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Entrepreneurs must build startups that address daily user needs

By Ravi Gururaj

  • 04 Jan 2016

External funding alone cannot assure a startup's rise.

While raising capital is important, entrepreneurs should not focus on getting money first to deliver consumer value later. From day one, the user has to be at the center of what you do. Running a successful venture is not just about burning cash and grabbing eyeballs. Even if one gets all these ingredients right, the issue of scaling up comes to the fore. That’s the way the cookie crumbles.

Funding is a cycle. One should neither get too euphoric during an upswing nor too shocked in a downturn. The current scenario, where early stage funding is not as cheap is it was perceived to be, is a very healthy sign. In the last few years, there has been a big influx of angels and several seed funds were set up. The bandwagon effect has now given way to rationalisation.

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Economic value creation

Successful startups focus on building a great product and team besides addressing real pain points by deciphering consumer behaviour. A successful startup would create a substantive product for real people. Its product must have a recurring use in everyday life. A case in point in Apple. Even without much information on Apple’s next product, customers make a beeline towards its store every time a new device is unveiled.

As an investor, I look for a good team and a disruptive technology / innovative idea which addresses a major pain point. The team must create a high utility product that has the potential to generate fan loyalty.

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I only invest in startups whose businesses I understand. I try to ascertain if the startup has the necessary muscle to play a dominant role in the next 3-4 years. I tend to invest in a startup’s early days as returns can be disproportionate if the venture takes off

However, a few investments happen in the pursuit of following a passion. You sometimes get caught in the moment. Thus, if I have invested in 25 startups and 3-4 out of them give good returns, that pretty much sums it up for me.

Technology, the disruptor-in-chief

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The beauty about technology is that one cannot forever be ‘king of the hill’. Eventually, one gets knocked over by someone better or the ecosystem becomes so flat that it becomes difficult to differentiate one player from the other. This has happened time and again. Technology is perhaps the single largest driver of disruption and innovation.

Stagnation is not an option for any industry today. CEOs of large incumbent companies are worried of being toppled by technology-driven, younger and more nimble rivals. Not necessarily startups, but any venture that is more startup-like in its approach, is perceived as a big threat. We have seen this happen across industries such as automobile, travel and retail.

IoT and the environment

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Startups operating in the IoT realm, more specifically ventures around industrial IoT / consumer IoT, deep machine learning, artificial intelligence, automation and robotics, will create a huge transformational impact going forward. While these may be good buzz words right now, there will be tremendous action in this space over the next 4-5 years. IoT will play a pivotal role in instrumenting the environment. It will do things like environmental measuring, recording, pilferage prevention of resources and inefficiencies reduction, better than manual systems.

Qikpod

Qikpod is a very young company that is trying to make the process of delivering and receiving packages asynchronous. The endeavor is to ensure that e-commerce buyers don’t have to be physically present at the time of receiving a package. Given the ever-increasing congestion and traffic on Indian roads, customers prefer a certain time slot for receiving packages. We are trying to develop a nationwide locker system, suited to Indian conditions, for delivering and receiving packages.

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An active angel investor and serial entrepreneur, Ravi Gururaj is the founder and CEO of Qikpod, a yet-to-launch startup for locker services. Previously, he founded companies such as Frictionless Ventures Pvt ltd, VMLogix Inc and SQA Technologies Pvt Ltd. As an investor, he has positions in 25 startups, including Appvirality, Wegilant, Hiree, Tookitaki and Explara, besides others. Gururaj also heads the product council at industry body Nasscom.

(As told to principal correspondent Vijayakumar Pitchiah)

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