How To Fund A ‘Fat’ Startup

These days, we focus a lot more on lean startups than startups that require capital to get going. The entire industry has moved away from the ‘fat’ startup category. However, infrastructure software, hardware, networking, chips – they need capital. Even in cloud software, to build complex technology like personalization and analytics requires some investment.

How do people fund those?

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Funding Rejection Statistics Of Key Players

You’ve often heard me say that over 99% of the entrepreneurs who seek financing are rejected. This post offers a set of rejection statistics culled from credible sources on some of the key players:

YCombinator: 97.15%

YCombinator started as a summer programme and the roots still show, with courses running for three months, about the length of an academic summer break. Teams all join at the same time, in batches. Applicants are rigorously screened and the best invited for interview. For the latest batch 74 (including six not-for-profits) were selected from a field of more than 2,600. Those lucky few get paid between $14,000 and $20,000 to attend. In return they have to hand over about 7% of their firm’s equity. [Source: The Economist]

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Running A Global Virtual Incubator: 10 Lessons We Have Learned

Further to my earlier post, Mentoring Startups: 10 Lessons We Have Learned, I want to also go over our learnings through running, what is today, the world’s only global virtual incubation program.

1. Reach & Scalability: We have successfully created a virtual incubation program that entrepreneurs all over the world are using. The self-service curriculum is quite rich now, which makes the program scalable. Also, the online mentoring roundtables have been extremely productive, as discussed in the earlier post. We’re also running an active content organization that helps our portfolio companies get coverage, as well as distribution for their messages through social media (reach over 100k currently).

2. Inclusive vs. Exclusive: We have successfully reset the definition of entrepreneurship within the program from Entrepreneurship = Financing to Entrepreneurship = (Customers + Revenues + Profits), Financing and Exit are optional. This has enabled us to be inclusive, as opposed to exclusive. Unlike YCombinator that takes pride in how many entrepreneurs they reject, we take pride in the fact that we do not reject anybody. Over 99% of entrepreneurs seeking financing get rejected. We work with ‘The Other 99%’ irrespective of their fundability, helping them grow to become successful businesses, and to raise financing if appropriate. Also, you don’t have to move to Silicon Valley to get incubated with us, which also gives us tremendous flexibility on whom we can work with.

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How to Navigate India’s Seed Capital Gap

India has a minuscule seed capital ecosystem. Entrepreneurs thus have to be really creative to survive.

My new piece How To Navigate The Seed Capital Gap in India offers a synthesis of how entrepreneurs are getting around. Two companion pieces offer perspective on why the ecosystem is developing so slowly: Seed Investors in India: Why So Few? and Venture Capital in India: Age of Reckoning. >>>

Is Too Much Liquidity In The Angel Capital Market Good or Bad?

Too much dumb money rushing into the angel investment game is inevitable with crowdsourcing, AngelList and other innovations. Innovation is welcome. Liquidity for startups is welcome. How much is too much?

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The Indian Startup Eco-System Wants Acqui-hiring!

I spent large chunks of time in the last two days with my friend Sharad Sharma, one of the true deep thinkers of the Indian startup eco-system. I first met Sharad when he invited me to co-chair the Nasscom Product Conclave in Bangalore with him in 2010. I really enjoyed working with him, and over the years, have come to appreciate what he is trying to do for the Indian eco-system.

Sharad, by the way, is one of the 20 odd effective angel investors who invest in the technology sector in India. While the total number of angel investors is much larger, many of them come from outside the sector, and hence are not capable of leading deals. If you look at Indian Angel Network or Mumbai Angels, for instance, a vast majority of the angels made their money elsewhere (like real estate), and often find it difficult to fully grasp what’s happening in the software, mobile or Internet businesses, let alone networking or semiconductor. Thus, these lead angels are critical for the eco-system to mature.

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How To Start An Incubator

This is REALLY exciting!

As you know, we’ve been working with many partners around the world over the last year.

This has helped us develop an informed perspective on the need for a scalable incubation system that our partners can use easily, affordably, seamlessly to launch their own incubators, with our help, anywhere in the world, but with deep ties into Silicon Valley.

And now, we present the 1M/1M Incubator-in-a-Box, a new program to support partners in how to start a business incubator.

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The Million Dollar Club: Quantifying The 1Mby1M Value Equation

At 1Mby1M, our agenda is to help you figure out how to put one foot before the other and build a sustainable business, irrespective of financing. If you use the program the way it is designed to be used, you would be able to derive value from it on multiple vectors. Let me quantify that equation for you. >>>