Startup Ecosystem in Kolkata: Lack of Funding

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There is no risk capital available in Kolkata.

This is a refrain that I have heard before many times: there is no risk capital. There is no venture capital. There is no Angel capital. There is no seed capital.

The truth is, in the Valley, most funding goes to validated businesses that are bootstrapped by founders. Or to repeat entrepreneurs with a significant track record of success.

608th 1Mby1M Roundtable Recording

In case you missed it, you can listen to the recording of this roundtable here:

608th 1Mby1M Entrepreneurship Podcast with Max Brickman, Heartland Ventures

Max Brickman, Founder at Heartland Ventures, talks about his firm’s investment thesis.

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Use Bootstrapping with Services to Increase Your Probability of Fund Raising

Raising funding for startups in Silicon Valley is a low probability game. Fewer than 1% who try actually succeed.

Outside the Valley, the startup ecosystems are mostly immature, and the probability gets even lower.

The bar to raise seed funding is getting higher and higher. Seed investors are mostly operating as growth investors, expecting that the entrepreneur will somehow manage to bridge the gap and bring a concept to realization. In fact, what these investors really want is to invest in businesses that have traction, not just validation.

In short, they want to come to the rescue of victory.

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How to Raise Pre-seed Startup Funding

The toughest round of funding an entrepreneur will seek to raise is pre-seed investment. It has the lowest probability of success, the highest amount of ambiguity, is poorly defined, and causes the greatest amount of confusion and missteps out there.

Over 99% of the entrepreneurs who seek financing are rejected.

So, my humble advice to all entrepreneurs: please learn to assess your own probability of getting funded.

For our Seed Capital series of podcasts and blog interviews, I’ve interviewed hundreds of investors, especially micro-VCs and angels who play an important role in the early-stage game.

As I expected, a large number of investors are still chasing Unicorns. They are interested in investing in companies that will go from 0 to $100M in 5-7 years. And they will consume a great deal of capital in the quest of hitting the coveted billion-dollar valuation mark.

However, I am pleased to report that I have spoken with a good number of investors who recognize the niche opportunities.

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1Mby1M Virtual Accelerator Investor Forum: With Sergey Jakimov, Co-Founder and Partner at LongeVC (Part 5)

Sramana Mitra: There is the opportunity for gene editing before a baby is born. Then there is the opportunity for gene editing later in life.

Sergey Jakimov: There is a huge ethical component. If you leave that aside, what makes total sense is identifying potential life-threatening diseases or disabilities with DNA-driven factors for unborn babies and introducing these changes early on so that the new person gets to live a normal life. That’s totally fine by me.

1Mby1M Virtual Accelerator Investor Forum: With Sergey Jakimov, Co-Founder and Partner at LongeVC (Part 4)

Sramana Mitra: Are you looking for something in this DNA testing and sequencing area that you haven’t found yet?

Sergey Jakimov: I would be looking for a merge between DNA sequencing capacity and actionable insights based on that. I would be looking at the comprehensive model where the company offers you DNA sequencing and a comprehensive report with some supplement-based insights or potential diagnostic-based insight or non-prescription interventions to mitigate risks.

1Mby1M Virtual Accelerator Investor Forum: With Sergey Jakimov, Co-Founder and Partner at LongeVC (Part 3)

Sramana Mitra: Let’s switch gears to another category. Pick another category where there is a heavy computer science element.

Sergey Jakimov: Another interesting one is digital health. If we’re talking longevity, it’s of course aging clocks and all sorts of consumer-facing risk calculators. That’s another very interesting angle of how we taught algorithms to work with clinical data or user-reported data as well as how we made it consumer-facing and consumer-digestible.