“First and most, an important lesson is not to be afraid of failures and believe strongly in your own start-up. Secondly, even if a start-up has raised money, it shouldn’t keep splurging or burning cash and behave as a bootstrapped one,” says Dr. Apoorva Ranjan Sharma, Co-founder, Venture Catalysts in an exclusive interview with ITBusinessToday.
ITBTBureau: What are angel investors looking for while deciding to invest in a start-up?
Dr. Apoorva Ranjan Sharma: Angel investing is tough and risky as investors are the first to bet on the early-stage start-ups. The concept of Angel investing globally is the same, which is to gain higher returns on investments.
Angel investors do the highest amount of due diligence by evaluating disruptive and innovative ideas with definite business plans that will scale faster. With COVID-19, angels have become more cautious in their approach. They are looking for ideas that are not only innovative but also have the ability to survive a crisis like the current pandemic.
ITBTBureau: What do you think about diversity among the team members both in terms of skills and experience is essential?
Dr. Apoorva Ranjan Sharma: Diversity within a start-up is critical as it helps fuel different ideas and unique perspectives. A diverse team will distinctly think and also approach a problem from various angles.
Historically, we have learned that companies with diverse teams outperform non-diverse ones. Besides, start-ups with teams from different backgrounds, genders, and ethnicities are valued more by the new-age customers.
ITBTBureau: It is no secret that 90 % of start-ups fail within the first five years. These statistics are making angel investors wary of investing. What should start-ups do to tackle this situation, and that will strengthen the investors’ trust?
Dr. Apoorva Ranjan Sharma: Unfortunately, yes the start-ups’ mortality is still high across the world. Investors are well aware of these statistics and also know for a fact that some investments will turn sour. Despite this fact, angels and other investors do not shy away from pumping in capital into a start-up.
While there are no cookie-cutter solutions to tackle failures, they can employ some simple and critical lessons of starting up. First and most, an important lesson is not to be afraid of failures and believe strongly in your own start-up.
Secondly, even if a start-up has raised money, it shouldn’t keep splurging or burning cash and behave as a bootstrapped one. Never stop innovating and always think about its customers/clients. The start-up should never overpromise or under-deliver and should always rely on the technology and more importantly, focus on unit economics.
ITBTBureau: How can start-ups develop exit strategies that will boost and build an investor’s confidence in the idea?
Dr. Apoorva Ranjan Sharma: For an angel investor, an exit is crucial within the first 3-5 years. Start-ups should keep this in mind while scaling up. There are different exit strategies that the start-ups can evaluate. This can start from merger and acquisition to bigger funding rounds or going public with an IPO.
They should focus on creating strong financials with good projections to quickly raise the next rounds or attract more investors. If they find it difficult, then the company should focus on scouting for more prominent start-ups for the complete acquisition of acquires.
ITBTBureau: What type of business continuity plan should a start-up have in crisis such as today’s pandemic?
Dr. Apoorva Ranjan Sharma: The current pandemic has taught businesses a very important lesson, and that is to have a plan B and C on standby so that they can pivot their businesses quickly. They should also have a contingency fund and plan in place to tackle unpredictable situations so that the business continuity is maintained and employees don’t lose jobs.
Dr. Apoorva Ranjan Sharma is the Cofounder of Venture Catalysts & Managing Director of 9Unicorns Accelerator Fund. He is a globally acclaimed angel investor, speaker and has previously been a speaker at RISE Conf. Hong Kong, Web Summit Lisbon, TiE Global SF & many more. Being one of the founding fathers of the startup ecosystem in India, he has been instrumental in developing the startup ecosystem since early 2000. He has been a pioneer in establishing incubators in India. Dr Apoorva Ranjan Sharma is a PhD in Incubation & Diploma in Mentor Studies from Berkeley Institute of Management, University of California, USA. He studied engineering at HBTI, Kanpur. He actively supports his alma maters by funding technology R&D and various entrepreneurship initiatives.