Praveen Sinha Shares Important Tips On How To Get Funded To Start-Ups

Despite the surge in coronavirus cases, the Indian startup ecosystem has witnessed a surge in investments across the past year and continues to grow at a fostered pace with every passing moment. Praveen Sinha, while sharing what he looks for in startups before making investments also advises entrepreneurs for establishing a viable and profitable business.

Co-Founder and ex-MD of Jabong, Praveen Sinha has said that it is the team and the idea behind the startups that impresses investors the most. As a business angel, he identifies a handful of broad criteria before making a move towards helping a startup.

The founding team, the idea, and the market 

He puts up the founders and the central business idea on his priority analysis before formulating any business relationship with a startup. “The utmost thing which I look for is the founding team, especially the experience and the passion required for the execution of their unique business idea, how deeply they are involved in that idea,” he says.

“If the team is good and then the idea grows through lots of slugs. They may have textured with a certain solution but the solution or the approach requires changes. If the team is good, they can certainly do it. Another thing is to look at the opportunity they are trying to create. Market size and acquisition of clients is also essential, how easy or difficult it is going to be,” adds Praveen Sinha.

Competition, profitability, and self-sustainability 

He also identified allied criteria based on the above-mentioned principles that are essential for the growth of the venture in the future. “How easy it is for a new entrant to copy and replicate the idea. No idea can be fully protected until it is super deep in terms of patent etc, hence, it is just in terms of USP through the founding team or the execution but not very easy to replicate the concept. If competitors come, the team is competent enough to handle it and ensure that they are not killed in the process.”

“Earlier I used to have a longer gestation period of three-four years when ventures were able to raise multiple rounds of funds. But currently, viability and profitability are the next requirements. Many startups have scaled on huge capital funding. Though they will justify the valuation in the long term which has now become 10-15 years. You will see a lot of startups with a billion-dollar evaluation, but the bottom line matrix is still not stable,” says Praveen Sinha.

“I don’t have a view, or I don’t suggest they will not become viable or they will not be able to justify the valuation but currently at the time frame of 10-15 years it does not look feasible. Now my focus is on an idea which might not become a unicorn in valuation but in terms of bottom-line profitability and self-sustainability, it can find its path,” he adds.

For entrepreneurs; Focus on dynamic strategy and execution 

While suggesting measures to keep the startup on the trajectory of growth, Praveen says, “For entrepreneurs at an early stage, there are multiple aspects that need to be taken care of. First is the customers and the environment, second is the product and the solution it is catering to and what customizations and tweaking are required. The third is if it still not profitable, either you start raising funds and in parallel finding ways to reduce costs, move it to a flexible model, given the uncertain time where lockdowns and curfew keep happening. The model needs to be dynamic, you cannot have fixed costs. And then the fourth is a team if there are no sufficient funds then the team also needs to move on.”

“At an early stage it is more towards product and customer, the mid-stage is about your growth, the satisfaction of the customers, and building the momentum on what you have already achieved. The next is while raising funds, making it more profitable by reducing the cost while ensuring the building up of processes so that scaling up is stable and not unreliable in terms of performance and delivery,” he adds.

Sharing own experiences 

Being a successful angel investor and serial entrepreneur, Sinha shares, “On investments, other than several other dynamics, what I have found that if the founding team has that persistence and passion then I generally find a decent growth. However, many times entrepreneurs don’t listen to advice and they go with their belief, which I think is good but considering the advice and not diluting other’s opinions will fetch better results.”

“On the startup side, finding the right set of the team is a challenge and then bringing the first customer as there is no history is yet another challenge, followed by registering early growth than raising funds, making it profitable, these are multiple challenges at different stages and it requires persistence and perseverance to make your venture a success.”

Praveen Sinha also said that he is now focusing on making investments in the startups in the fin-tech, health-tech, and agriculture space.