Paytm Wallet to be Transferred into Paytm Payments Bank on 23rd May

Paytm Wallet to be Transferred into Paytm Payments Bank on 23rd May

Digital payments player Paytm will be transferring the payment wallet business to the Paytm Payments Bank Ltd on 23rd May at the launch of bank’s operations. The wallet money will be transferred to the Paytm Payments Bank once the wallet business becomes part of the new company.

Earlier this week Paytm announced the start of bank operations from 23rd May. Renu Satti, the current Executive and Vice President will be CEO of the Paytm payments bank.

Paytm Payments Bank

Paytm said that all active wallet accounts on the payments app will be transferred to the payments bank. “As per the directions of RBI, the company will be transferring its wallet business to the newly incorporated payments bank entity, Paytm Payments Bank Ltd, under a payment bank licence awarded to a resident Indian, Vijay Shekhar Sharma,” stated in a statement.

The difference between a payment bank and the normal bank is that the payments bank cannot lend or give advance to customers i.e. it can issue cheque books and debit cards but not credit cards. The upper limit for keeping money in Paytm Payments Bank is Rs 1 Lakh. The purpose of these banks is to provide quick and basic banking services to the people at the bottom.

There will be no change in user experience due to payment banking service. The existing acceptance of Paytm for payment of services like taxi, food, fuel etc will remain the same.

Paytm will allow users, who do not wish to transfer their accounts, to opt out through a written request, while for accounts dormant for six months and having zero balances, Paytm will transfer wallets only when the user notifies it to do so. Such communication will have to be made before 23 May.

The announcement the launch of Paytm bank just ahead of its 1.4 B$ fundraise from Softbank on Thursday. The company is planning to invest approximately $1.6B$ over the next three to five years towards getting half a billion Indians on board.

Byju’s is in Talks to Acquire Edurite and TutorVista

Byju’s is in Talks to Acquire Edurite and TutorVista

Byju’s, Education-technology startup is in talks to acquire parts of TutorVista from British publishing and education firm Pearson. Acquisition discussion also includes the online business of technology-enabled education solutions provider Edurite that TutorVista acquired in 2007. Deal size is not disclosed yet.

Pearson acquired a 17% stake in TutorVista from Bengaluru-based entrepreneur-investor couple K Ganesh and Meena Ganesh in 2009. In January 2011, it purchased another 59% before increasing its controlling stake to 80% shortly after. Pearson acquired the remaining 20% after two years.

Byju’s is in Talks to Acquire Edurite and TutorVista

Pearson is facing trouble in its education business and reported a pretax loss of £2.6 billion for 2016. While Byju’s, backed by the Chan Zuckerberg initiative and flush with cash after a recent fundraising, is looking for international footprints.

The deal is a win-win situation for both of the stakeholders. TutorVista is having a large presence in US market and hence would provide a strong base to Byju’s to build upon. Till date, Byju’s has been a private label and creating its own content. With Edurite, they can now sell any kind of education content from any kind of provider. Also, Edurite has a big database of students, to whom they have been selling worksheets and video-CDs. The data is crucial for Byju’s India business. Edurite works on a lead generation and a call-centre based model, and this will help Byju’s in its sales as well.

The school management piece, which was a part of Edurite, is still with Pearson. The part that Byju’s has acquired is the e-commerce marketplace model.

Since education sector is recession-proof sector, close to $1.1 billion has been pumped into the Indian education sector since 2007 by private equity investors. Byju’s today is the largest funded edtech startup in the country with $204 million funds till date. With its target of penetration in the international market, Byju’s will be facing challenges from bigger players of the same domain.

Pepperfry Partners with Franchise India to Grow Offline Presence

Pepperfry Partners with Franchise India to Grow Offline Presence

The Goldman Sachs and Norwest Venture Partners-backed Pepperfry has partnered with Franchise India to expand its offline presence through a franchise model in FY17-18.

Currently, Pepperfry is having 18 studios and is planning to expand to 46 studios in 15 cities by the end of this year. While the franchisees will own and operate the studios, Pepperfry will train the staff and ensure the order completion from the booking stage onwards. An additional feature that the franchise studios will provide to consumers is the booking and payment for an order from the studio itself. The franchise studios will operate on per sale commission-based revenue model with margins spanning 8-13%.

Pepperfry Partners with Franchise India to Grow Offline Presence

A key driver for this initiative is the company’s strategy to cut cost even as it maintains the pace of offline expansion. “Studios are working for us as a model and therefore we want to expand in this direction. Lesser capital requirement and the idea of empowering entrepreneurs is what led us to this model. We invest Rs 70 lakh in capex per studio even as we incur an operating cost of Rs 6-7 lakhs per studio. The franchise model will help the company cut costs by over Rs 20 crore for FY18,” stated Ashish Shah, COO of Pepperfry.

For FY18, the company is looking to grow between 70% and 100%. To achieve the targeted growth, the company has introduced two new services that will enhance its revenue model. Pepperfry has tied up with interior designers and architects as channel partners for leads and order fulfillment.  For every order received through these partners, the company will offer a 5-10% commission. The two week-old pilot will see a 10x jump in the number of channel partners with a target of 300 designers and architects to be on boarded by the end of the quarter. Pepperfry is also building a community of real estate builders starting with Pune, where builders will earn a similar commission on every order they direct to the company from a home buyer.

The current contribution of offline studios is around 22-25% of the company’s overall sales and the anticipated share of offline sales by FY18 is 35%.

Zomato and UberEATS are in Talks for Acquisition of Runnr

Zomato and UberEATS are in Talks for Acquisition of Runnr

UberEATS, the food delivery service that was launched by cab aggregator Uber in India earlier this month and restaurant directory portal Zomato that launched its food delivery service in May 2015 are in talks with last mile delivery startup Runnr for acquisition.

As per resources, both of the companies have given term sheet to Runnr.  While UberEATS has pegged the company’s valuation at $50 million, Zomato is offering $20-30 million in an all-stock deal. The sale is anticipated to be an acqui-hire as it will give Zomato or UberEATS a ready pool of employees to strengthen their food delivery business and stand against rivals like Swiggy, Foodpanda.

Zomato and UberEATS are in Talk for Acquisition of Runnr

With the merger of on-demand food delivery startup TinyOwl and business-to-business last mile delivery startup RoadRunnr, Runnr was formed in July 2016. The combined entity then pivoted to food delivery, focusing largely on the consumer side and B2B connecting corporate employees and restaurants on a common portal. The company recently pivoted to focus on B2B orders across 15 categories including food, e-commerce and others.

Uber launched its on-demand food delivery app UberEATS in Mumbai earlier this month partnering with over 200 restaurants. Zomato currently aggregates restaurants on its platform and works with third-party delivery partners such as Runnr and Grab to fulfil deliveries. Zomato started food delivery services in May 2015.

Due to common challenges in last mile delivery startups – thin profit margins, customer acquisitions etc, a lot of food-tech startups had shut their shop in last year. The entry of UberEATS and Google Aero’s into the Indian food delivery space has given a new twist. Their strategies for sustainability would be a learning scope for other startups if things go well for them. Earlier, Ola also tried its luck in Ola Café and Ola Store but shut its shop within a year of execution.

Business Model Enhancement

Business Model Enhancement

The ultimate aim of a business is to make money. To achieve its goal, the company aligns its resources into a business model to generate the product or service for its consumers. A business model is the framework of a company by which it generates revenue and makes a profit through its operations.

The metric to analyze the efficiency and effectiveness of a business model is the gross profit and return on investment.  Another way of comparative analysis of different business models is the value addition or convenience that it provides to its consumers by solving their problem or by providing a new dimension to handle situations. More the value addition to consumer, more will the willingness of the consumer to pay and hence more will be the scope of revenue and profit generation.

Since a lot of players of same domain are coming on the horizon every day with almost same business model, consumers are having choice to move from one to other. As a result, it has become an inevitability for every business model to enrich it as per the market trends or as per the consumer expectations.

Let’s take an example of logistics business model. Simple logistics solution is to collect goods from point A and drop it at the desired destination B within the defined timeframe. Now, there are two basic aims that needs to be looked while deciding the improvement strategies –

  1. Making the existing business model more attractive for consumers
  2. Removing non-value added services/ steps to enhance the performance of the system

Simple Business Model - Logistics

To achieve both of these aims, here are few suggestions from FS –

[A] User-Friendly and More Accessible Business Model

Convenience is one of the major factors that attracts consumers to select a specific product or service from a particular player. Reason, why hyper-local delivery concept became so popular in major cities of India, is the value additional that it provides to the consumers in terms of time-saving. The more simplicity is added into a complex business model, more are the chances of market reach. So, the first milestone towards business model enhancement is making is the most user-friendly model by removing the obvious obstacles from it.

For logistics business model, following strategies can be used –

  • Easy access for consumers to check the availability of feet as per their requirements can avoid the unnecessary struggle of getting the right information.
  • Stress-free booking, change or cancellation process can add more convenience to consumers.
  • Real-time tracking of shipment can help consumers to get the right status at any point of time.
  • Easy payment solution can help consumers to get rid of the hard cash involvement.
  • Convenient process of solving consumer queries, discrepancies can bring more consumers to the company.

[B] Use of Technology to Improve the Performance

Technology is the need to enhance the performance of simple business model. Eg – GPS enhances the performance of cab aggregator business model, payment wallet enhances the performance of manual exchange of currency for buying. Technology not only attracts the consumers but also reduces the operational cost if utilized in a proper manner. So, it’s good to add technology into business model to optimize the revenue model –

Logistics business model can be enhanced by adding following technologies –

  • Autonomous fleet has potential of bringing more efficiency and cost saving over manual operations. Autonomous guided vehicles, cranes, robots, truck platooning etc can bring more intelligence and efficiency to the simple supply chain.
  • Data analytics can provide the solution for optimized movement of goods and hence can reduce the fuel consumption.
  • Internet of Things can provide highly integrated “Transportation and Warehouse Management Solutions” connecting in-vehicle sensors and other integrated devices over the network. This real-time tracking of data can enhance the efficiency of the system.

Business Model Enhancement - Logistics

[C] Incorporation of Supporting Products and Services

Any product or service requires supporting products or services to sustain or enhance its defined life span. Eg – spares parts are always required for maintenance of automobile, warehouse management support is required to run the inventory based e-commerce. Consumers are always in need of these products or services once become user of main product. So it’s a good idea to incorporate these services in business model to provide more value to the consumers under the same umbrella and hence, to enhance the scope of revenue generation.

Approach to integrate such supporting services shall be as follow –

  • First, add those services which require less resource utilization and can easily be recovered if anything goes wrong.
  • Once the stability and acceptance of above services are visible, those shall be added which requires less development time.
  • In parallel, services having high development time shall be established and merged in alignment with consumer demands.

For a simple business model of logistics, following services can be incorporated based on the above approach –

  • Delivery planning and management solutions like optimization of delivery flow, tracking, and handling of missed or pending consignments are the service requiring less resource blockage and hence shall be incorporated to add more value to consumers.
  • Inventory planning and management solutions like forecasting, consumer analysis, and Inventory allocation are the services with short development time if the required data is available to analyze. So, these services shall be added once consumers start showing interest in delivery management solutions.
  • Other services like after sales support have high development time and resource utilization and hence shall be incorporated at later stage.

[D] Removal of Non-value Added Activities

Any step that doesn’t add any value to the final product is non-value added service/ step. Eg – Inspection activity of semi-finished or finished product at any stage is because of the system inefficiency and hence a non-value added activity. So focus shall be on system development rather than inspection improvement. These activities not only surge the cost of the product but also increase the production time. Removal of all such non-value added steps is essential to maximize the efficiency of system.

Value stream mapping is a lean-management method for analyzing the current state and designing a future state for the series of events that take a product or service from its beginning through to the customer. So, any step that is not adding any value to the final product shall be removed from the chain.

In the contemporary competitive world, it’s necessary to provide more and more convenience to consumer to remain ahead in the race. A business model that can handle all the needs of consumer under one umbrella will definitely have high probability of success.

Wish you luck for your startup. Stay tuned with FS for more updates.

1mg Technologies acquired MediAngels

1mg Technologies acquired MediAngels

Digital Healthcare and Online pharmacy 1mg Technologies acquired MediAngels for an undisclosed amount in cash and stocks deal.

With this acquisition, 1mg has marked its entry into the lucrative super specialty consultations, corporate health services and insurance partnerships.

1mg Technologies acquired MediAngels

“Our consumers can now access a deep network of over 450 super specialists across India and the world, and we also get an entry into the corporate health space through this platform,” 1mg’s co-founder Prashant Tandon stated for the acquisition.

MediAngels was founded by Arbinder Singhal and Debraj Shome in 2011 providing a platform for patients to seek online consultations for specialized medical cases in cardiology, cancer, neurosurgery, orthopedics and pediatrics, among other areas, from its network of doctors covering 93 specialties.

“Within 1mg ecosystem, we plan to scale up second opinions and drive B2B engagements with more insurers and corporates. Our robust technology tools will help them optimize employee benefits spends on healthcare and to have a healthier workforce,” Singhal stated.

The entire team of 12 at MediAngels is now part of 1mg. MediAngels will continue to build the doctor network and B2B health services for the corporate users in Mumbai led by Arbinder Singhal.

In July’16, 1mg acquired Medd, a diagnostics and imaging tests marketplace. Backed by Maverick Capital Ventures, HBM Healthcare Investments AG, Sequoia Capital and Omidyar Network, 1mg has raised over Rs100 crore in series B round of funding this year.

1mg was earlier known as HealthkartPlus, the generic drug search business of Healthkart, an online vendor of health products run by Bright Lifecare Pvt. Ltd. In April 2015, HealthkartPlus was spun off into a separate entity and rebranded as 1mg. 1mg has 30-40 pharmacies that fulfil medicine orders, across 13 cities. 1mg is preparing to roll out subscription services for patients with chronic health issues such a diabetes, blood pressure, among others. 1mg is planning to expand to 30 cities in the next six to nine months.

Having a mixed model of online consultation, e-pharmacy and diagnostics space, 1mg has to face Practo as major competitor. Other players of same domain include Netmeds, Zigy etc.

Quikr Acquisitions – Pattern & Potential

Quikr Acquisitions – Pattern & Potential

Quikr is India based classified advertisement player having presence in more than 1000 cities facilitating over 30 million consumers for large classified business across C2C, Cars, Education, Homes, Jobs and Services. It now has more than 13 categories and 170 sub-categories, with the most popular being mobile phones and electronics, real estate, cars and bikes. It also has over 4.2 million listings and have generated over 150 million replies.

Founded by Pranay Chulet and Jiby Thomas in 2008, it was formerly known as Kijiji India Private Limited. Quikr has so far raised $346 million from investors such as Tiger Global Management, Warburg Pincus and Norwest Venture Partners, among others and is developing itself beyond a listing platform to a one-stop shop for used goods by enabling payments on its platform, as well as facilitating logistics, a move likely to throw open additional revenue channels.

For financial year 2015-16, Quikr declare the net sales of Rs 41.24 crore as against Rs 24.78 crore in the year ago and commands a valuation of $1.5 billion.

With nine acquisitions in a year, Quikr is strengthening its targeted business verticals of automobiles, real estate, jobs, services and customer-to-customer sales. Here is FS analysis how Quikr has strengthened its existing business through acquisition –

fs-labs-quikr-acquisitions-pattern-potential

[1] Indian Realty Exchange (IRX) [2015, Target – To strengthen QuikrHomes, Deal Size – Undisclosed]

In November 2015, Quikr announced the acquisition of Indian Realty Exchange (IRX), a mobile-first aggregator of real estate agents for an undisclosed amount to strengthen QuikrHomes by connecting with the brokers and agents for long-term basis.

IRX was founded by Vikram Dhawan and Karan Jindal in March 2016. It tags agents and brokers with real time projects and locations and helps users connect with them to buy and sell property.

[2] RealtyCompass [2015, Target – To strengthen technology of QuikrHomes, Deal Size – Undisclosed]

In December 2015, Quikr acquired acquired real-estate analytics platform RealtyCompass for an undisclosed amount to help QuikrHomes access technology built by RealtyCompass that would help consumers and investors in their decision-making process by providing builder ratings and detailed project analysis.

Nimesh Bhandari, Sankara Srinivasan and Alok Mishra founded RealtyCompass in 2013. “We will continue to operate as a stand-alone portal and will focus on building real estate analytics products for both consumers and builders,” said Nimesh about the acquisition way forward.

“Real estate is a key category for us. We have been keenly developing some innovations that have the potential to reshape the market landscape and the acquisition of RealtyCompass will help us bring more such solutions to our users,” said Pranay Chulet, who founded Bengaluru-based Quikr in 2008.

[3] Common Floor [2016, Target – 1 Billion US$ Valuation Dream, QuikrHome Enhancement, Deal Size – approx. 120~160M $USD]

In January 2016, just after the four month of launch of Quikr Homes, Quikr announced the acquisition of real e-state property portal Common Floor. Though no official disclosure was made to confirm the deal amount, the expected amount of deal was approx 120-160M $USD. After the deal of Quikr and Common Floor, Quikr was expected to be valued at around US$ 1.5 Billion based on the share-swap ratio.

CommerFloor was facing problems of getting further rounds of funds due to its inability to monetize the portal. Tiger Global which is common investor in both of the players was not in alignment of further funds requirements of Common Floor. If one of the existing investors stops supporting, it would become difficult for any startup to get further funds as other investors see something amiss. Fund crunch and non-supporting Tiger Global could have given no better alternate than a merger with some other player. So merging was a good option for common floor to keep its operations running.

With this acquisition, Quikr entered in the club of more than 1 Billion $ valuation companies. Quikr got the benefit like technical support, experience through Common Floor for its business vertical of real state, Quikr Homes.

This acquisition was considered as one of the biggest move of sector consolidation.

[4] Salosa [2016, Target – To penetrate market volume of Home Services, Deal Size – Undisclosed]

In May 2016, Qukir acquired Salosa, an on-demand beauty service provider for an undisclosed amount with target to penetrate deeper into the market volume of home services.

Salosa was founded by former Procter & Gamble executives Piyush Dhanuka and Anurag Nair in September 2015 that operated in Gurgaon and parts of Delhi with a team of in-house beauticians at that time. After two months of acquisition, Quikr rebranded Salosa as AtHomeDiva offering a full range of in-home beauty and styling services including hair, skin, make-up services and special packages and expanded operations from Delhi and Gurgaon to Bengaluru.

Pranay Chulet, Founder & CEO of Quikr stated, “AtHomeDiva is a great example of the synergies between our verticals. It is a QuikrServices business that has scaled fast on both demand and supply side in virtually no time with practically zero marketing. On the demand side, the business had access to a large base of women users from not just QuikrServices, but also QuikrGoods and QuikrHomes, and on the supply side, we were able to on-board a large number of beauty experts from QuikrJobs. We expect such synergies to play out more and more, giving us a fundamental competitive advantage in any business we enter.”

[5] Hiree [2016, Target – To strengthen Quikr’s job listings business QuikrJobs, Deal Size – Undisclosed]

In July 2016, Quikr acquired Hiree, Bengaluru based online recruitment platform to strengthen its job listings business, QuikrJobs. Financials of the deals remained undisclosed.

Founded as MyNoticePeriod by Manjunath Talwar and Abhijit Khasnis in May 2013, Hiree connected potential jobseekers serving notice periods with prospective employers with an aim to fast-track the recruitment process by enlisting active jobseekers. In May 2015, the company rebranded itself as Hiree and to increase its targeted market volume, it introduced the listing by all categories of jobseekers.

With this acquisition, Hiree merged with the job listing business – QuikrJobs and Hiree team, along with the founders got absorbed into Quikr. The combined entity claimed to build a recruitment platform that would connect over four million active candidates with recruiters across the country.

[6] Zapluk [2016, Target – to strengthen Quikr’s beauty service brand AtHomeDiva, Deal Size – Undisclosed]

In August 2016, Quikr acquired Hyderabad based Zapluk for undisclosed amount of money with an aim to strengthen its beauty service brand AtHomeDiva.

Zapluk was founded by Manan Maheshwari and Mahesh Teja Gogineni in August 2015. The firm had acquired Chennai-based competitor Pamperazi in June’16. Lavanya Hariharan, co-founder of Pamperazi, had subsequently joined Zapluk. Following the acquisition by Quikr, Maheshwari and Gogineni quit the company, but Hariharan joined Quikr.

P.D. Sundar, head of QuikrServices stated about the deal, “Zapluk’s operational strengths, trained pool of stylists and professionals and highly engaged user base in the Chennai and Hyderabad markets will allow us to expand the reach of our AtHomeDiva brand in these markets rapidly. AtHomeDiva is growing fast and the number of services delivered by our team of trained and professional stylists is growing by more than 100% month on month. While we are experiencing a high repeat rate, what’s even better is the average transaction value is increasing steadily for repeat users.”

[7] Stepni [2016, Target – To strengthen car-related services under the QuikrCars vertical, Deal Size – Undisclosed]

In September 2016, Quikr acquired Stepni, Bengaluru based maintenance aggregator that connects vehicle owners with nearby maintenance service providers for undisclosed amount of money. As identified five key business segments for Quikr growth – automobiles, real estate, jobs, services and customer-to-customer sales, Stepni acquisition helped Quikr to strengthen car-related services under the QuikrCars vertical, as well as lift its services business, QuikrServices.

Stepni was founded by Vinay Singh and Nikhil Nair in October 2015, having a network of more than 125 service centres across Bengaluru. The Stepni team, including the founders joined QuikrCars.

The deal, being a win-win situation for both the involved stakeholders, gave opportunity to Quikr to expand its business model from listing only to service provide and possibility to scale up Stepni across multiple cities.

[8] Stayglad [2016, Target – To strengthen Quikr’s beauty service brand Athomediva, Deal Size – Undisclosed]

In September 2016, Quikr announced the acquisition of on demand beauty services provider StayGlad with a target to strengthen its beauty service brand, AtHomeDiva. Though Quikr didn’t disclose the amount and terms of the deal, it was anticipated mostly in stocks.

Staygald was founded by Shashank Gupta, Kavish Desai and Prateek Jain in May 2015. Stayglad was failing to attract new investors and running out of cash, prompting the company to scot for a buyer. Staygald failed to get acquired by on-demand service provider Urbanclap, also, made an unsuccessful attempt with Accel Partners and Matrix Partners to raise funds. After acquisition by Quikr, the 100-member team at StayGlad, including the co-founders joined Quikr.

“On-demand beauty is one of our fastest growing service categories. With well more than half of our consumers coming back to us with bigger ticket sizes, the demand is clearly very strong. As a service provider we want to continue to scale to meet that demand, and also ensure that we maintain the high standards of quality we pride ourselves on. StayGlad is one of the largest and highest quality players in beauty services with a 70 percent customer repeat rate, which makes them a great fit for our overall vision for AtHomeDiva – we are excited to bring them on board,” said Head of QuikrServices, PD Sundar.

[9] GrabHouse [2016, Target – To strengthen QuikrHomes, Deal Size – Undisclosed]

In November 2016, Quikr announced the acquisition of Grabhouse, an online home rental solutions provider, in an all-stock deal giving investors Sequoia Capital and Kalaari Capital stake in Quikr. Quikr didn’t disclose the value of deal.

This strategic move will help the company address an acute pain point in India’s real estate market with a solution that does not involve any cash payments. As part of this, Quikr will integrate Grabhouse’s products and technology stack into QuikrHomes while also reaping strong synergies the business has with its other verticals. Grabhouse will continue operations as an independent brand for managed rental homes. As part of the overall integration process, its founders and entire team will move to the Quikr HQ.

Founded by Prateek Shukla and Pankhuri Shrivastava in July 2013, Grabhouse was struggling to scale fast strong competition from same domain players like NestAway and NoBroker, and consequently losing confidence of existing investors. The company was also in talks with bigger rival NestAway and budget hotel aggregator Oyo but couldn’t materialize finally and hence decided to sell it off.

Further Potential of Acquisition

Due to slow down in fresh funds and subsequent requirement of profitable verticals, Quikr is trying to strengthen its business model through acquisitions as well as partnerships.

As per FS predictions, if you are planning to sell a business model to Quikr, following are the potential areas for near future –

  • Vehicle spare parts and service management
  • Analytics firm for real estate services
  • Technology based recruitment facilitators
  • End to end consumer services
  • Logistics firms managing end to end deliveries

Stay tuned with FS for more updates.

Startup Idea Selection – When you have Multiple to Execute

Startup Idea Selection – When you have Multiple to Execute

“My original business model – I actually wrote this down – was ‘interesting work for interesting people.’”- Tim O’Reilly

Today is the age of entrepreneurs. Everyday entrepreneurs are coming with their new business model to woo consumers. They are not only creating opportunities in market like additional jobs but also giving better solutions to consumers for the pain areas. Idea which seemed like the craziest one few years before are now the need of daily life. No one could have imagined computer in every home before Steve Jobs and Bill Gates made it happen.

Most of the times entrepreneurs have multiple ideas in their mind to execute, but which one to select and which one to discard is the real struggle and challenge. Some concepts might sound good but doesn’t make any business sense while some may sound crazy but are profitable. The concepts which are reducing the pain areas of consumers have high probability of being appreciated by mass. There is no point of investing resources when success doesn’t seem to come in near future.

Though success of any business model is the result of passion, hard work and determination, it doesn’t give any assurance of success of startup. A lot of factors are involved behind the success of startup and shall be evaluated before moving ahead with your concept and utilizing available resources. Here is a generic analysis from FS for optimum startup idea selection when you have multiples in your mind to execute simultaneously.

startup-idea-selection-when-you-have-multiple-to-execute

 

[A] Available Market Size

Market size/ volume is the estimation of consumers for some particular product/ service. Based on the type of product, the potential consumers can be categorized easily as per age groups, gender, affordability limits, geographical boundaries etc to estimate the numbers.

To know the market size before execution is helpful in terms of predicting the potential of the concept. Out of the total market volume only few percentage is penetrable at initial stage unless the consumer trust is gained.

When you have multiple startup ideas in your mind, it’s better to move ahead with the one having maximum available market volume. A product designed for specific consumers is difficult to scale up rapidly. Also, convincing the limited consumers’ volume is more difficult.

[B] Market Competition

One of the biggest challenge for startups to survive in long run is the “Market Competition”. Players working in same domain of the product or service are direct competitors while biggies getting diverse are the indirect competitors. Betterment of existing business models have a lot of competition as anyone can incorporate the additional features/ product/ service at any point in time once it start attracting consumers. A completely new business model has less market volume as it always has the advantage of first mover.

Since the available market volume within operational boundaries for a particular concept is limited, every single player of similar domain is trying to grab the maximum slice. Who will win the race is dependent on the consumer trust that it is able to gain. Consumer trust and loyalty are majorly driven by the quality of product/ service, cost effectiveness and reliability. Players with ample resources are able to gain the consumer trust and liability easily, hence get the maximum slice of market volume.

To stand against a biggie is not only risky in terms of gaining consumer trust but also in terms of resource wastage. Players with limited reach and resources are easy to handle by achieving operational excellence and providing better alternative to consumers. So, when you have multiple startup ideas, it’s better to go with the one having less market competition. Bigger the market competition, greater is the probability of failure.

[C] Potential Revenue Models

Major motive for any business idea is to make money. Revenue model is the cash flow of any business, cash input, output and profit. Cash-in must be greater than the cash-out to earn profit.  Since fixed cost of set up is generally huge as compared with running cost, so return on investment is dependent on profitability limit.

Though the revenue models associated with business idea might be multiple, but their applicability and growth depends on time. Revenue models with limited profit margins require huge volume to overcome the fixed and variable cost of execution hence require comparatively more time to reach breakeven point, while more profitable business models can reach at breakeven with lower volume also.

All the possible revenue models might not be clear at the idea stage itself or some are anticipated to come in picture at later stage of execution, comparative analysis of possible revenue sources combined with time frame gives a good estimate for selection of startup idea.

[D] Availability of Required Resources

One of the major contributors of realization of idea into running business is the availability of required resources. Manpower, money, technology, assets etc. are essential element to run a business model. Based on the estimated penetrable market volume, the required resources can easily be determined. For example – if the product is completely technology based having specific potential customers, it requires technology knowledge, sale and marketing skills.

At initial stage of startup, available funds, technology and manpower are limited, hence the entire scope of work needs to be distributed within the existing team and the funds. Few skills can be learned with minimal effort while few are time consuming. Outsourcing of work might be a good choice if the quantum of work is large or not manageable but it depends majorly on the available funds.

So one of the major selection criterion out of multiple startups ideas is the availability of resources. There is no point of working on a concept which is going to get stuck with progression of time. It’s better to start with something and make some money with the possible concept and then working on other parallel on later stage.

[E] Feasibility of Execution and Market Acceptance

At starting stage, Idea itself might seem impressive but more important is the feasibility of execution. Also, the new concept might seem appreciable by targeted consumers, but the real scenario is based on the actual acceptance by them once the product is out there in the market.

So at initial stage, it’s better to check the feasibility of execution at all the stages and analyze the mitigation plan for any risk associated. The benefit of having this clarity at start itself is that no surprise will stop the execution at later stage. Also, it’s better to interact with targeted consumers with prototype/ MVP and get their expectations aligned with the product/ service. Though it seems impossible to contact with all of the consumers but a section of good sample is suitable to get the insight about consumer behavior.

Selection of one suitable idea can be done based on the higher probability of execution feasibility and market acceptance.

[F] Other Critical Parameters

Other critical parameters for startup idea selection are government rule and regulations, liabilities, proprietary issues etc. Also, the product specific or segment specific challenges must be considered while selecting the idea.

So the right combination of critical parameters applicable for all the idea shall be analyzed to finalize the execution of one. Based on the highest probability of success, right idea can be selected. Though no foolproof mechanism can be developed to evaluate a business on idea base only as the evolution of right business model is a continuous improvement and experiment process, a good judgment on success can be made on the above basis.

“The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives.” -Alexander Osterwalder

Wish you luck for your startup. Stay tuned with FS for more updates.

Zuckerberg Foundation and Others to invest $50 Million in India’s Byju’s

Zuckerberg Foundation and Others to invest $50 Million in India’s Byju’s

Bengaluru based education technology startup Byju’s has raised $50 million from  the Chan Zuckerberg Initiative, and existing investors Sequoia Capital, Belgian investment firm Sofina SA, Lightspeed Venture Partners and Times Internet Ltd.

This is the first Asian investment for Chan Zuckerberg Initiative, a personal fund set up by Facebook Inc. founder Mark Zuckerberg and his wife Priscilla Chan.

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Byju’s provides learning programs for class VI to XII students and preparation programs for competitive examinations such as JEE, CAT, IAS, GRE and GMAT, among others. With this investment, Byju’s is the most well-capitalized education technology start-up in the country.

Byju’s makes use of original content, graphics and other video tools to explain concepts and theories that makes learning contextual and visual, not just theoretical. It leverages technology and data science to make learning personalized so that the students will know what to learn, when to learn, how to learn, how much to learn, and how fast to learn.

With its app-based learning program, Byju’s business model has undergone a significant change in the last one year, from a classroom-based model to an app-based one. The company claims revenue has grown from Rs 45 crore to Rs 120 crore in fiscal 2016.

Byju’s Learning App is growing at 15% month-on-month and has crossed 5.5 million downloads. The application has 250,000 annual paid subscribers, having added 30,000 paid students last month.

The company will deploy the fresh funds to expand into global markets, especially in the US and UK, introduce new subjects beyond physics, chemistry, biology and mathematics as well as roll out products for classes IV and V.

“This investment was done keeping a couple of things in mind, primarily to get a good partner on board who can help us connect with the international market. We have already started developing products for the international markets. It will take us 12-15 months to complete,” said Byju Raveendran, founder of Byju’s.

“Education can give young people and their families a path to a better future, and families in India work hard to give their children that chance. Byju’s represents an opportunity to help even more students develop a love for learning and unlock their potential,” said Vivian Wu of Chan Zuckerberg Initiative in a statement. She will join the board of Byju’s.

Shopclues to Invest Rs 1 Crore across 4 Startups

Shopclues to Invest Rs 1 Crore across 4 Startups

Online marketplace and unicorn Shopclues will invest a total of Rs 1 crore across four startups. The startups receiving funding are Pepper Agro, Glam Studios, Ornativa and Scrapify. ShopClues shortlisted these startups after organizing the first edition of the ‘Next Big E-preneur Challenge’, which they plan to make an annual event. This collaboration also entails assistance in operations, technology and strategic partnerships that ShopClues intends to provide to these startups.

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Bengaluru-based Pepper Agro is an online marketplace for gardening products.

Founded in 2016, Noida-based Glam Studios claims to be India’s first chain of tech-driven standardized salons. It currently provides services in Hyderabad and NCR.

Ornativa is a jewellery startup that uses 3D printing technology to build their products. It is already a merchant on ShopClues and wants to use the funding to scale up and build its brand.

Scrapify is still in its ideation stage.

Though Shopclues has not finalized yet whether to have a stake in the companies or disburse the amount based on milestone, details shall be finalized by the next week, stated Ganesh Balakrishnan, assistant vice-president, Merchant Services, ShopClues. Based on the stage and the requirements of the startups, ShopClues will divide and invest the money. “It’s not just money that we are giving. We want to help the entrepreneurs with our know-how and expertise in ecommerce itself and offer any operational help,” added Balakrishnan.

“The next clutch of entrepreneurs in India is really pushing the envelope of innovation and also carefully looking at execution and profitability,” said Sandeep Aggarwal, Founder of ShopClues. “I believe that challenges such as these are an ideal way to encourage fresh approach and help bolster the enthusiasm that is already present in India’s startup world.” ShopClues has previously invested in real-time shopping-assistant app HeyBiz.

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