Execution

My last article was about ideas and how to generate, incubate and finally commercialise your idea. But what should you do once you have the final product? Why try and sell it of course! But, there is a step in between. Most of us do not have the funds to actually get our idea into the marketplace. Whether it is the need for coders for an e commerce site or large scale manufacturing, the need for seed money and continued funding is felt by every venture in its early stages. Not only in the early stages, most successful start-ups go through multiple rounds of investment before they become operational.  So here is a brief guide to the different kinds of funding available to young entrepreneurs and what should they expect from these sources.

1. Grants

This is the most lucrative kind of funding out there. Many institutes give grants to ideas that they feel requires their backing. Grant money does not need to be returned (Some grants require you to payback a part of the money in the form of donations but this is considered to be debt financing explained below). This grant money is also (most of the time) well publicised and can help you gain recognition and associates.

The downside is that most grant money is issued to projects in their research stage. This money is also very tightly controlled and there are strict guidelines set up which limit how the money can be used. Grants are also fiercely competitive and very hard to come by.

2. Debt Funding

This is the kind of funding that most banks and financial institutions issue. These institutions have very clear lending policies and are very clear about rate of interest, time of return etc. You need to have a clear business plan and repayment strategy for this kind of funding, along with good credit history. These banks also often need some kind of collateral. This kind of funding provides you with clear aims that your company needs to achieve to repay your loan and this also gives you full control of your idea and product without having to consult investors and venture capitalists at every turn.

The cons of this are that this funding needs to be repaid whether your business is a success or not. The repayment scheme is discussed when you are issued the loan and needs to be adhered to. This kind of funding also doesn’t give you any secondary benefits such as having the recognition that comes with having a big investor and the visibility which comes with it (look at flipkart with its billion dollar investment).

3. Equity Funding

This is the kind of funding that most of us are familiar with. Almost all new start-ups want a piece of this very tiny cake. When you get equity funding you may be funded by friends and family, institutionalised angel investors, seed capitalist all the way upto venture capitalists. In return for the funds they provide these investors ask for equity (shares) in you start ups. This is a good thing as they can only get a return for their investment when your company does well. They often provide guidance and networking opportunities to you and your associates.

As great as it may sound there are a few problems with equity funding

• Your idea does not solely belong to you now. You have to keep your investors happy and appraised of your performance and have to take their views into account.
• It is extremely hard to get this kind of funding.
• Even if you do find somebody who is interested in funding your venture they might not be as forthcoming as you would like.

This is the basic difference between debt and equity funding:

4. Crowdfunding

This is the newest kind of funding out there. It involves directly connecting with your market and asking them for funds for a product they might find useful. Sites such as Kickstarter and Indigogo are leaders in this field. This involves putting a prototype of your product on the website and having a reward based investment by the general public.

This is very helpful for really innovative small scaled ideas but requires an internet presence and a lot of luck.

Most small businesses go through the following stages:

And have the following investment model

However every start up is different and will require different kinds of funds at different times. So the final advice I would like to leave you with is choose wisely .So, may the odds be ever in your favour.

P.S. If you are having a hard time understanding investment and funding watch the first few episodes of the HBO series “Silicon Valley”.

 

The Interview

Amidst the pile of sheets, different pencils, eraser, set squares and T-squares, I spotted out one (almost) living being in her polka-dot pajamas. The spotted species is popularly known as “The Architecture Student”. Her sleep-deprived eyes looked up from her sheet as the interview began:

Q.What comes to your mind when you hear “entrepreneurship”?

— Lijjat Papad. I was only eight and munching on the papad in subject when my father narrated me an incident about how seven Gujarati women started a small venture of making papads and selling them from their homes which gradually grew into a successful business. “It’s called entrepreneurship.”, he had concluded.

Q.Do you think it helps the field of  architecture ?

— Of course it does. Right now, after I finish my graduation, I’m looking at five more years of slogging in somebody’s firm and running around to fetch coffees for my superiors. The only key to freedom from a relationship with the coffee machine and for the liberation of ideas is running a firm of my own.

Q.If you had all the resources would you like to start a company?if yes then what service would you provide?

–Yes, that’s the dream. Someday, I want to start an architecture firm which would focus mainly on the residential architecture. Afterall, accommodation of the raging population on this planet is one of the biggest challenges.

Q.What campus companies would you have wished for in your college to make your job easier?

— The fact is that an architecture student has more luggage to carry than a coolie does on Mumbai Central railway station. A campus company from whom we can rent the drafting tools for the time that we are in college can serve as a relief ointment to our numbed-by-pain vertebral column.We are always in a battle against time and are highly forgetful. A stationary provider on the campus can be the knight in shining Armour during such crisis.

Q.Do you think architecture colleges should also promote Ecells?

–Ecells can work as good as a GPS system for the architecture students who are gearing up to step out of the college and are as lost as a sheep. Pursuing entrepreneurship needs a heavy dose of encouragement and guidance in the right direction. So having Ecells in architecture colleges would work in our favour.

 And with that our interviewee concludes her interview because even though we want to know more about this bone-tired talented species called The Architecture Student , they always have work to do and hopefully ,after reading this interview,even architecture colleges will start promoting Ecells and some budding entrepreneur will cash-in on the idea she spoke about and earn a lot of blessings along with monies for saving the students from turning into part-time coolies.

Moral of the story:Feasible business ideas can be found in plenty right in your backyard, you just need to look right.

Young Entrepreneurs of KJSCE

What is the first thing that comes to your mind when you hear the words “Entrepreneurship “ or  “Entrepreneur”? Ninety percent of the time you will imagine one of those big shot business names like Bill Gates or Zuckerberg or Ambani or a faceless person in an expensive suit in a formal business environment.

But then you have to go back to the basics .Everyone started out with an idea. It is not even necessary that you have to become a corporate ninja to become an entrepreneur. It is the other way round. You first become an entrepreneur and then if you wish to , you become a corporate ninja or a stay at home mom or sell your idea and let someone else do the business

This concept has been well explained in the movie “English Vinglish” where a housewife sells ladoos from home and becomes an entrepreneur.Entrepreneurship means stretching the boundaries of innovation and for that, all you need is an inspiration. And inspiration like lightning can strike anywhere. Maybe one day your fuse decides to act out and you are sitting there in the dark trying to find a flashlight and suddenly you realize what an amazing concept “glow in the dark flashlight” is because honestly ,if everything is dark how will you locatethe flashlight! And just like that you become an entrepreneur.

To give a platform to start out and test their ideas , colleges have started developing Ecells or entrepreneurship councils which encourage ,support and incubate young entrepreneurs starting out in their college hoodies and grungy t-shirts.

Bloombox,KJSCE is one such Ecell and it helps to transform ideas into businesses . it’s like a mock test before going out into the cold hard world. The target demographic here are the students of the college but the challenges are all in real time. It is really astounding to see the ideas some of the students come up with .They range from services you always wished were available to those younever imagined until someone made it available.

Let’s understand this with few examples.

Tool trunk, an existing campus company sells tools in the college to FE’s and Mech students. If you aren’t from KJSCE and your college does not have this service then I am sure that you wanted someone to hand you the tools of the correct specifications nicely in a bag so that all you had to do was shove them in your locker instead of going to a hardware store and scratching your head and transporting those heavy chunks of metal to your college.

Another company Writing Wonders provides write-ups to you in your class. You don’t need this kind of luxury but wouldn’t you wish for it once it is there?

Artsy Craftsy sells handmade cards, surprise boxes, bookmarks and anything else you can come up with. Again , wouldn’t you wish for some new innovative personalized thingy to be available so that you can gift it to someone instead of a store brought card and at a much more reasonable price?!

If you are a tronics or EXTC student then wouldn’t you wish desperately that you don’t have to travel all the way to town if you don’t live near there and pick out components? Well, Component Cloud makes it available in the college!

As I said, some of these ideas are astounding. What India really needs is more entrepreneurs to challenge the First World countries and make rupee stronger. So, just gather your resources or your talents and team up with your friends or anyone who can fill in the voids of your idea and start a company of your own so that even you can get the impressive title of “entrepreneur” !