By Sramana Mitra
I recently wrote a blog post that I believe is worth pointing out in the context of the strategy roundtables: VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects?
It makes the following observation:
When I first talked about the 1M/1M program, I had observed the need to contain the immense infant entrepreneur mortality prevalent in the startup ecosystem. Over the past year, we have been talking to various investors – VCs and angels, and incubators and accelerators – asking them the question: What are you doing with your rejects?
To give you some further context, we recently spoke with a VC in Boise, Idaho, who gets 500 deals a year. His firm invests in four. That means that less than 1% of the entrepreneurs who apply succeed in getting financed. If you look at the numbers of super angels in Silicon Valley, they are even scarier. Mike Maples told us that he gets 7,000 deals a year and invests in 12 to 15. That’s a 0.21% hit rate. The flip side: a 99.79% rejection rate.
Friends in the investment ecosystem, this is the most obvious opportunity for us to address through 1M/1M and make a dent in infant entrepreneur mortality. (more …)
I’d like to hear from venture capitalists, angel investors, incubators, and accelerators on this topic. I have a fundamental observation to make here that seems to be lost in the noisy universe of entrepreneurs’ obsession with fund-raising: Most companies should not raise external financing. They should be built organically, bootstrapped, and get to sustainability. A sustainable business = (customer + revenue + profits). Investors are optional in this equation. Very few businesses address large enough market opportunities to warrant professional investor involvement, especially VCs. But many can become sustainable businesses that can make their owners tremendously wealthy.
With that preamble, let’s jump into the presentations for this week’s One Million by One Million roundtable. Very encouragingly, we had three businesses, each addressing an interesting business opportunity, and my personal experience resonated with all three.
First, Sam Slover discussed Learn It Live, a marketplace for experts teaching certain subjects through a distance learning mode. I have seen several businesses along these lines, but what I liked about Sam’s is that he has started working with professional IT organizations where experts naturally gravitate and empowering these existing communities to better leverage their expertise.
Sam had other ideas about healthcare and such, but I asked him to focus the business squarely on IT experts and build up the community by working with professional organizations, as he has already started to do.
Next, Taariq Lewis presented Bizeque, a business analytics company, with the observation that the C-suite at different companies is still unable to access critical business metrics (e.g., Who are my most profitable customers?) because they are dependent on database administrators (DBAs) to set up queries. Taariq wants Bizeque to free C-Suite and other top executives to be able to freely query such questions and act as a translation bridge between them and the DBA or business analysis teams.
Business analytics has, of course, been around for a couple of decades, and there are numerous vendors in the market. I advised Taariq to focus on just one analytics product and become a value-added service provider for that particular vendor. Taariq can use the relationship to better understand the situations of various real customers and have the vendor partner bring him into, let’s say, a dozen customer situations.
Perhaps, to begin with, Taariq uses his software to offer the solution as a service project and charges for building a certain set of analytics queries to address key performance indicators.
This would do two things: contain the complexity of the systems Taariq has to work with right out of the gate, and help him go to market through the sales and marketing team of the analytics software vendors providing the core engine. It would go a long way in validating his assumptions and possibly also bring in customer revenues if the value proposition really resonates.
Finally, Adarsh Jain from Delhi pitched CricketWeekly. Adarsh has a good insight that cricket enthusiasts, of whom there are millions in India, do not have access to quality cricket merchandise at affordable prices, and he has launched a site to do crowdsourced designs around the cricket theme to produce and market T-shirts and similar products. It’s a spin on Zazzle and Shutterfly types of concepts, and I think it has solid potential for the Indian market. I know because I grew up as a cricket enthusiast and have firsthand knowledge of the fever it creates among Indian youth. I can easily see them creating T-shirt designs and such on Adarsh’s site (I advised him to change the name, though).
Our primary discussion was about the company’s customer acquisition, and I suggested using events at various college and high school campuses to build up buzz.
In summary, all three of today’s entrepreneurs presented real opportunities. Now it’s going to be a matter of fine-tuning, sculpting the businesses day by day, and executing precisely, accurately, and without losing focus. I am a great fan of precision, and with some of the strategy tightening we did at the roundtable today, these businesses definitely have a shot at such focused execution.
Sramana Mitra is the founder of the One Million by One Million (1M/1M) initiative, an educational, business development and incubation program that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond. She is a Silicon Valley entrepreneur and strategy consultant, writes the blog Sramana Mitra On Strategy, is author of the Entrepreneur Journeys book series and Vision India 2020. She has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology.