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How to Prepare for an Investment Meeting

How to Prepare for an Investment Meeting

March 1, 2016 Tandon Group
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How to Prepare for an Investment Meeting

  Tandon Group
  March 1, 2016
 

This post is going to focus on the mental aspects of an investment meeting, over the technical aspects surrounding your company. If you’d like a more technical breakdown of necessary components to bring to an investment meeting, go to our checklist on raising startup capital. As far as this post is concerned, these are the task you need to do to be mentally prepared to tackle an investment meeting confidently.

Keep in mind that, no matter what, you’re almost certainly going to be nervous going into your investment meetings. The best advice we can give is to reframe ‘nervousness’ as ‘excitement.’ If you’re excited, as opposed to nervous, you’ll perform better. The physical feeling is almost identical.

That being said, here’s our list of things to do before meeting with your first investor:

Anticipate questions

Before stepping foot in an investment meeting you obviously want to know what questions they might ask you. Having answers to difficult questions prepared proves to investors that you actually thought your idea through. This doesn’t necessarily mean you have to have perfect answers for every question but at least having an answer means you’ve anticipated difficulties and planned ways to overcome them. In every business, there’s going to be difficult questions and sometimes investors simply ask a question to see how you approach a problem. There have been countless articles written online about the different questions investors will ask you.

Brainstorm objections

After anticipating questions, investors will almost certainly object to some of the answers you give. You need to anticipate these objections and have counters available, so you can build your argument. An investment meeting can really be boiled down to the process of building an argument of why your company has the potential to be successful. In most cases, if you can prove your case, you’ll get an investment. The point here is not to be combative or to prove anybody wrong. The point is to show you’ve really grappled with the potential difficulties that lie ahead.

Memorize answers

There’s no use in anticipating questions if you’re unable to articulate your responses when the time comes. After you’ve thought of answers to all of the most common questions you might encounter, you need to commit those answers to memory. Ideally, if you’ve been working on your company for any length of time, you have mentally addressed these problems many times in the past and the answers will come second nature to you. If you’re having a hard time committing your answers to memory, it may not be the best time to be looking for an investment.

Rehearse

Building upon the last point, the best way to commit your answers to memory is to rehearse them. You should use a co-founder, a friend, a family member or anybody else that you can trust to help you rehearse questions and answers, back and forth. Many people find it helpful to start with a mirror and simply practice with themselves before they move on to live practice.

Research investors

Knowing about the investor(s) that you’re pitching can be one of the easiest ways to gain confidence before an investment meeting. Get beyond the basics of where they’re located and who they are. Figure out: What is their typical investment size? What are the type of companies they like to invest in? What are some companies they’ve invested in in the past? What big successes/failures have they had? Basically, look for anything that you can leverage as a positive to help sell your vision.

At the Tandon group, we’re currently looking for promising startups who are looking for investment capital. If you believe your company is on the verge of becoming the next big hit, get in contact with us. The Tandon Group has invested in dozens of startup companies and has seen some resounding success in the past. We hope that your company will be her next big success and we’d love to be your partner for the road ahead.

Tandon GroupHow to Prepare for an Investment Meeting
Forget e-commerce, m-commerce is where India’s potential lies

Forget e-commerce, m-commerce is where India’s potential lies

November 26, 2015 Tandon Group
BL 112715 India mezz

Forget e-commerce, m-commerce is where India’s potential lies

  Tandon Group
  November 26, 2015
 



For 32-year-old Varsha Deerpaul, shopping these days no longer involves weekend trips to her favorite mall in South Delhi’s Saket area.

Instead, she now indulges in retail therapy “mostly on the go” through her Samsung smartphone. For example, during her daily commute to work, Deerpaul spends most of her time browsing through the latest deals on e-retailers Flipkart and Jabong.

“If I wanted to buy a dress, I probably will have to check out many shops before deciding on one and that takes up too much time and effort. But now, I can easily browse through 20-30 dresses and there are discounts almost throughout the year. It’s really easy and by the time I reach my metro station, I would have decided on what I want,” the human resource senior executive told CNBC.

With consumers such as Deerpaul, it is little wonder that India’s e-commerce companies are racing to embrace mobile, with some ditching their web platforms entirely to go mobile-only such as online fashion retailer Myntra earlier this year.

Most recently, the country’s biggest e-commerce player Flipkart unveiled a new mobile website on November 9, which aims to give users an experience close to standalone apps.

“In July 2014, we had about 15 percent of transactions coming from mobile. In a year, we have gone from 15 percent to 70 percent. This kind of revolution is almost unforeseen and we have to come up with a whole new set of products to deal with that,” Flipkart’s chief product officer Punit Soni told CNBC in September.

Read More Snapdeal CEO: We will be India’s biggest e-commerce player

Drivers and limitations

According to a report released in April by market research firm Zinnov, India’s mobile commerce market could balloon to $19 billion by 2019, up 850 percent from its current size of $2 billion. Surging smartphone sales in the world’s second most populous country amid a tidal wave of low-cost handsets is the key driver, the report said.

Projections by Cisco put the number of smartphone users in India at 651 million by 2019, a near five-fold jump from 140 million by end-2014. The study, released in February, noted a 54 percent surge in the number of smartphone users in 2014 as the average price of handsets fell to around $150 last year and as smartphone penetration increases in rural India.

With the availability of cheap mobile data plans increasing, analysts believe this will help boost internet usage via mobile handsets — and consequently online shopping.

“India has a huge opportunity for mobile commerce. This is the first time a majority of Indians are getting connected to the internet. They are discovering products at costs that are lower than they’ve never seen before, and they are getting products that were not available in their market before. So it’s a huge opportunity,” FreeCharge’s co-founder Sandeep Tandon told CNBC.

Read More Flipkart founders debut on Forbes billionaire list

To be sure, obstacles that threaten to stymie the growth potential of mobile commerce in India remain aplenty.

For one, India’s focus on cash usage and security concerns about e-transactions are creating friction with the burgeoning online shopping market, analysts say. Large players are wary of the ‘Cash on Delivery’ system as it is manpower intensive, and requires time to collect the cash from the consumer’s doorstep.

In addition, India’s poor logistics infrastructure creates a challenge for e-retailers to offer quick delivery services, while the lack of stable telecommunications infrastructure across the country could also limit the pace of growth.


However, companies such as India’s second-biggest e-commerce player Snapdeal have taken the proactive approach by actively investing in solutions that will iron out these obstacles.

“Connectivity over telecom networks in India isn’t that great. So what we are doing is investing massively in building lighter apps [and] mobile sites that load up in three seconds even on a 2G network. It’s a lot of tech investments that we have to make, but we are seeing fairly exponential growth from mobile commerce,” co-founder and CEO Kunal Bahl told CNBC on November 18.

Others are hopeful, with recent government policies being supportive of developments in the mobile commerce space, particularly in paving the way for non-cash payments.

“There’s a lot of gap when it comes to understanding the digital space. Luckily the government has taken huge strides over the last six months to understand [the sector and] this is why they’ve offered more banking licenses. The recognition is coming so I think over the next year or so, we will see a huge amount of change and upward growth in the [mobile payment] space,” e-commerce consultancy eTailing ‘s founder Ashish Jhalani said.

In August, the Reserve Bank of India (RBI) announced that it plans to grant licenses to 11 businesses such as U.K. telecommunications group Vodafone and India’s Airtel to launch new so-called payments banks, which will allow transfers and deposits up to a limit of 100,000 rupees ($1,532) predominantly via smartphones. Analysts have widely viewed this as a significant shake-up of the country’s financial sector.



The next big thing?

With competition heating up, both established players and fresh entrants are seeking to differentiate themselves with a “new variant of mobile commerce” that moves beyond the retail realm, according to FreeCharge’s Tandon.

“Competition is so severe [so] not everybody is going to jump in and do mobile commerce [in the same] way… There are now service companies like UrbanClap [where] you can choose and hire a service professional to your house. For example, I’m invested in a company called Amber [which] is a platform for every stylist to become a business person and deliver the product to a customer’s house,” Tandon said.

Started in October 2014, hyperlocal start-up UrbanClap offers hiring services across categories such as health, home and events via its smartphone app. On the other hand, Mumbai-based mobile-first marketplace Amber taps on a pool of freelance make-up artists, hair stylists and henna artists to provide on-demand beauty services.

“These are new variances of mobile commerce which have not been so successful in the U.S. markets because [of] a lower population density,” he added. “But in India, a city like Mumbai has 20 million people.”

Read More Meet India’s home-grown IKEA

Paytm is also venturing into the hyperlocal commerce segment, as consumers get increasingly comfortable with the idea of making purchases with just the touch of a finger.

The Alibaba-backed firm announced last month it was partnering hyperlocal businesses BookMyShow and Zomato to roll out food ordering and table booking services, as well as deals available in a user’s neighborhood.

“India’s infrastructure may not be so highly developed, but it is developed compared to 5 years go and consumers are now more comfrtable with shopping from smartphones. India has leapfrogged from one generation so we might just leapfrog to another generation.” Paytm’s Sharma said.

Tandon GroupForget e-commerce, m-commerce is where India’s potential lies
Checklist for Raising Startup Capital

Checklist for Raising Startup Capital

September 1, 2015 Tandon Group
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Checklist for Raising Startup Capital

  Tandon Group
  September 1, 2015
 

Raising capital for the first time can seem daunting. If no one on your founding team has done it before, you’re bound to make mistakes. The only thing you can do to calm your nerves and feel more confident is get as prepared as possible. Luckily, most VC’s and angels have similar needs when it comes to the information they want to see before making an investment.

Here is a list of items we like to see at the Tandon Group before we consider investing in a company. While some startups will have more concrete information for each item on this checklist, you simply need to do your best to flush out your company’s position on each of these items:

  • Company Overview: Your overview should be an overarching description of your entire business. It’s usually best to complete this part of your preparation after you’ve gone over the rest of this checklist. The company overview will be a shortened version of the main points contained here.
  • Physical Location: Where is your company located? How many locations do you have? Where do you plan to open new locations? Is your team all “under one roof” or remotely based? Basically, spell out where and how your company is operating.
  • Founding Team: Most investors are looking to invest in a team of founders. While this isn’t a definitive rule, it’s usually a best practice to find someone who has complementary skills to your own. If you’re a coder or an engineer, you should find a business savvy co-founder (or vice versa).
  • Product Demo: At the very minimum, if you’re not a seasoned entrepreneur with past successes, you need to have something to show an investor. It doesn’t have to be as complicated as your final product but it needs to capture the essence of what you’re trying to do. Ideally, it proves your concept viable.
  • Addressable Market: You don’t want to go into an investment meeting saying that your addressable market is the entire world. You need to have a specific target audience, at least for your initial marketing efforts. Who is most likely to use your service? What’s their age, gender, interest, demographics, etc?
  • Problem/Solution: This goes hand-in-hand with your addressable market. Now that you know who you’re serving, what specific problem, need, or desire are you going to solve? The number one mistake we see entrepreneurs make is they create a product or service that no one actually needs or wants.
  • Business Model: How are you going to make money? You can start a business and not immediately monetize your user base but, eventually, you’re going to need a way to make it sustainable. Your product demo should align with your business model to show how you’re going to generate revenues and profits.
  • Competition: There’s a common saying, “business is cut-throat.” Your competitors are trying to steal your customers, take away your market share, and put you out of business. It’s in your company’s best interest to know exactly who all of your competitors are, where they operate, and how they operate.
  • Financials/Projections: You should always be able to show where you’ve spent every dollar and where you generated every cent of revenue from the beginning of your company’s existence. It’s simply bad accounting if you don’t have records of all the money you’ve spent and made so far.
  • Legal Information: How is your company legally formed? Is it an LLC, corporation, partnership or some other legal business entity? In most cases, you need to have this already setup before you go to any sort of investor because you’re not even going to be able to open a business bank account without having a company formed.
  • Past Funding: If you’ve raised money in the past this is going to be one of the first things investors are going to want to know. What was the last funding round valued at? How much equity was exchanged for what amount of money? What kind of shares and what sort of control do the previous investors have? These are all questions you going to need to make sure you have answers to.
  • Future Vision: Where do you envision taking this company? While most companies will need to pivot and change course multiple times during their lifetime, you should always have some sort of vision that you’re aiming to attain. A compelling vision aligns your employees, your investors, and your goals- so that everyone is on the same page.

If you follow the checklist above, your chances of raising capital for your startup will greatly increase. If you’re a startup founder looking to raise capital, Tandon Group wants to meet you. We have over 40+ years of startup experience and have invested in startups from many different sectors.

We’ve had numerous successful exits/acquisitions and would love for your company to be the next one. Reach out to us and we’ll get back to you with more information about setting up a meeting.

Tandon GroupChecklist for Raising Startup Capital
What to Look for in an Angel Investor

What to Look for in an Angel Investor

August 1, 2015 Tandon Group
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What to Look for in an Angel Investor

  Tandon Group
  August 1, 2015
 

There are important differences between an angel investor and a venture capitalist. For starters, the typical investment size for angels is smaller than that of a venture capitalist. In general, an angel will invest between $20,000 and $250,000 (of their own money) in exchange for a private equity position. VC’s pool together resources and invest on behalf of a “fund” in most cases. Venture capitalist (VC’s) don’t usually have a cap on the amount they’ll invest but they have a range they prefer.

Angel investors are more common for early-stage startups because these companies (usually) have less of a track record and are still validating their business idea. Angels like investing in early-stage startups because they get in “on the ground floor” and receive a higher equity position.

While the term “angel” might conjure up images of a business savior and someone who whisk companies on to success, the reality is most angel investments fail. Startup founders need to take certain things into consideration before bringing on an angel investor. Remember, this person will be with the company for the foreseeable future.

In this post we’ll look at the most important things you need to consider before taking on an angel:

High-Risk Tolerance

Perhaps the most important thing startup founders need to consider when looking at angel investors is their level of risk tolerance. Startups are inherently risky because it’s almost impossible to know whether or not a company will succeed. There can be indicators of success but only time will tell. Angel investors that don’t have high-risk tolerance can cause all sorts of problems for startup founders.  In general, you need to make sure your potential angel is in a position to lose their entire investment. While your goal is to make the company a huge success, you can’t risk having an angel investor breathing down your neck, asking when they’re going to get their money back.

Long-Time Perspective

If an angel investor expects to get their money back in 6 months or less, you need to take that as an indicator they’re not the right investor for you. Professional angel investors know that it can take multiple years before a startup provides a return on investment. Having a long-time perspective means that an angel investor’s willingness to wait years before even anticipating a return. Be upfront with any potential angels and let them know that you’re in this for the long-haul. It can even scare off potential angels if you tell them that you’re going to pay them back in an unrealistically short time frame.

Control

One common theme seen in successful entrepreneurs is that they almost always have regrets about equity and control. While you have to be willing to give up some amount of control to raise capital, you also don’t want to give up too much control before you know where your company is heading. If an angel investor is overbearing on the amount of control they want, sometimes it’s best to simply pass on that angel.  Before ever going into any investment negotiations, make sure that your startup co-founders are clear on the amount of control you’re willing to give up.

Network

A less quantifiable benefit to bringing on an angel investor is the professional connections they’re able to provide to an early-stage startup. Startup founders should reach out to angels who have specific industry connections in the field that their company operates in. An angel who has 10 years of experience in your field is far more valuable than an angel who has 30 years of experience in a completely unrelated field.  Do background research on any angels you’re speaking with and figure out who they know and how long they’ve known them. Tools like LinkedIn, Google, and good old-fashioned telephone calls are your best bet here.

If you’re a startup founder looking to find potential angel investors for your company, Tandon Group might be able to help. Tandon Group has invested in many startups over the last 30+ years and is always interested in meeting new startup founders (even if we don’t invest ourselves). We have one of the strongest networks of Indian and American entrepreneurs in the world. If you want to find out how we can help, reach out to us and let us know what you’re working on!

Tandon GroupWhat to Look for in an Angel Investor
Tandon Group’s Global Impact Since 1978 Until Now

Tandon Group’s Global Impact Since 1978 Until Now

July 1, 2015 Tandon Group ,
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Tandon Group’s Global Impact Since 1978 Until Now

  Tandon Group
  July 1, 2015
  ,

Founded in 1978 by M.L. Tandon, the Tandon Group has grown to become one of the most influential and important companies in India. The zeal for technological and social innovation found at the heart of the Tandon Group is a product of its beginnings and the personality of its founder.

In 1960 M.L. Tandon arrived in the U.S. with just $12 to his name, determined to attend university and forge a career to help his family. Despite his limited resources, he gained admission into Howard and paid his own way through college by working in the service industry before joining IBM after graduating. It was these early successes born of hard work and determination that taught him to tenaciously pursue success at every level of his career.

After a successful career in the American tech sector he decided to return to India, determined to use his hard-won knowledge and expertise to improve the lives of his family and others in India. Tandon Magnetics was formed in 1978 with the help of his brothers and the support of the rest of his family, soon finding success manufacturing the first floppy drive for the IBM PC.

Since then the Tandon Group has gone from strength to strength, partnering with global brands and developing strong partnerships to support new business expansion in the emerging Indian market. Working with a zeal for innovation born in its founder, Tandon today works towards social innovation as well as technical with a legacy that includes helping grow India’s technology sector and to help increase the acceptance of women employees within the industry.

Tandon GroupTandon Group’s Global Impact Since 1978 Until Now
Most Common Issues Facing Startups Today

Most Common Issues Facing Startups Today

July 1, 2015 Tandon Group
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Most Common Issues Facing Startups Today

  Tandon Group
  July 1, 2015
 

At the Tandon Group, we’ve heard at least two startup investment pitches a week over the course of the last 40+ years. We’ve invested in promising startups and passed on countless pitches that didn’t convince us of likely success. In that time we’ve come to recognize common issues that many companies face. Our hope is that by divulging these issues future startup founders can avoid them.

Knowing what not to do can sometimes be just as important as knowing what to do. The issues we’re going to discuss are a major enemy to any startup’s success. In his classic The Art of War, Sun Tzu remarked, “If you know the enemy and know yourself you need not fear the results of a hundred battles.” As a startup founder, you’ll be forced to face hundreds of “battles” in the pursuit of growing your company. Remember this fact before you start and it’ll save you a lot of stress over the course of your career. If you can avoid the common issues outlined below, you too might build the next million (or billion) dollar company.

  • Issue #1: Doesn’t solve a problem. By far, the number one mistake startups make is building a product or service nobody needs or wants. “Cool” and “quirky” ideas may be fun and even attract notoriety but if that same idea doesn’t solve a problem or make someone’s life better, the novelty will eventually wear off. All successful businesses either solve a problem, improve an existing solution, or create a new market all by themselves.
  • Issue #2: Lack of sales. Some startup founders think that a large user base is all they need to be successful. Unfortunately, that isn’t true. While a large, million-person user base can result in a large startup valuation, it isn’t until the company finds a way to extract money out of users that the company produces a profit. Great startups always have an end-goal for producing revenue from their users. If you have an awesome product or service you deserve to charge for it in some way.
  • Issue #3: Undercapitalization. This point is tied directly to the previous issue. A startup being undercapitalized (not enough money) is the direct result of not enough sales. If a company is always producing sales in excess of their lost customers they would never go out of business. Most startups need to solidify their revenue generation strategy before they try to expand further. We see this problem even in popular services like Soundcloud which, according to recent reports, only has enough cash to survive 50 days.
  • Issue #4: No true leader. When multiple co-founders are involved in startup things can get tricky. Miscommunications, disagreements and large egos can all get in the way of running a successful business. Defining a single leader and true CEO is the only way to structure a company so that decisions (and progress) can be made. This can be one of the hardest conversations you need to have but it can also be the most beneficial.
  • Issue #5: “Copycat” business. “We’re the next Facebook…” or “We have the same business model as…” are phrases used all too often in the startup world. If you define your business in terms of how it relates to another business, you don’t have a unique selling proposition. Why is your business different? Why are you unique? You need to be able to answer these questions without even thinking about it. The live-streaming app Meerkat was a perfect example of a company that raised a lot of money, wasn’t truly unique and ultimately went out of business.
  • Issue #6: Poor customer service. The customer isn’t always right, but that doesn’t mean you should ignore them. The purpose of a business is to gain and keep paying customers. Some startup founders believe that customer service is somehow beneath them when, in fact, it’s one of the most important things they could be doing. Upset customers will tell you everything you need to fix, what they don’t like, and what you could improve in your product or service. Happy customers can provide invaluable testimonials that help sell your product to more people. Either way, you can’t ignore feedback.

If you’re able to successfully avoid these major pitfalls within your startup, your chances of success will dramatically increase. The Tandon Group is always interested in helping growing companies get to the next level. If you’re looking to raise capital for your business or expand your offerings within the Indian market please reach out to us. We’d love to learn more about your company and see how we can help.

Tandon GroupMost Common Issues Facing Startups Today
Freecharge Story

Freecharge Story

June 19, 2015 Tandon Group
freecharge

Freecharge Story

  Tandon Group
  June 19, 2015
 

Early in 2015, Snapdeal acquired FreeCharge in the largest buyout in the largest Internet M&A in India at that time. The story of the FreeCharge journey is also the story of a great partnership among all key stakeholders.
Kunal and Sandeep and Shailendra talk about the mutual trust and understanding between them that helped build a special partnership.

Sandeep Tandon
FreeCharge

The memories of our first meeting are still vivid. We started to pitch our concept and 20 minutes in, Shailendra told us he wanted to move forward. Kunal, being Kunal, kept going. I nudged him to stop since Shailendra was clearly sold on the idea.

Kunal Shah
FreeCharge

The reason we chose Sequoia was not that they had the best terms to offer. It’s that we thought there would be comfort in working with Shailendra. We had to decide if we were willing to meet this person for the next five years.

Shailendra Singh
Sequoia

Kunal is a philosophy major who dropped out of his MBA and had run a BPO business before. Sandeep had run an electronics manufacturing business and BPO business earlier. But they had all the ingredients of Sequoia founders – very committed, resourceful, independent minded, full of profound insights. I loved how Kunal articulated habit forming activities and the power of “free”. He went on to coin the term “habit commerce”. For us, it was a contrarian investment. After all, recharge was viewed as a commodity business. For a while, many people quizzed us on the FreeCharge investment but we knew that all new category creators look puzzling to outsiders in the beginning, so we kept at it.

Sandeep Tandon

We agreed on an arrangement that would give us half the money upfront and the other half later. Just before we closed, the rupee took a downward plunge. I got a call from Sequoia then – I was expecting them to ask for a renegotiation in light of the currency devaluation, but was completely thrown by what they proposed. They wanted to give us the entire amount upfront since the rupee’s future looked volatile. That’s been the tone of the relationship throughout – no game playing, no hedging.

Kunal Shah

We have never had a negotiation call with Sequoia. There have been multiple calls – but never a negotiation call. We firmly believed in our lead investor Sequoia and are confident that was a good decision on our part in all our rounds of investments.

Shailendra Singh

When the investment was being discussed, there was agreement on the terms in five minutes. As the round sizes increased later on, Sequoia volunteered to remove its participating preferred security and change with non-participating preferred securities, as this was more company friendly and helped to bring in more investors at the same terms. This was one relationship when the short-term economic agenda did not matter, everyone was singularly focused on winning.

Kunal Shah

We ran into a couple of roadblocks in trying to scale. The biggest challenge was recruitment – it was especially difficult to attract talent in Mumbai. It was probably one of the worst periods for us as a business. It was comforting to have Sequoia tell us that we would get through it if we continued to focus on the important things.

Kunal Shah

I still remember what Shailendra said to me at that point: “Don’t worry about the fuel; just focus on getting the plane off the ground.” For a founder, someone showing faith in you during rough times becomes the biggest motivation. I remember sending Shailendra a text that evening saying, “ Thanks for having faith in me, I promise to make this big”.

Sandeep Tandon

We always had open discussions focused on what is best for the company. That helped us zero in on where we felt the gaps existed. For instance, we were able to study the situation objectively and open our minds to bringing in a CEO from outside the company.

Kunal Shah

We knew how to grow and monetize by then but we really needed someone to run the tech and product side of the business – to help us think more clearly about those aspects. And we didn’t want to let things such as rank and position get in the way of more important goals.

Shailendra Singh

We were ready to help in the search for this person but we always told Kunal that it was ultimately his decision and his choice. That’s how Alok Goel, an ex-Googler, came on board. The fact that Kunal voluntarily ceded the CEO title speaks volumes for his maturity and magnanimity. Founders who are secure about their own contribution don’t care about titles.

Sandeep Tandon

Our conversations with Sequoia have always helped to clear the fog – whether it involved our initial business plan or the launch of our marketing campaign or the final sale to Snapdeal.

Shailendra Singh

Each of us trusted the other side to do the right thing. This is one relationship where personal ego and economic agenda have never come in the way of the greater good.

Sandeep Tandon

It felt like we were one seamless unit and that was very helpful to us as entrepreneurs. It freed up a great deal of mental space and energy. We didn’t have to worry about what the board would say – just what we could say for ourselves.

Kunal Shah

Our board meetings were always extremely candid; we never had a investor-founder relationship. It was a discussion between partners about what was the right thing to do. That’s what we had – an extraordinary amount of trust. It made everyone want to give it their best.

Tandon GroupFreecharge Story
Is Your Business Idea Feasible? A Checklist for Entrepreneurs

Is Your Business Idea Feasible? A Checklist for Entrepreneurs

June 8, 2015 Tandon Group
Tandon Checklist 823x315 1

Is Your Business Idea Feasible? A Checklist for Entrepreneurs

  Tandon Group
  June 8, 2015
 

Do you watch Shark Tank? If you do, have you ever noticed when an aspiring entrepreneur pitches an idea and you think: “Hmmm, I don’t think that’s a very good idea.” And the next thing you know every shark is saying: “No Deal.” Well, if you’ve ever seen that, imagine how bad it must feel for the entrepreneur to hear those words. With that in mind, we’re going to show you a set of rules many VC firms use when considering an investment. How many check marks does your idea have?

1. Does Your Company Solve A Real Problem?

The greatest sin entrepreneurs make is inventing a solution before solving a problem. We get it, you have the hustle and persistence, but at the end of the day. Are you really helping your customers solve a tough problem? If you can answer with a resounding “yes” then you’re well on your way.

2. What Is Your WHY For Launching This Idea?

Another way to phrase this question is: are you capable of doing this business idea? Simon Sinek is an author who asks one simple question: “Why are you doing this?” The reason is simple. What is your motivation to launch this idea, and will it keep you going when “the going gets tough”? Here’s a sad reality, if you think entrepreneurship is easy then you have it completely wrong. Running a business can be harder than you imagine, and if you want to make it through those rough patches you need a why which deeply motivates you.

3. How Fast Can You Execute?

In the world of business, there’s a simple motto. Execute, Execute, Execute. VC’s need to know how quickly your idea can become a reality. Additionally, they have to trust that you have the chops for pivoting when needed and can make adjustments as the data comes pouring in. The questions to ask are: “Is this an R&D project which will need funding to get the technology just right? Is this idea easily tested by the marketplace? What resources will I need to get my first version going? How long will it take to get my first sale?”

4. Do You Have Competitors In The Market? If So, What Are They Doing?

Business Insider wrote a fascinating article back in 2010 about the overrated myth of “First Mover Advantage.” In the article, he said: “First Mover Advantage — Great Bad Idea” and “Fast Follower – A Better Idea.” In the article, he also cited a study that showed 47% of First Mover Businesses failed and only 8% of Fast Follower Businesses failed over the long term. Here’s why: if you have competitors the solution is validated because there are people who are already paying for that very solution! This is great news for you because now you have an addressable market to sell your product. However there is a caveat, you need to know everything about your competitors because you’ll need to carve out a niche for your business to be successful.

5. Can The Business Be Described Simply?

If you need 2 hours and 100 slides to explain your business idea to somebody then your idea is too complex. People thrive on simplicity, and like the famous quote goes: “If you cannot explain it simply, you don’t understand it well enough.” The rule of thumb is this: If you were in a stadium crowd of your perfect customer audience, what would your businesses headline be to grab their attention? Normally this means concentrating the idea into 25 words or less, breaking it down to its bare essentials. If this is next to impossible for you, it may reveal a fatal flaw in the idea.

6. How Quickly Can You Monetize This Idea?

It’s interesting that the above question isn’t asked by many new entrepreneurs, but it’s the one every venture capitalist investor is thinking about. How quickly will I see my money back? This is where you need to get technical and deeply think through this problem. It’s important to have an accurate runway of your business idea so you can convey to potential investors that choosing your idea is a win-win for all.

The Bottom Line

As an entrepreneur, your dreams probably reach well over the $1 billion mark, and we hope it happens! However, remember that proper planning could mean the difference between a successful business, and an embarrassing failure. Use the above checklist to exponentially increase your chances of hitting a homerun! If you’re working towards being an influential entrepreneur then contact The Tandon Group. We’ve invested in the dozens of high-growth startups in the wireless, consumer, defense, and information technology sectors, across the globe. We’ve had successful exits and helped grow companies to millions of users, and you could be the next shining star.

Tandon GroupIs Your Business Idea Feasible? A Checklist for Entrepreneurs

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