Rashmi Raizada, intellectual property consultant with Samtel, quit her job three years back to start her own consultancy. She was lucky to find mentors like serial entrepreneurs Saurabh Srivastava and Mohit Goyal, who went on to invest in her company later. ?Their investment has helped grow the company four-fold in the last eleven months. But we value their guidance and mentoring even more,? she beams, having bagged clients like IIT Kanpur, Videocon Industries and Mascon Global. Rashmi can consider herself lucky.
Most other seed stage startups have to struggle hard, despite India being counted among the top three favourite private equity (PE) and venture capital (VC) investment destinations last year.
Serial BPO entrepreneur Raman Roy realised the gravity of the problem on a flight from Bangalore to Delhi. The young man sitting next to him had boarded the flight just to get Roy?s views on his new business idea. ?He bought advice and mentoring with his airline ticket,? laughs Raman Roy, who has now joined hands with Genpact?s Pramod Bhasin, Nasscom chairman emeritus, Saurabh Srivastava, Canaan Partners? Alok Mittal and IBM Daksh?s Pavan Vaish to fund ?early-stage businesses that have potential to create disproportionate value?. Also on board are institutional members like IBM and Google. ?Our education system creates job seekers and we are trying to create job givers,? says Roy.
The idea is to fill the garage type startups scouting for small early-stage investments in the range of Rs 50 lakh to a couple of crores, that generally can?t get funding from VCs. A big venture capitalist fund may have a genuine problem in financing such a small start-up, they argue. The fund?s overhead cost limits might not allow them to hire too many people, thus forcing them to focus on few deals of larger sizes. In sharp contrast, most of these young entrepreneurs with an idea need a small part of their money and lots of handholding as they establish and grow their businesses.
Many argue that lack of angel funding is one of the crucial reasons why we don?t have many disruptive ventures in India. ?US leads the world in entrepreneurship because it has the world?s best and most vibrant angel and venture capital ecosystem,? says Saurabh Srivastava. In the US, angel funding exceeded VC funding in 2005.
Typically, investors come on board and provide advice on setting up business and help them network. ?There are many who do not need capital but still seek advise,? says Axis-IT&T chairman Rohit Chand. Srivastava adds that the group plays a crucial role in providing funds to companies, which need Rs 1-2 crore capital. ?There is a lot of money chasing the big players but that?s not so true for start-ups,? says Ranjit Shastri, managing director, PSi Inc.
The 60-member network now claims to be considering about 40 deals every month, including those from US-based prospective entrepreneurs. Companies, which had sought assistance include Author Gen, Knowcross, Fan Shadow, E-tendering. ?We have been through this learning curve and can help others out now,? sums up Srivastava for all those aspiring to set up another Google.