The Indian startup ecosystem is no stranger to crises. Having battled a global pandemic that shook our ways of life and work, it is now gearing up for the effects of inflation and an impending recession.
Diksha Pande who managed to raise two rounds of funding during the pandemic for her Bengaluru-based D2C Samosa Party says the secret lies in creativity, flexibility during fundraising, and being judicious about time as a founder.
“Creativity is your best friend; find ways of generating more revenue, cutting down on the unnecessary expenses, and see how you can get your business funded through your customers and various other channels,” she says.
During times of crisis, Diksha advises that founders be flexible about the terms that they had set out in the beginning such as valuation and raising from a particular fund but focus on staying alive to see another day.
Most importantly, Diksha emphasizes that founders do not forget for a day a founder’s core job is to build a credible business and not raise money. “So continue to build, don't get distracted with the whole funding noise,” she says, speaking at a panel discussion on building companies in times of crisis moderated by Ritu Marya, Editor-in-Chief, Entrepreneur Media APAC
With the assurance that more than six crore samosas are consumed every day in India, Samosa Party’s overall strategy was shaped by how the consumers wanted to access it: online, offline, and people did not want to wait too long. Samosa Party took it one step ahead by leveraging delivery aggregators and the Quick Service Restaurant (QSR) model.
During the pandemic, the brand had to scale back the physical outlets, become more delivery-focussed, and took the time to fix its supply chain and production capacities; Samosa Party developed the first fully-automated samosa production machine.
Your customer is indispensable
Siddharth Sirigeri, an angel investor, emphasizes that founders need not shy away from pivoting. “I've invested in Rupifi in the pre-seed, seed, pre-Series A, Series A and doubled down in each and every round. But if I look at the pre-seed deck and look at what Rupifi is in the current form, there's a big difference,” he says, adding that customers can be the best guidepost in such times.
He believes that customers are one major financial asset that founders tend to ignore while actually revenue can be the largest source of cash flow in bad times, especially when it comes to B2B and enterprise ventures.
“They would be more than willing to pay you six months in advance if the product is right and helps in tackling their big problems,” he adds.
He also urges founders to raise small rounds from friends and family to achieve product-market fit (PMF) and then approach other investors to back.
As an angel, he notes that funding has not dried at least in the pre-seed and seed stage while Series A companies are facing a tough time as VCs become stringent and have more time to evaluate.
“You’re well aware of all the large funds, they have raised around $5 billion in the last six months which has to be deployed. So I would say keep building your product, keep solving your customers problems, and eventually capital will follow you,” he advises, especially as angel investing as a practice has become more democratized.
Sousthav Chakrabarty, Co-Founder and CEO of micro-savings app Siply, says loans are not a good option as most banks still consider principles like profitability. This would be difficult for early-stage companies when net burn is always going to be negative, unless they are bootstrapped or operating a customer-funded business.
On the other hand, Sousthav vouches for the value that angel investors can bring in.
“I think today angel investments are at a lifetime high. There's interest; People have realized that if you're participating during an unlisted phase of a company, that's when you actually build substantial wealth,” he adds. Startups can do good from making the best use of this rising interest.
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