they had recently pivoted from a rural business to a more urban consumer centric business, from a B2C model to a B2B.
  • He was running out of cash. Based on my conversation, the cash would run out within a month.
  • All the angels and investors he was speaking to told him to show traction, which given the pivot was impossible to show in the next month, since they were planning the launch in a couple of weeks.

There was one angel (from a completely different industry), who was willing to put in an investment of 15 Lakh and asked them to come up with the valuation based on  which they would proceed further.

I had suggested exploring a convertible.

For the following reasons:

  • The company was extremely early stage with no spike in revenues in the next 6 months. Hence not much to negotiate on the table, except future revenues, which for an early stage company with young founders with no formal work ex wouldn’t necessarily work out in their favor.
  • 15 lakhs would run out in 2-3 months, hence putting them in fundraising mode before that. Fixing a valuation at this stage wouldn’t give these guys that great a deal.
  • It didn’t seem like a good idea to give away 15-20% of the company (which is what the investor expected) at this stage, and that might create an issue with the next round investors.

In general convertibles aren’t very common in India, though have gained some prominence in the west (At Aavishkaar, we’ve done convertibles). The reasons are simple:  It isn’t as clean as a pure equity round. It requires some amount of paperwork, there are too many moving parts and ambiguity (read caps/floors, timing issues, consensus among angels). The fact that it has a debt component, is also seen as a deterrent by startups, which aren’t going to see revenues anytime soon and who don’t want to pay the interest (though I have seen convertibles with a 0.01% interest as well).  Here are two popular links on convertibles by Brad Feld and Fred Wilson. They speak about how convertibles work along with the nuances of caps and floor prices/discounts/timings.

However, if the initial share capital put in by the promoters isn’t much, and they are raising multiple rounds of funding within 2-3 months, and don’t have access to bridge loans and find the initial valuation they receive something they are not comfortable with, a convertible is possibly worth exploring.

This particular entrepreneur, was hoping to have convertibles enforced and then upon conversion, would raise another round at a different valuation. He was suggesting going to the next investor asking for a 3x valuation of the convertible once it got converted. I had to then explain how convertibles work. Convertibles convert at a “trigger event”, which is mostly the next round of funding. This means that the valuation that the next investor gives you is (more or less) the same valuation that the convertibles convert at.

I later found out that the angel, though first ok with the convertible, just found it a nuisance, and instead went for a priced round.

I spoke to the entrepreneur again a few days back, and he said that perhaps 15 lakhs was a strange amount to raise, during a pivot. They weren’t at an idea stage and already had part of their operations from the B2C business, so they probably should have planned their fund raising in a more organized manner. We did discuss how he could have tapped his alumni network better, how there was also Angel list and the general riff raff about meeting investors before you are in a desperate situation. Mukund’s post about raising the seed round is supremely useful in this regard and I would suggest you go through this.

Notes to entrepreneurs (and hopefully some pointers):

In the case of early stage investments, mostly, the way it works is this:
The angel group/VC already has a stake % that they are looking for. The entrepreneurs know how much they want to raise. From my conversations and what I see in the industry, angels will seek 10-20%, VCs will seek upwards of 20%. The negotiation then comes down to a couple percentage points here and there and rights.

Ex: You want to raise 2.5 crores. VC wants 25%. Your post money valuation is 10 Crores, your pre money is 7.5 Crores.

If you’re making good revenues, the VC might look at comparables, and the only meaningful metric at early stage (assuming you’re not EBIDTA positive) is the revenue multiple. For pre-revenue companies, chances are the deal might take a standardized valuation, for example, most incubators/accelerators seem to value pre-revenue/negligible startups at INR 50 lakh- 1 Cr (post investment). For companies that work on tenders, having a Discounted Cash Flow at an early stage might make sense.

So what can you as entrepreneur do:

  • Be aware of the industry trends. Not just in terms of company specific metrics, but also in terms of valuation metrics. Most early stage VCs, at least the active ones, will look at industry comparables. The only realistic metric you have at this point is your revenue multiple (Revenue/Entriprise Value).
  • Figure out what is the equity you are willing to give up, taking into account angel/VC trends.
  • Also, figure out how much you want to raise. Some entrepreneurs don’t might raising more, others want to cling on to their equity, in the hope of a better deal in the future.
  • With convertibles, figure out what kind of structuring would work best for you. Would you rather pay the interest, or have that convert to equity later as well. Plan convertibles keeping in mind the next fund raise. Also, with convertible, ensure you have the consensus of all the angels (in case you have a bunch)- can be done via a power of attorney, just makes paperwork much easier
  • Try to negotiate valuation based on what works in your favor. One startup delayed fundraising and signing the term sheet by a month, because they could show a bigger order book and hence justify the valuation they thought they deserved.
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The last week was spent in Tamil Nadu scouting for organizations which might benefit from Aavishkaar’s assistance, at the same time checking the progress of some of our portfolio companies there.

The trip gave me the chance of visiting the famous Ramanathaswamy Temple in Rameswaram. While I found the percussion inside reinvigorating a vitality in me, which the TN afternoon heat had drained away, I also noticed some interesting things:

  • One of the common criticisms of TN that I hear from friends from North is the hostility towards non-Tamil speaking folks. There was no trace of that. Every single person within a 3 kilometer radius of the temple spoke Hindi. It reminded me of Pilani, when I was studying there, where every second person knew pidgins of Telugu/Tamil owing to the large student population from those areas.
  • Commerce thrives where there are consumers. And temple has consumers. There was a counter inside the temple selling pure Gangajal. The theory being that pilgrims go to Kashi, take a dip in the Ganges, take some of the water and come to Rameswaram to bathe the deities with (called Abhishekam). The counter of course was for convenience sake, so that the poor pilgrim, wouldn’t have to go to Kashi. However, I also noticed a RO water plant located right inside the temple donated by India Cements, right behind this counter.
  • Seeing the hoards of people there, I could only think of the many more who would have wanted to be here but couldn’t owing to the various other commitments which have them occupied elsewhere. I have been keeping track of startups like Online Prasad (started by a friend and batch mate from BITS, Goonjan Mall and recently accepted into the Morpheus cohort). It would be very interesting to see how these pan out in the years to come.  Will people actually be willing to offer their prayers online via the web?

***

Traveling through the hinterlands and talking to the entrepreneurs here, one thing became apparent: There is a terrible shortage of labor in these areas. Many blame it on the free handouts given by the government leading to a Communist sentiment, thus making them “lazy”. I am not sure how true this could be, however, I have heard of/seen numerous instances, for ex. Tripura, where starting an enterprise can be extremely tough, which is a result of years of government handouts.

I think entitlement is a tricky game and entrepreneurs need to come to terms with it and tackle it. They sentiment of entitlement can appear due to historicity, but the entrepreneur doesn’t live in the past. He/She is in the present and needs to acknowledge it. The geographies in which rural entrepreneurs operate in, apart from battling the usual issues like corruption, inclement climate, lack of resources like power and water, they also have to battle human psychology. A sense of entitlement from the public, which would eventually constitute the work force that these entrepreneurs have to tap into, is something which the entrepreneurs also need to work around. An entrepreneur (unless you are a Reliance) isn’t the government, they don’t have the kind of budgets that the government has. They can’t give away free TV or free alcohol. But there are something the entrepreneur can do:

  • Ensure a basic stable income which is higher than the irregular income a person in the hinterland might be earning.
  • Create a platform, which can leverage the multiple resources at hand, such as government subsidies, bank loans and thus give the unbankable credit worthiness.
  • Create a sense of purpose, through the economic activity and make them stand on their feet. A lot of organizations which work on the SHG or the micro entrepreneur model are striving to do that. Not all of them are successful, but a few are. And they are making a significant difference to the lives of the folks that are engaged with.
  • On the job training.
  • Access to a market, this can be done either by connecting them to buyers or by providing a buy back arrangement.

To end, here’s an image of the beautiful Palk Strait

Image credit: Theodore Kaye

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You know that situation, where its 12:45 PM, and you need to decide what to have for lunch.

I hate traveling a long distance to the mall and at the same time, the food that we get in the complex is quite repulsive or reeking with oil. Now, if anyone of you have seen me, you’d figure that I am no prude when it comes to food, but I do think that the kind of food you eat does affect you post lunch productivity.

But now there’s a solution to that. Bowls to You. Came across it via Mumbai Boss.

Started I think a couple of weeks back, BTY gets you awesome salads. Anyone can sign up with them to become a chef. That’s pretty much it. Last I checked they had 3 chefs and 10+ kinds of salads.  And while I am not a salad freak, I did love the Russian that I had ordered. Awesome packaging; the whole thing made me want to order again and again. As I started eating mine, heads emerged from the cubicles and glanced. Within seconds, out came 5 forks and made me wishing I had ordered a couple more.

I guess there’s always Monday for that. I have already placed mine

Interestingly, all the Chefs so far as well as the founder, Pinank Shah of the venture are Gujjus. Can’t compete with their entrepreneurial acumen. Pinank seems to be a serial entrepreneur, by the virtue of running multiple businesses at the same time! I wish him all the best with Bowls to You!

I think I am noticing more and more ventures applying this concept of aggregating service providers under their roof to leverage the brand. Clinic chains, and there’s one popping up and getting funded every week, provide the brand, and get all the clinicians under one roof, who would otherwise be competing against each other and couldn’t provide complementary services. Ola Cabs ties up with cabs to provide on demand cabs. And Bowls to You can make any person into a micro entrepreneur. I reckon a lot of housewives will be signing up with these guys.

Caveat: Since they are in early stages and the Chefs are not engaged with them full time, one needs to place an order a day in advance. Also, they deliver only in Malad and Parel as of now I think.

 

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Kya kahen ahbaab kya kar-e- numaya kar gaye

BA padhe , naukar bane, pension mili aur mar gaye !

-Akbar Allahabadi

My classmate’s father, Kavil Ramachandran, who is a Professor at ISB recently gave an interview in Mint, where he said that every time a family business shuts down, there is an entrepreneur out there in the open, who now can start another business. This was in reference to an earlier comment he had made about 94% of the family businesses declining by the third generation.

This is an obvious yet important insight.

Every time a family business shuts down, there is an entrepreneur looking to start a company. 

Out of the 30+ companies in our portfolio, family businesses are a serious minority (~10%).I would presume, this would be the case in most of early stage VC portfolios as well.  However since having joined Aavishkaar, I have been coming across numerous family businesses looking for equity. Quite a few of these are agribusinesses and education ventures with robust top lines and operations and looking to scale.

And I am noticing another phenomenon. One where, the new generation of family business owners are deciding against continuing the prevailing business and starting new businesses in a completely different sector because they couldn’t resonate with the earlier family business.

What is good about these businesses is that, while all the promoters are related, they are all also qualified. Some of them have also worked for the market leaders before deciding to start a venture in the same sector. And from an investor’s perspective that is very comforting, since what we’re doing is really investing in people, their vision and execution capabilities.

Coming back to Prof. Ramachandran’s comment. At face value, I would like to agree with him. Programmes like the one that ISB is running on family businesses are definitely needed in a land, where a majority of businesses are family owned. And if they are looking to tap the private equity market, they would need to be equipped with the decision making capabilities to figure out the succession plan, their personal interest vs the company’s best interest among other issues.

I was made aware of the couplet in the introduction through a recent conversation with my grandfather, who heard it from his grandfather. The talk was about how professionally, Kashmiris like a comfortable lifestyle with minimum hassles and how it often really was all about getting a degree, a job, settling down till the day we breathed our last.

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