Bengaluru: Start-ups have to be clear about the need for venture-capital funds and should get out of the entitlement mentality, said Shalini Prakash, Venture Partner, 500 Startups, at an investor insight event held by global start-up community Startup Grind.

Sharing insights to a group of entrepreneurs, in a conversation with Dharani Manne, Vice-President – Start-up Activities, iB Hubs, at Innov8, a co-working space, Prakash insisted that entrepreneurs need to be crystal clear about the need for funding.

“If the funding you are looking at can drive your bottom-line by 10 per cent or so, it does not make sense to go for investments,” she said.

Her insights come at a time when investors are getting increasingly picky about the kind of ventures they invest in. Prakash believes if the venture is generating revenues, the emphasis should be on rotating revenues, ploughing it back into the venture and thinking deep about the need for additional funding.

“Small incremental increases should not warrant fresh funding.”

So, what does a VC firm look for in a start-up — vision or execution?

“Ideas are not worth a dime if you cannot execute them,” opined Prakash.

Also, investors are not looking at entrepreneurs who have worked in a domain or technology. They should have the ability to solve an end consumer’s pain point.

Investors are also re-evaluating their strategy around investment, at a time when there are many changes happening in the world — from governments, to the ones technology is bringing in.

Customer is king

In such a scenario, a founder should be cognizant about these things, and should know the needs of the customer.

“A lot of times, we see entrepreneurs getting fixated with technology and even asking investors for their opinion on their product or service. Investors should be obsessed about their client’s business,” Prakash said.

500 Startups invests in a range of ventures from health tech, ed-tech and agri-tech to Software-as-a-Service companies. Prakash also pointed out that an entrepreneur should be open to feedback and accept changes suggested by customers, else they run the risk of losing focus on the end objective.

The session also had some tips to entrepreneurs. Investors, on an average, get around 30 emails every week, but a large majority of them are not clear about their product/service.

“Sending a video of your offering would help us determine things,” Prakash said, adding that the focus of the email should be on what an investor wants to read.

She also suggested researching about the investor before meeting them, to get an idea of what sectors or geographies the firm invests in.

The conversation concluded with questions, which included why businesses were not able to solve India-specific problems. Prakash replied that a lot of the bright minds are happy in their comfort zones and do not feel the need to work on issues specific to the country.

However, she added that it is slowly changing.

Source: Business Line