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These are the first two sessions in a programme on entrepreneurship aimed at working professionals pursuing an MBA.
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Anilesh SethIdeator, Co Founder & CEO, KROWwww.krow.in
Strategic Advisor to the Qatalys Group of CompaniesMentor at the KYRON incubatorVisiting Faculty at CMR IT Exec MBA programEx-CEO/MD: LGSI, Qatalys & Supervalu India
www.slideshare.net/anileshhttp://In.linkedin.com/in/[email protected]
ENTREPRENEURSHIP MANAGEMENT SESSIONS 1 & 2
Objectives of the programme
• To develop an understanding of the concept of entrepreneurship in different contexts with a common outcome based objective
• To develop an appreciation of entrepreneurship through examples and a project
• To create an understanding of the ecosystem that exists • To understand and imbibe some critical aspects of
managing the entrepreneurial journey• And finally, to create an entrepreneurial mindset that can
be applied in pretty much any situation
Course assignment
• The class will be divided into two groups – A and B• Each group needs to identify a value-creating idea and pitch it
to potential investors/decision makers in the last session of this course
• Group leaders will be identified upfront• Each group will present its assignment in the form of a PPT
not to exceed 10 slides (not including any title slides, content slides or thank you slides). This limit is important and will play a role in your gradation
• The ppt should address at least the following: The idea, what problem it is solving or what need it is addressing, whose problem or need it is addressing, an implementation plan, competition if relevant, associated financials, impact
Project evaluation
Parameter Weightage
Group leader’s assessment on participation by individual team members
30%
Class participation and attendance 20%
No of slides 10%
Content and final presentation 40%
Session 1: So what is entrepreneurship?
https://www.youtube.com/watch?v=a10Vg50Pzkk
Dr. Steve Gedeon of Ryerson University
Entrepreneur
16th century : military expeditions carried out by Frenchmen were called “entrepreneurs”.
Derived from FRENCH “Entreprendre”
So what is entrepreneurship?
Viewpoint• Seeing opportunities• Bringing about change
Viewpoint• Organizing a business
venture• Assuming the risk for it
Seeing opportunities – within or outside – assuming ownership – assuming risk
Creating value! Creating Impact!
Entrepreneurship according to Peter Drucker
“An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource.” http://en.wikipedia.org/wiki/Entrepreneur
Types of entrepreneurship
Political
Social
Intrepreneurial
Commercial
- Founding a new party- Founding a new political project- Lobbies
Create & sustainsocial value
- An “inside” entrepreneur- Reduced risks
Wealth creation
Types and examples of entrepreneurship
SOCIAL FINANCIALRETURN
RESIDENT’S ASSOCIATIONSNOT FOR PROFIT - TIEIIT ALUMNI CLUBOLD AGE HOMEAAM ADMI PARTY VINOBA BHAVE
COOPERATIVES – LIJJAT PAPD(SRI MAHILA GRIHA UDYOG)NEXT WEALTHBIHANI
(IMPACT ENTREPRENEURS)
APPLEMICROMAXBIG BASKETREDBUSGOLI VADA PAVAIR DECCAN
KINGFISHER AIRLINESWIPRO(scion of established business)KEN KUTARAGI(intrapreneurship)YANTRA(corp incubated)DCM TOYOTA(corp diversification)
AZIM PREMJI FOUNDATION
IND
IVID
UAL
S/G
ROU
PCO
RPO
RATE
INIT
IATI
VE
E CHOUPAL
What are entrepreneurial traits? What is entrepreneurial leadership?
Entrepreneurial Leadership:“Achieve a
common goal” or “See an
opportunity”
Innovator
Risk Optimizer
OwnershipManages Change
Leader of people
Entrepreneurship in turbulent times
• When the times are good, is risk taking at an all time high? Or when the times are bad?
• Recessionary situations restrict opportunities in the wage/salary sector
• Higher local unemployment rates are found to increase the probability that individuals start businesses
http://ftp.iza.org/dp5725.pdf
Managing in a turnaround environmentCASELET:
• Supervalu Inc is an over 140 year old company in the grocery business – both retailing and supply chain. With major strengths in supply chain, it acquired several retail brands along the way and to make it one of the top grocery retailers in the US, it acquired Albertsons in 2006 which practically doubled its revenues to around 40 Billion
• 2007 onwards saw the US responding to the first signs of recession and therefore reduced consumer spending
• With margins under pressure and the need to service debt, SUPERVALU was facing challenges – not the least of which was managing change in a post acquisition scenario
• The then CEO (Jeff Noddle) retired in 2009 and a new CEO (Craig Herkert) was appointed
• In 2013, Supervalu announced the sale of the earlier acquired Albertsons stores and a new CEO (Sam Duncan) was appointed
• In 2013 Supervalu announced annual sales of 17.1 Billion dollars and a net loss from continuing operations
Is this an example of where an entrepreneurial style of leadership is required?
Getting under the skin of the entrepreneurial struggle
• So what is really important?
I, Me, Myself
The Team
The Plan
The Value Proposition
Customer Acquisition
Competition
I, Me, Myself
• This isn't about ego! Its about conviction• Its about sacrifices – and majorly so for the family!• Its about turning on a dime• Its about being in it for the long haul• Its about synergies• Its not about “being right”• Its about really really hard work
ITS NOT ABOUT MONEY (well it is, but if you have the above, you’ll find a way)
The team……
Mentor/CoachCo-FounderAdvisorCore TeamDevelopersMarketingSalesetc
At what point do you need each role?The needs will change
Why do you need each role?
Map your needs. Be clear about why you need some roles
Role When Why Short/LongMentor/Coach Idea - Confidence
- Bounce off ideas- Network- Help find
investors- Help find talent
The type of person you are looking for may change over time
Co-Founder Idea? - More the merrier- Share the risk
and reward- Builds
confidence- Synergistic
Advisor Seed/Funding stage - Approach investors
- Resume building
May be in place just for this specific objective
Core team Idea/Seed - Take on key responsibilities
Ideally long term – but be prepared that your own idea of the right person may change
Other team members Seed and beyond - Need based skills There will be peaks and troughs – these tends to be skills that are more abundantly available
Mapping whatyou think you needwill force you thinkdeeply
This step is crucialas it enables you to devise a plan to attract the right people
Note: this is an example only and is not meant to be prescriptive
So how do you convince someone to join you….an unknown startup….?
Prestige/VisionMoney
Motivators
Abundant skills
Tough to find
Rare/Industryfigure
Wealth
Your strategy will depend upon a combination of:- Who you are looking for- What motivates that person- Is it a long term or a short term need
A different combination of motivators will therefore need to be configured
Role Your conviction
Vision Importance accorded
Wealth building opportunity
Technical thrill
Aggressive stock plus some money
Some stock, mostly money
Mostly money
Mentor/Coach
Co-Founder
Advisor
Core team
Other team members
Note: this is an example only and is not meant to be prescriptive
What can you leverage?
What you have going for you• Your vision• Your conviction• Your network• Your business plan and
willingness to part with stock to create wealth building options for those willing to invest in you and your idea
What you may not have• Upfront cash• Upfront company
valuation
What you have far outweighs what you don’t……..
And remember, if you sell to their families, you have a high probability of a sale!
Some maxims….• Your strongest selling point is your vision and conviction• Ensure a match of objectives……and values……• Be clear about short term vs long term roles – why give stock for short term
roles or non-critical ones?• Remember stocks are difficult to value – sell the value on vision…but also
remember that stocks don’t pay bills. Some people need to do that• Look at family background – does the person have a “cover”?• Don’t hire for skill alone – value fit must be there. Be clear : are you looking
for a thinker + doer or only a doer. Would you part with stock for just a doer?• Be prepared to invest a fair amount of time in recalibrating everyone's
commitment – and in reinforcing and in adjusting the formula for the right person
• Build relationships with the family – the start up must be an extended family; share the joys and sorrows of life in general
• Involve the wider company – don’t get closeted with a coterie and leave the rest out
• Communicate, communicate, communicate – in various media, whenever you get an opportunity - visibility motivates across the board
And finally its all about execution…..
Session 2: The entrepreneurial cycle and support system
IdeateBounce
off
Team set up
Initial capital
Validate
Fund
Scale
Realize value
- The process of ideation/refinement is ongoing- Value realization is very subjective – for commercial enterprises some would say it is synonymous with the promoters “cashing” out; for a VC, for the company to go IPO or get acquired
Commercial value realization examplesCompany Established Exit Bought by Consideration
REDBUS 2006 Acquisition Goibibo (2013) 600-700 crores
JobsAhead.com Acquisition Monster Worldwide Inc
40 crores
Indiaworld1994
Acquisition Sify 500 crores
Spectramind 2000 Acquisition Wipro 460 crores
Indiagames 1999 Acquisition UTVlater acquired by Disney
65 crores500 crores
Makemytrip 2000 IPO 2010 502 million
Just dial 1997 IPO 2013 4,700 crores
But how do you measure social value?
Examples of start ups that have modified their direction
Name of company More info Changes
makemytrip http://en.wikipedia.org/wiki/Makemytrip#History_and_Growth
Founded in 2000 it started by providing air travel options for the US-India corridor for Indians. Today it provides additionally holiday solutions and is a big player in India
redbus Brick and mortar outlets.
paypal http://chargify.com/blog/6-companies-that-succeeded-by-changing-their-business-model/
Cryptography company to means of transmitting money via PDAs to online payment system
YouTube http://mashable.com/2011/07/08/startups-change-direction/
Started as a dating site called "Tune In Hook Up,“ & morphed to simply sharing videos online
MingleBox http://www.nextbigwhat.com/indian-startups-that-pivoted-successfully-297/
Started as a social network & transformed into an educational content company
Flipkart http://www.nextbigwhat.com/indian-startups-that-pivoted-successfully-297/
Moved from selling books to everything
The role of Government policy in India
• Complex and outdated labour laws• Too many windows for registration• Monies locked in service tax, tds
refunds• ….trade license, environment,
shops and establishments, various taxes …various laws
• High level of taxation • Difficult to obtain finance: issue of
credit worthiness• Labour pool not very motivated to
join startups due to the above issues
• Confusion around taxation of share premium
http://taxmantra.com/five-things-indian-government-can-do-for-start-up-eco-system.html/ www.msmes.com
http://www.nasscom.in/nasscom-partners-government-karnataka-inaugurate-first-coworking-facility-bangalore-startup-warehous
• With accelerating inflation and dipping growth, entrepreneurship is the way to go to contribute to employment and growth in the economy
• The MSMEs ministry needs to view this as an opportunity
• Legislation needs to favour risk taking
Examples of labour laws in India
• Workman’s Compensation Act (1923)• Trade Unions Act of 19226• Payment of Wages Act of 1936• Minimum Wages Act of 1948• Industrial Employment (Standing orders) act of 1946• Industrial Disputes Act of 1947• Minimum Wages Act of 1948• Industries (Regulation and Development Act) of 1951• Employees Provident Fund and Misc Provisions Act of 1952• Maternity Benefit Act of 1961• Payment of Bonus Act of 1965• Payment of Gratutiy Act of 1972
The fallout……
• The complex laws and lack of transparency and the perception that monies are locked in government taxes can prompt shortcuts … can this result in “under-reporting”?
• Ignorance/clarity about labour and other laws can prompt shortcuts and may result in defaults that may not even be known
However there are still great examples of successful entrepreneurial ventures – Air Deccan,Infosys, Biocon etc. Isn't that what Entrepreneurship is about? Finding ways to unlock value?
Examples of Governmental support– DST (Department of Science and Technology)
• Estd 1971• http://www.dst.gov.in/
– KITVEN (Karnataka Information Technology Venture Capital Fund• Estd 1999• State and central govt FIs backed VCF• www.kitven.com
– CVCFL (Canbank Venture Capital Fund Ltd)• http://www.10000startups.com/
– SIDBI (Small Industries Development Bank of India)• Estd 1990• http://sidbi.in/
– Startup Warehouse (NASSCOM and Karnatak Government Initiative)• 2013• http://www.10000startups.com/
Business Incubators
Business incubators are organizations geared toward speeding up the growth and success of start-up and early stage companies.
– Some are located in an actual physical – Others operate on a virtual basis.– Incubators sometimes call themselves accelerators instead, often when
they’re geared toward jumpstarting businesses that are more developed.– Many have potential capital to invest, or links to potential funding sources.
One of the most prominent incubators is the Y Combinator (http://ycombinator.com/
based out of Mountain View, CA)– Founded in March 2005, since then over 550 companies have been funded
such as Scribd, reddit, Airbnb, Dropbox, Disqus and Heroku– Twice a year they invest a small amount of money in a large number of start
ups and invite them to Silicon Valley to undergo a 3 months acceleration program
What's the difference between an incubation and an acceleration programme?
Business Incubators in IndiaName Location Details URL
The Hatch Gurgaon and Chandigarh
The Hatch has both physical and virtual incubators and accelerator programs. The incubator program is 52 week long and included 13 weeks of accelerator program.
https://angel.co/hatch-incubator
Technology Business Incubator, IIT Delhi
Delhi Some of the startups that have come out of IIT Delhi’s incubator include VirtualWire, which works with wireless technologies and Mechartes Researchers Private Limited, which provides engineering solutions.
http://www.fitt-iitd.org/tbiu.aspx
Amity Technology Incubator
Noida Amity Innovation Incubator offers a range of incubation services to nourish entrepreneurial talent such as - Business Planning, Company formation, Legal & IPR assistance, Managerial Support, Technology Support,....
http://amity.edu/aii/index.html
Business Incubators in India..cont’d
Name Location Details URL
Microsoft Accelerator
Bangalore 4 months of accelerator program with intake of two batches – summer batch(applications start in Nov) and winter batch(applications start in May).
http://www.microsoft.com/en-in/accelerator/
NSRCEL, IIM Bangalore
IIM Bangalore
Support included subsidized facilities like office space, power and infrastructure and services like finance, legal, HR etc. Offers seed funds under DIT TIDE scheme.
http://www.nsrcel.org/
The Morpheus Chandigarh Morpheus Startup Accelerator focuses on “super-early stage startups” in a program for 4 months. The accelerator has a strong network of over 100+ graduated companies from previous portfolio
http://themorpheus.com/
TLabs Delhi A startup accelerator by Times Internet Limited. Investment of Rs. 10 Lacs for 10% equity.
http://tlabs.in/
Name Location Details URL
Kyron Bangalore Lalit Ahuja, John Cook and Larry Glaeser. $50 million accelerator with $100,000 in seed funding for a 10 % equity in the startup. Plans to invest in two batches of 10 startups each year and to incubate 125 companies
http://kyron.me/home.php
Venture Nursery
Mumbai A physical business accelerator program called BOOTCAMP is run for 13 weeks, minimum twice a year. Maximum of 8 starts are selected at a time
http://venturenursery.com/
Start-up village
Kerala Public Private Partnership with Govt. of Kerala. Rs.100 cr for 1,000 student startups over a span of 10 years.
http://www.startupvillage.in/
http://inc42.com/magazine/resources/50-amazing-startup-incubators-and-accelerators-in-india/
Business Incubators in India..cont’d
Angels
• An angel investor or angel (also known as
a business angel or informal investor) is an
individual who provides capital for a business start-up,
usually in exchange for convertible debt or ownership
equity
• Angels tend to access investment opportunities either
through their own network or through Angel funds
Examples of Angel Funds in IndiaName Location Details URL
Chennai Angels Chennai Seed Funding for start ups in Tamil Nadu. http://www.chennai.tie.org/
Indian Angel Network New Delhi India’s first Angel network with successful entrepreneurs and high profile CEOs interested in investing in early stage businesses across India.
http://www.indianangelnetwork.com/
Mumbai Angels Mumbai Platform to start up and very early stage companies; helps in bringing them face to face with investors, mentoring, inputs on strategy.
http://www.mumbaiangels.com/
TIE Entrepreneurship Acceleration Program
Bangalore Ecosystem of Angels, Investors and VCs to provide Series A round of financing for Start ups.
http://www.bangalore.tie.org/
Hyderabad Angles Hyderabad http://hyderabadangels.in/
Harvard Angels Bangalore Vision is to provide the next generation of India's most promising entrepreneurs with the right level of financial capital, strategic guidance and mentorship and in many cases, deep technical advice.
http://www.hbsalumniangels.com/article.html?aid=137
Examples of Angel Investors include: Kanwal Rekhi, NS Raghavan, K Ganesh
Seed Funds
The seed stage is the setup stage where a person or a
venture approaches an Angel or an early stage fund (like
an Angel fund or an early stage VC for funding the
idea/product
Name Location Details URL
Blume Ventures Mumbai Blume Ventures provides seed funds to early-stage tech-focused/tech-enabled ventures
http://www.blumeventures.com/
Angel Prime Bangalore It provides startup capital to companies operating in India and seeks to invest in mobile payment, e-commerce and smartphone application services sectors
http://www.angelprime.com/
SRI Capital Hyderabad SRI Capital investment include e-commerce platform Shopo.in, education services startup Edutor Technologies and fast food chain Big Dosa, among others.
http://sricapital.in/
Examples of early stage funds
Examples of early stage funds..cont’d
Name Location Details URL
Ixora Ventures
Delhi Invests $25,000-$500,000 in early stage companies. The fund appears to be sector agnostic
http://www.ixoraventures.com/
Blu Sky Venture Fund
Bangalore It invests both in offline as well as online entities. The company is looking to invest in one company per quarter. The ticket size and per-stage funding depends on the requirements of startups.
https://www.bluemountaincapital.com/
IndiaQuotient Mumbai It invests in companies operating in consumer-facing businesses targeting mass markets. The sectors include food, fashion, education and healthcare.
http://indiaquotient.in/
Examples of early stage funds..cont’d
Name Location Details URL
KAE capital Mumbai Kae Capital invests in early stage companies which bring about innovative solutions for the existing gaps in the markets, all backed by a great team capable to execute and build a large business.
http://www.kae-capital.com/
Catamaran Bangalore It is venture capital firm specializing in startups, early stage, mezzaine stage, and late stage investments. The firm seeks to invest globally with a focus in India.
http://www.catamaranventures.com/
http://techcircle.vccircle.com/2013/05/30/10-new-early-stage-investors-for-indian-tech-startups/
Venture Capitalists• Any individual or institution that provide funds as well as value in the form
of networking and possibly board membership.• Types of rounds typically funded by VC organizations are:
– Series A :• The first round of financing undergone for a new business venture
after seed capital. – Series B:
• The second round of financing for a business.• Generally take place when the company has accomplished certain
milestones in developing its business. – Series C:
• The third round of financing once the company proves its mettle.• For capturing major market share, acquisition or to develop more
products and services. • Different VCs may focus on different stages (means different levels of risk)
and some may tend to focus on narrow spaces/sectors
Examples of VCs in IndiaName Location Stage/Sectoral focus URL
Helion Ventures Partners
Delhi, Bangalore It invests in early to mid-stage companies in India in sectors such as Outsourcing, Internet, Mobile, Technology Products, Retail, Education and Financial Services.
http://helionvc.com/
Sequoia Capital
Bangalore, Mumbai The firm seeks to invest in all sectors with a focus on services including financial services, healthcare, internet, outsourcing, retail, wireless, energy etc
http://www.sequoiacap.com/india/
Intel capital India
Bangalore, Mumbai, New Delhi
Intel Capital invests in a broad range of companies offering hardware, software, and services targeting enterprise, home, mobility, health, consumer Internet, semiconductor manufacturing and cleantech.
http://www.intelcapital.com/
IDG ventures Bangalore, Delhi Target sectors include:Digital Consumer – Internet, Mobile, Media and Technology Enabled Consumer ServicesEnterprise Software – SaaS, Software Products and Enterprise servicesEngineering – Medical Devices, Clean-tech and IP-led Businesses
http://www.idgvcindia.com/
Inventus capital
Bangalore They focus on financing early stage companies with some customer validation in the following areasInternet, Mobile, Cloud/SoftwareServices
http://www.inventuscap.com/
Venture capital
Chennai, Hyderabad Focuses on life sciences, technology and emerging sectors and manages a $300-million (Rs 1,634.7 crore) fund
http://www.ventureast.net/index.php
Additional resources• TIE (www.tie.org)
– TiE (The Indus Entrepreneurs) is a global nonprofit dedicated to fostering entrepreneurship. TiE has 61 chapters in 17 countries, with a total membership exceeding 15,000.
– TiE's sponsors include nearly every venture capital firm in Silicon Valley. • NEN (http://nenonline.org/ ) focuses on fostering entrepreneurship in colleges
NEN focuses on fostering entrepreneurship in colleges– Is a non-profit initiative by the Wadhwani Foundation.– The NEN was co-founded by five of India's premier academic institutions:
• IIT Bombay,• IIM Ahmedabad,• S P Jain Institute Bombay,• Institute of Bioinformatics and Applied Biotechnology (IBAB), Bangalore• BITS Pilani
• Venture intelligence database (http://www.ventureintelligence.in/products.htm– Launched in 2002– Leading source of information and analysis on privae equity, venture capital and
M&A in India
References
• The High Performance Entrepreneur – Subroto Bagchi
• Simply fly – Captain G. R. Gopinath• Social Media Marketing - Times Business Series• The 4-Hour Workweek – Timothy Ferriss• Entrepreneurship: Successfully Launching New
Ventures – Bruce R Barringer and Duane Ireland• Entrepreneurship – Robert Hisrich, Michael Peters
and Dean Shepherd