Before they decided to start VentureNursery, India’s first angel-subsidized startup accelerator, Shravan Shroff and Ravi Kiran had traversed unique routes of their lives. Both came from commercial enterprise families – Shroff’s family become into film distribution and Kiran’s was into jewelry. Neither had joined the circle of relatives business. Shroff had built a compellingly powerful business in the amusement enterprise, founding and building Fame Cinemas, taking it to IPO and then exiting, even as Ravi Kiran had dedicated twenty years to the corporate world, constructing and walking operations, developing strong new fashions, in worldwide conglomerates in Marketing and Communications – IPG Group and Publicis Groupe.
A hazard meeting at Indian School of Business Hyderabad, where they shared place on a panel in 2010, accompanied by means of any other one at a Mumbai Angels assembly a yr later, led to the founding of VentureNursery.
The idea became simple,
To train startup founders who had no dearth of exuberance, however had a sure loss of entrepreneurial revel in and knowledge of the nuances of constructing and strolling a enterprise.
VentureNursery aimed to perceive gaps in startups and plug them systematically, a good way to set the founders at the proper path. Founded in March 2012, VentureNursery has extended 21 startups till now, of which sixteen have graduated, 12 are lively and developing nicely. Beginning with twelve angel investor participants (including Shroff and Kiran) and 17 Mentors-in-Residence in 2012, VentureNursery, presently has 30 contributors and nearly eighty Mentors-in-Residence.
Based on its belief that the assignment atmosphere needs to awareness by and large on maximising the success potential of founders and startups, VentureNursery undertakes extensive and immersive education and mentoring function within the chosen startups and allows every with quit-to-give up infrastructural and getting to know support. With an obsessive focus on first-rate, VentureNursery, presently, conducts to 3 boot camps a 12 months in Mumbai and comprises a two startups in each for a 3-month duration. It also runs a separate software called ParallelTrack whose duration may range between ten and 40 weeks. Both applications contain heavy customization based on the startup’s requirements.
The VentureNursery Alumni include branded budget motel chain OYO Rooms, video interview platform Talview, fashion and lifestyle social trade platform Klip, crowdfunding platform Catapooolt, journey startup SeekSherpa, synthetic widespread intelligence corporation InvenZone, closing minute motel reserving organization Hotels Around You amongst others.
In an distinctive chat with Inc42, Ravi Kiran spoke approximately this system, the motive and the angel making an investment scenario in India.
VN Partial Portfolio Nov 2015
Criteria For Selection
The most critical standards for a startup to be taken into consideration for admission to VentureNursery application is whether or not there's a actual, huge and ideally developing market for the startup. If the founders have identified the marketplace, it’s even better. Founders discover ways to discover the market, validate the trouble and frequently refine the market definition throughout the acceleration application. Says Ravi, “About eighty% of new companies shut down because of negative product market healthy.”
A proper product marketplace match guarantees that the commercial enterprise will have actual customers who will need to pay for the product or the solution. It is also evaluated, whether or not the marketplace recognized is a developing one or is it only a passing faddish marketplace. So it's far essential that the trouble diagnosed is one that is really worth solving and it's far extreme in nature i.E. Lot of humans are facing that trouble and they need to need a solution instead urgently.
The accelerator additionally seems on the founding crew’s dedication to the problem, their capacity to clear up it, their willingness to stick to it, and whether they're disciplined enough to look it till the end. “Sometimes, the founders simply come to us with a touch of an idea, and all through the route of the program, they're capable of discover the actual problem,” Ravi added.
It began with recognition on six sectors, but is now open to just accept packages in 18-20 unique sectors. As lengthy as a startup has recognized or can identify a actual international trouble and there are customers who would need that answer, it subjects much less which zone it's far working in.
For each program or batch, (the business enterprise calls it a ‘Season’), the accelerator receives among three hundred and 4 hundred applications. At the give up of a rigorous 5 degree screening technique, most effective five in the end make it to this system, and now this number has been reduced to two due to the fact that final yr. If the corporation does no longer feel strongly about the applications, it defers the commencement of the program, instead of begin it just to paste to a date. Till date, it has performed seven batches, accelerating a total of 21 startups. Of these, 16 have graduated, 10 had been funded and 12 are energetic and doing well.
Following a exceedingly customised curriculum, introduced via industry main mentors over more than one one-on-one periods, the three maximum essential matters every startup learns during this system are identity of proper issues, achieving product-market in shape and selection making. At the cease of this system, or by using Graduation Day, that is normally the ninety fifth day of the program, the startups must have started to construct an answer round their identified troubles.
At the end of every software, startups graduating successfully are evaluated through VentureNursery’s individuals, a sturdy organization of devoted and seasoned angel traders. Graduation isn't clean, with approximately 30% of the startups now not making it. If the contributors approve the graduation of a startup, VentureNursery’s Investment Council, together with three of the most experienced participants, recommends the funding phrases. Actual funding is executed via every man or woman member, independently and voluntarily, with none canvassing or persuasion by using everyone.
The investment length ought to range everywhere between $15K and US $123K (INR 10 – 80 lakhs), with the average price tag size being $92K (INR 60 lakh). The amount relies upon on the level of the business enterprise, and what sort of money it requires to sustain for as much as 18 months, refining the product, hiring skills and attending to Proof of Concept and purchaser adoptionable enterprise. The advice of the Investment Council encompass funding quantum, valuation, founder repayment, tranches of fund release, ESOP pool creation and the milestones to be done.
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VentureNursery participants continually attempt to dilute the founders share as low as viable at this stage, sufficient for the buyers to stay motivated in addition to the founders to hold maximum possible stake for dilution in next rounds of cash raising.
Simultaneously, the accelerator also runs the ParallelTrack program for startups which are either too raw or already into building the challenge. For these, the program period is altered based on recommendation by means of the VentureNursery Selection Council. These startups are multiplied for everywhere between ten and forty weeks.
Whether within the fashionable ninety-day Bootcamp or the flexible ParallelTrack, VentureNursery claims to personalize the whole lot about the program for each startup. “That’s in which our founder friendliness is the most obvious”, says Kiran.
The Mentor-in-Residence program at VentureNursery started out with more often than not friends and commercial enterprise pals of founders, who agreed to give 9-10 hours of their time, each sector, to startups, over multiple classes, assisting the startup in a key hole location. As this system multiplied, the accelerator claims to now remember nearly 80 people as MIRs who impart startups with the gentle hacks of going for walks a business. The high-quality issue is that mentors paintings seasoned-bono with the startups and are spending time to keep tempo with the brand new ideas and new groups.
In addition to mentors, it additionally has 30 angel buyers as its contributors, who actively help promising startups via investments and additionally tap their networks to convey worthwhile business connections and often next spherical investments to the VentureNursery alumni ventures. These participants pay a nominal help fee, which make a contribution approximately 10% of the prices of the corporation. The relaxation comes from the non-public investment of the founders.
The Angel Investing Scenario
“Many buyers today need to go into the angel making an investment space with an funding attitude to multiply their investments. They recollect angel making an investment as simply an funding asset elegance. However, they don’t realize that angel making an investment approach you have to play the position of an angel and actually undertake the startup. You have to be interested in honestly helping the founder to build a enterprise.” stated Ravi.
The purpose of the angel investor should now not be to throw money. He notes that not many ultra-HNIs are inclined to make investments within the angel space, despite the fact that the wide variety has been growing step by step. Seasoned investors are those who're drawn greater to the space, and comprehend the reality that angel investing can be a very profitable getting to know revel in.
Commenting at the sectors which are drawing greater angel traders, Kiran stated that as with other industries, waves show up on this space as well. “We have seen the ecommerce wave, the cellular apps wave. Now we see the hyperlocal wave and the IOT wave. I don’t suppose waves are terrible however doing random making an investment simply on the basis of a wave, can make properly money turn to bad cash fast.”
Advice For Startups
For him maximum crucial substances for a startup need to be dedication to fulfillment and personal subject. The founders need to have a willpower to remedy actual international issues. In addition to this ardour and resolution, they also wishes to have the non-public subject to see thru things and work out an answer.
Many humans have a variety of ardour to remedy such troubles, but lack the subject required to set up a successful enterprise. He provides that startups have to be geared up to do whatever it takes to occupy the pole position in the space they perform. “If you need to take the pole function as an example Oyo did in the branded accommodation area, then you need to be earlier than the wave.” The fact that not a unmarried startup funded by VentureNursery has shut sincerely substantiate the knowledge of the founders and the prowess of VentureNursery’s application.
The Accelerator Space
There are many different accelerators in India which can be active within the startup atmosphere with distinct investment ranges, mentorship applications, consciousness areas, and fairness terms. For instance, Hyderabad-primarily based Catalyzer Startup Accelerator Program is a one zero one-day mentorship-driven entrepreneurship cohort accelerator program for startups. Twice each 12 months, it selects up to 12 startup teams (or individuals) and allows them navigate the essential first level. Selected startups receive financial help inside the form of pre-seed capital, paintings space, IT centers and other resources. It provides funding within the range of $7.6K-$15.2K(INR 5-10 lakhs) on 7-12% fairness.
Gurgaon-based totally GSF Accelerator is a 13-week program, which aims to offer select startups with unheard of get admission to to venture and business networks, personalised & in depth mentoring, and initial capital. GSF Accelerator is designed to assist product-orientated startups. It provides funding within the variety of $25K-30K for 5-eight% fairness.
Bangalore-primarily based Kyron has introduced a brand new idea of ‘pre-accelerator’, in an effort to admit approximately 20-25 startups. Such startups might be put through a six-month incubation duration and then some could be handpicked through Kyron for its accelerator batches. It affords funding of upto $20k for five-10% fairness.
Focused on promising early-degree startups or first-time marketers, Bangalore based totally Microsoft Accelerator runs a software of four months, starting in January and July every yr. Selected startups get sturdy mentoring, technical steering and connections to other startups.
Times Internet’s TLabs accelerator, powered by a panel of 70+ mentors – that consists of pretty-experienced marketers and industry professionals, TLabs runs a structured and fairly in depth four-month mentoring application for these startups. It additionally offers a funding of $15.2K (INR 10 lakh) for 10% fairness, a co-working area and a number of other advantages from outstanding tech partners, to the startups it accepts for this system.
Founded by Dave McClure, well-known angel investor from Silicon Valley, 500 Startups runs a four month accelerator application open for all domain names. It’s like a Startup MBA on steroids imparting startups get right of entry to to a network of 1000+ founders, 2 hundred+ mentors, and its personnel for steering and mentorship. It invests $100k in trade for 7%, and expenses a $25K application rate for a net $75K investment.
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National Association of Software and Services Companies (Nasscom) also runs enterprise incubator-cum-accelerators at Bangalore and Kolkata, and trying to open places of work in Gurgaon, Navi Mumbai and Pune. Nasscom affords a important, well-related, plug-and-play working area for startups to release their operations, besides presenting them one-on-one mentorship in step with its 10,000 Startups initiative to assist technology entrepreneurship inside the usa.
While the above cited accelerators provide mentorship and funding on fixed terms, VentureNursery steers clean of that. It hasn’t constant a funding amount or fairness range for investing in startups. The application is administered extra as an adoption and grooming centre for startups to take them to pole function as opposed to potential investment goals to multiply project capital. Ravi candidly states that the startup ecosystem has also visible a wave with a number of accelerators sprouting in the final couple of years.
VentureNursery in reality steers clear of the sort of wave, differentiating itself with its spirit of nurturing startups in basic terms for the passion of it and now not the moolah. It proudly follows what Ravi claims to be a ‘mentoring first’ version. That model has reared fast growing startups which include OYO Rooms, the poster boy in the branded price range accommodation area. However, with the increasing variety of accelerators and competition in this area itself, it is going to be interesting to watch how many ventures would choose VentureNursery and how many extra such leaders will emerge from its nursery within the near destiny.