From launching the world’s first postage meter to becoming a global firm powering billions of transactions, Pitney Bowes Inc. has come a long way thanks to its sharp focus on technology. The US-based company, whose focus areas now are e-commerce and logistics, rolled out its accelerator programme for Indian startups three years ago. In an interview with VCCircle, Manish Choudhary, senior vice president, global innovation, and managing director of India operations, talked about Pitney Bowes’ criteria for selecting startups, innovation and the key challenges facing India’s startup ecosystem. Excerpts:
Can you tell us more about your accelerator programme? What does Pitney Bowes look for in a startup?
We have screened more than 6,000 startups in India, and selected 18 of them across three batches. These 18 startups have raised a collective $13 million in funding.
We first look at the founders, their backgrounds, and their commitment to the business. We don’t consider part-timers. We want predictable and committed people who know what it takes to run a business. Second, we look at the business model and the founders’ understanding of the domain. Third, the overall presentation, whether they have a pitch deck, etc.
Finally, we believe that even when the idea is broadly right, people should be okay with pivoting. We like flexible people, and not the ones with massive egos, which happens to be the case with a lot of founders.
How are you using your accelerator programme to tap the Indian market?
There is a change that we are seeing. Earlier, Pitney Bowes had large companies as its customers, but over the last three years, several growing startups, such as InMobi and Delhivery, have become our customers. In case of startups, Pitney Bowes’ decision cycle and its ability to close a sales deal is 10 times faster then selling our software and technologies to large enterprises.
We have also noticed that startups are buying more technologies than traditional companies.
We have seen several companies leverage solutions created by the startups they accelerate. Are you looking at such benefits?
Pitney Bowes is a Rs 25,000-crore company. We feel innovation is the foundation of our transformation, and we believe in open innovation—it doesn’t need to happen behind closed doors.
Startups and accelerators are one way for us to bring in outside innovation, and create a broader innovation charter within the company. Its effect is sometimes tough to measure, but you start seeing changes in culture.
Besides, we look to embed our technologies in startups’ business models, and learn from them locally where we do not have a footprint or understanding.
What are the key challenges the Indian startup ecosystem faces?
One fundamental challenge we see is, there are a lot of smart people who know how to create stuff, but a very small fraction of them actually focus on solving the problem and making money. Robust models for monetisation and scaling up, and the thinking of creating something big and global are missing. A lot of companies come up with great ideas, but they lack training.
The second is hype versus reality. Sometimes, a trend or technology is hot, and the segment gets so crowded that real companies with real businesses get lost. Something has to done to separate hype from reality.
Third, the funding atmosphere has tightened, and a successful fund-raise now needs a real revenue model and profitability projections. However, companies with solid fundamentals, a strong business model and robust teams are still raising money. Copycats are finding it tough.
Another challenge here is to make companies think global. And thinking global doesn’t mean you don’t solve local problems… look at startups in Silicon Valley.
Last but not least is the all too common mindset “I want to make money” without sometimes even having a strong idea or plan. In fact, I have come across people who had the business model ready before even understanding well what the idea was. However, their balance sheet and financial projections were off the roof.
Solve a problem first, and you will eventually end up making money.
Pitney Bowes offers free software access to the selected startups, but funding is not part of your programme. Why?
We have explored these things, but it’s too small a play for us given our size. Besides, we are based in the US, and we don’t want to complicate things for young startups. If they find value in our technologies and products, we will probably have long-term relationships with them. At that point, it may make sense for us to invest.
We have had conversations with a few ventures, wherein we explored how we can help them without picking up any equity stake.
How do startups look at accelerators that provide funding in lieu of equity versus players like you? Is funding more important, or do they look for domain expertise?
It depends on the founders and the startup. There are companies that want basic funding—they are willing to part with some stake for initial seed funding. In our case, companies come more from the domain knowledge standpoint.
We see shipping, tracking, location-intelligence startups come to us, following a lot of research on our products and technologies.
I think both kinds of accelerators are great in their own right.
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