Although the World Resources Institute reports that low-income segments represent a US$ 5 trillion global market, entrepreneurs catering to low-income markets find that developing scalable business models is often complex and risky. There is often little or no existing infrastructure, and since India is a vast country, the culture changes every 100 kilometers. As a result, innovative business models that take into account challenges related to distribution and educating communities, for example, are important.

Early-stage enterprises that have high-potential ideas often lack the support required to develop and refine such innovative business models. These entrepreneurs face seemingly insurmountable resource constraints such as information asymmetry, sporadic support of varied quality, and limited budgets.

Read More on the Ennovent Blog –

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A couple of weeks ago I did a presentation at a Vilgro event in Jaipur covering the funding landscape for early stage enterprises. As entrepreneurs financing is a major challenge for most entrepreneurs especially in the early stages getting monies into the company and at what terms is extremely critical.

Hope you enjoy this long presentation on the different instruments and also tips on how to pitch to venture investors

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Note: A version of this post was originally published on the Ennovent blog.

It is no secret that governments and large corporations often fail to adequately address the product and service needs of those living on less than $5/day at the ‘base of the economic pyramid’ (the BoP). Recognizing this clear market opportunity, many enterprises have taken on the challenge of bringing innovative and affordable products and services to BoP communities. While these enterprises are often branded as ‘social’, the reality is that despite their clear social contributions, they are just businesses responding to a high potential, yet fragmented, market.

Not unaware of the BoP market potential, this emerging network of triple bottom line-focused enterprises have attracted attention from angel investors and venture capitalists (VCs). Yet, despite the social and economic potential of these business, investors are following a fairly risk averse approach. Entrepreneurs often hear variations of the same line: “A solid idea, but it’s too soon for investment.” Fact is, despite their unquestionable social value proposition and strong financial potential, many early-stage enterprises responding to BoP markets have yet to demonstrate ironclad proof of concept – which leaves many investors uneasy.

This is the classic chicken-and-egg situation. Entrepreneurs need capital to build prototypes, acquire customers and reach a critical mass in the market; yet, investors will rarely support these businesses before the product and the business model is proven. Despite the global estimated BoP market demand of $5 trillion, many enterprises with truly innovative ‘game changing’ products and services fail to prosper – often because of lack of financial backing at the critical first phases. In addition to quickly flattening economic opportunity, this reality leaves low-income communities without the products and services they need to improve their lives.

Early-stage enterprises call for early-stage investors

In response to the clear demand for investment dollars tailored to the realities of enterprises working at the BoP, a recent surge of investors has emerged – willing to take higher, albeit calculated, risks. These ‘early-stage investors’ are more likely to take the market, technology and business model risks which are often necessary when supporting an enterprise in it’s infancy.

Recognizing the importance of these early-stage investors, in Spring 2012 Ennovent launched the Impact Circle

Read the full post here -

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In the ecosystem one often hear entrepreneurs saying where is the money or from whom can I raise money from? And you ask the investors pat comes the reply where are the quality entrepreneurs or in our conventional investor language (investor ready deals). This change can only be brought about if both investors and entrepreneurs work together. While there is no quick fix to this, what it needs is a deeper understanding of where the other person is coming from and what are they constraints.

I mentor a lot of entrepreneurs seeking funding – my advice just put yourself in the investors shoes. Imagine if your friend approached you with your idea, business plan etc for funding how would you react? What are the questions you would ask, what would be your concerns etc? As entrepreneurs we also need to realize that while investors would love to fund every great idea, the reality is they are bound by fiduciary responsibilities and like entrepreneurs they also raise money from their investors (Limited Partners). So investors also go through similar fund raising cycles and raise funds with the expectation of delivering maximum returns to their limited partners.

Its definitely not rocket science but as entrepreneurs we get so consumed by our idea and business plans sometimes we forget to ask ourselves some hard questions! So what are those hard questions, that we should definitely ask ourselves before approaching investors, here a few to get the ball rolling :-

- Do I have the right team with the required skill set to implement this business opportunity?
- Have a clearly identified who my customer really is and what is the pain I’m solving for him or her?
- Size of the addressable market opportunity – Is that really mapped out or number from some report?
- Have I figured out who is going to buy your product/service and how much they would pay for it.
- Do I know why would customers choose my product or offering over others?
- Can I clearly articulate the key differentiators in customer benefits, not just an internal perspective on technology superiority?
- Do I clearly know how my service or offering will make money(example who will pay me, who will charge the customer, how, when etc)
- Do I know how I”m going to market and sell my products/services (Go to Market Model)?
- Do I know who I’m currently or in future likely to compete against and what is my plan to win this battle? (Remember that competition is not just those providing a similar solution to yours, but all those addressing the same customer need through variety of approaches)
- Have I planned for all the market risks, financial risks, business model risks, execution risks, etc?
- Can I clearly articulate what I intend doing with these funds?

This by no means is an exhaustive list only an indicative checklist of questions to which you should have clear answers too. In my next post I will dig through each of the questions in more detail and highlight some quick tips as well

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TiE Delhi-NCR is hosting the Deal Flow Session at TiEcon Delhi 2012 which aims to provide a one stop platform for high potential entrepreneurs to present their business plans to some of the leading national & International investors to meet their funding objectives.

The investors present at the deal flow session are an ideal mix of prominent Angel Investors & leading Venture capital firms who are keenly looking at investing in high potential businesses. Over the years, the deal flow sessions at TiEcon have attracted a whole host of prominent Venture Capital Firms, Private Equity Players, Angel Investor Groups and HNI’s.

The plans received would then go through a short listing & mentoring process led by a screening committee with representation from renowned Angel Networks and venture capitalists. Feedback and suggestions given by the screening committee will be shared with the short listed companies.

In addition, our Angel Partner – Indian Angel Network would also be keen to look at the shortlisted entrepreneurs for the IAN incubation services. We believe this exercise would give the Investor Community a platform to look at the interesting investment opportunities to bridge the last mile.

Some of the investors who have interacted or closed investments on the TiE Platform are:
Indian Angel Network, Canaan Partners, Baring Pvt. Equity Partners, Omidyar Network, DFJ, Matrix Partners, Seed Fund, Blue Run Ventures,Mumbai Angels Network, Erasmic Ventures, Ojas Ventures, Evolvence, Gaja Capital, Gujarat Venture Finance, SIDBI Ventures, Punjab Venture Capital, Google, Intel Capital, India Value Fund, New Path Ventures, IndoUS Venture Partners, Sequoia Capital, Silicon Valley Bank, Sun Group, Motorola Venture Capital, Lumis Partners, One97 Mobility Fund, RVCF, Sierra Ventures, Helion Ventures, SAIF Partners & many more….

Companies that would like to present their business plans at the above forum would be required to submit the same by clicking the relevant link given below.

For Angel Funding

For VC Funding

For any other further information please feel free to connect with Upasana Sharma – Upasana@tienewdelhi.org Mobile-+91-9810078395

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We made our first investment through “The Sustainable Enterprise Fund”, an impact venture fund managed by Ennovent, of an undisclosed amount in Barefoot Power. The co-investors include Insitor, Oikocredit and The Grace Foundation. Unitus Capital advised Barefoot Power in this transaction.

Barefoot Power (BFP), a global, social for-profit enterprise, manufactures and distributes lighting products, solar phone charging and business development services specifically for low income populations that do not have reliable access to electricity. Founded in 2005, Barefoot Power has impacted the lives of 1 million people in over 20 countries.

Over 1.5 billion people globally lack access to electricity and Barefoot Power is on a mission, to bring affordable renewable energy and safe, healthy lighting to 5 million people by 2012 and 10 million people by 2015 to help eradicate energy poverty.

Barefoot Power

Rick Hooper, CEO of Barefoot Power shares with us his views on the investment and their plans for India:

What opportunities do you see in the Indian BoP market?
I see the opportunities in India as vast, a large market with a large off grid population. While our current products are directly suitable to these demographics, I foresee that we will also adjust a variety of products to suit the Indian requirements. With a suitably adapted range and in-country BFP support, I see that our products will be helping millions of people within only a few years combined with a healthy business for our investors and to be established local entrepreneurs.

What is unique about Barefoot’s model of providing power to the BoP?
Barefoot Power addresses the problem at its source, not trying to put in place large scale products that are costly and perhaps out of the reach of many. BFP focuses on Pico Solar that gives good quality lighting, power and phone recharge solutions at affordable prices so the local consumer can benefit immediately replacing costly and unhealthy solutions such as kerosene. Our products are backed by quality of design and warranty. In the small chance that something does go wrong, the level of our support is perhaps unique in this market space.

How can ennovent help Barefoot to access this market?
As everyone admits, India is a different if not difficult market to understand and enter. Ennovent with its on the ground knowledge is an important partner for us in our establishment and setup. I see Ennovent will be providing human resource advice, local conditions (state to state) advice, advice on target entry markets and most importantly introductions to local communities.

What are your global plans for the near future?
BFP continues to enjoy high growth in all our current markets. We, like all companies, continue to work on innovation of products as the market demands evolve. Having recently released our Generation 2.5 products that provide more light and longer battery times, we are now looking to both range extension and distribution reach. India in this case is a key market for our growth.

Read more about Barefoot Power and the investment news here.

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Last week I meet up with Shailesh who is representing Seedfund in Delhi and must say was pleasantly surprised to learn that they are even looking at concept stage ideas backed of course with mature teams. So what are some of the other things that make Seedfund stand apart besides being voted as the “Best Early Stage Investor at the Apex Awards”….

Backed by a formidable team with many years of experience in founding, running companies in addition to venture experience. Already invested in a dozen companies including recognizable names like redbus, afaqs, carewale, vaatsalya etc. Presence of a incubation center both physical/virtual where they house a few fledgling companies till they are old and strong enough to fly out and be on their own. The process to apply for incubation is the same for funding i.e. due diligence remains the same.

Interested folks can apply for funding through Seedfund and if they believe your business is interesting – and worthy of funding eventually by Seedfund itself, they might either offer you the full Seedfunding – or a tranched amount where you first graduate through the Incubator process, where we have an additional set of advisors and then automatically get the rest of the full-term funding- not a bad deal eh??

Key takeaway – They are open to early stage investments and are prepared to take the risks provided there is a solid team and skin in the game. Rumor has it they decided to invest in Redbus when it was at a concept stage not when the business was well proven

To apply to Seedfund feel free to click on the link – http://seedfund.in/plan/.

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TiE Delhi-NCR is hosting the Investor Showcase an initiative to connect investors to high potential entrepreneurs. The Showcase will highlight one investor and provide a unique platform for entrepreneurs to understand the investor’s areas of interest & investment philosophy.

This showcase will feature SAIF Partners, one of leading investors comprising an enviable portfolio that comprises MakeMyTrip, One97, JustDial, NSE and Network18 among others.

The Investor Showcase will enable you to discuss your current & future growth plans and funding requirements with best of breed investors. Needless to say, the limited seats on offer will run out fast! Confirm your participation now to get to know SAIF Partners like never before and interact with some of the investee companies to get a first hand account.

Date: 3rd March,2011
Time: 7pm followed by cocktails & dinner
Venue: Magnolia, India Habitat Centre, Lodhi Road, New Delhi

For More Details & Registration Click Here

About SAIF Partners

SAIF Partners is a venture capital firm that is sector and stage agnostic. SAIF is extremely active in early stage technology-enabled businesses. SAIF was the first institutional investor in companies such as MakeMyTrip (Consumer Internet), One97 (Mobile VAS), JustDial (Local Search), and HomeShop18 (eCommerce). The fund has strong experience of investing in companies at an early stage and helping them through multiple rounds of financings and eventually an IPO.

SAIF is growth investor in companies like Catmoss (Apparel Retail), Speciality Restaurants, Network18 (Media & Broadcasting), TV9 (Media & Broadcasting), Veta (Education), SIFY and IL&FS Investmart.

SAIF currently manages $4.0 billion across funds and is actively seeking investment opportunities in early stage and growth stage businesses.

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Saurabh Srivastava has beautifully articulated a set of core recommendations which should go a long way in encouraging the angel and entrepreneurial ecosystem in India. He argues for a thriving MSME sector we need to create a policy environment that would encourage the creation of more seed funds or early stage funds.

Couple of highlights from his post on YourStory.in

- Getting higher equity participation to facilitate better debt-equity mix;
- Encouraging MSMEs to go global and increase their exports;
- Entering into foreign technical collaborations for improving competitiveness.
- The government could have a program on the lines of the highly successful Yozma scheme which was responsible for triggering off early stage funding in Israel, by using some public funds to create more early stage venture funds in the public private model. Similarly, some public funding could be used to help spawn more business angel groups in the country to complete the entrepreneurial ecosystem for nurturing SMEs.Setting up of a separate SME Exchange or platform in an existing Stock Exchange to provide exit route to an angel or venture capital investor, along the lines of AIM, UK.

- Allowing listing of angel/venture capital Funds on the existing Stock Exchanges. This is critical as such funds invest in a seed stage company which is unlikely to be able to go public or be large enough to be acquired in 3 to 5 years. However, the typical portfolio of 15 or 20 investee companies of such a fund would collectively have the required valuation net worth and listing the fund would provide a return to the investors thus encourage more such funds to come up.Besides this there are non-financial issues like liability of an individual Director on the Boards of angel or venture capital Fund which need to be addressed.

To read the complete story, click here.

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One97MobilityFund

The One97 Mobility Fund (OMF) is a $100 million fund set to support entrepreneurs who are making, or are ready to make game changing companies in the mobile ecosystem.

Lead by One97 Communications is a leading full service multi-range VAS firm in India with the best team of employees, customers & investors behind it.

They have already invested in two companies:-

1. Oorja
2.Tencube Pte ltd

Would be happy to provide relevant connects to anyone looking at raising money in this space.

For more information on the fund click here

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