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Early Origins of Tandon Group’s Manufacturing Excellence

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Early Origins of Tandon Group’s Manufacturing Excellence

  October 15, 2019
 

Before fledging Tandon Magnetics could gain prominence as an exporter of key components IBM would incorporate into their pioneering floppy disk drives, founder M.L. (Manny) Tandon was faced with two significant challenges. The first early problem was sustaining stable, dedicated workforce.

During the mid-1970s, entry-level assembly workers, males in particular, among India’s handful of electronics manufacturers were quick to hop from town to city in search of other career options. After noticing the costs associated with the high turnover, namely constant training of replacements, were gnawing at his bottom line, Manny turned to what at that time was considered a radical solution–avoiding hiring men in favor of a mostly female workforce.

Indian culture frowned upon young unmarried women leaving their households–or even independently taking nearby jobs on their own. But Manny recognized an opportunity to capitalize upon an untapped pool of industrial talent. Besides delivering a strong work ethic and long–term company loyalty, the all–female production floor proved to offer another distinct advantage–superior manual dexterity necessary for high-precision electronics assembly–such as meticulously winding wire around the donut-shaped core of a magnetic bobbin.

1983 Tandon Motors: Floppy Disk, Head Coil Winding

Quality…and Quantity?

While Tandon Magnetics’ female assembly workers consistently delivered top quality results, the next issue soon arose­­how could production output ramp up to meet IBM’s rising demand as he original PC gained popularity around the world?

At a time when industrial automation in India factories was rare, Manny looked at novel alternatives to standard coil wrapping machines of the day­­, which were sophisticated equipment typically retailing as high as $10,000 apiece. He soon developed a relatively simple solution: adapting a household sewing machine–a pedal­-operated appliance most of his female workers were already quite familiar with.

Mounting the sewing machine motor on a wooden block, he added a few enhancements, including an automatic counter to ensure the correct number of windings, as well as attaching a microscope to help the operator precisely wrap the smallest coils. After the handmade prototype proved an instant success, 100 more machines were installed throughout the assembly floor­­–at an estimated cost of about $5 each.

Thanks to lower overhead costs and skilled, efficient manpower­­–or, more exactly, womanpower– Tandon Magnetics would provide IBM with top quality PC components ­­at volumes up to 60,000 units per day–at prices competitors simply couldn’t match.

1985 Tandon Motors: Voice Coils

A Prosperous Legacy

Nearly four decades later, the early success of Tandon Magnetics has evolved into a core specialty at the Tandon Group’s Syrma Technology, providing world class electronics design and manufacturing services to global OEMs. High-­precision equipment based upon those original revamped sewing machine remains a cornerstone of Syrma’s 100,000 square foot state-­of-­the-­art flagship facility in Chennai.

2015 Syrma Technology: RFID coil manufacturing

Tandon GroupEarly Origins of Tandon Group’s Manufacturing Excellence

Checklist for Raising Startup Capital

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Checklist for Raising Startup Capital

  October 4, 2019
 

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

Global Perspective Helps Founders Solve Local Problems

Global Perspective Helps Founders Solve Local Problems

  July 23, 2019
 

When Manohar Lal Tandon formed Tandon Magnetics, the manufacturing arm of Tandon Computers, in 1979, he was determined to improve the lives of many in India. After studying and working in the United States for several years, he returned to India and used the knowledge, expertise and experience he cultivated in the U.S. to make the local market better. Founders who are open to new ideas, solutions and challenging the status quo open their companies up to new opportunities, exactly what Manohar was able to do with Tandon Magnetics, and later, Tandon Group.

Changing Business as Usual in 1970s India

Combining a global perspective with a deep understanding of local needs is just as powerful for modern-day startups in India as it was for Manohar at dawn of the personal computing age in the 1970s. As Manohar grew one of the most influential manufacturing companies in India at the time, the company helped solve local issues related to the economy, workforce, and leadership at the time including:

  • Encouraging the creation of “tax-free zones” throughout India, which increased production and foreign investment that ultimately has driven India into the top 10 of the world’s biggest economies
  • Becoming the largest employer of women in the tech sector from 1984 to 2000
  • Adopting IBM’s “open door” leadership policy at Tandon Magnetics, which was uncommon for Indian companies in the 1970s

 Partnering with Today’s Problem-Solving Startups

Today, India has the third largest startup ecosystem behind Silicon Valley and the United Kingdom. As a major participant in India’s startup environment, Tandon Group continues to help solve local problems as the company provides financial and managerial assistance to modern-day startups in India working to improve the country’s education, employment, finance, healthcare, and transportation challenges. Successful startups include:

  • Providing a progressive workplace for women and improving India’s economy (Syrma)
  • Helping healthcare providers preserve reimbursements from patient care and maximize collections from unpaid claims with technology (Infinx)
  • Saving people time by providing on-demand transportation and lifestyle services (GOJEK)
  • Changing the way education is delivered and consumed in India (Genius)
  • Revolutionizing the mobile economy in India by making it easier to pay for everyday items and tasks (FreeCharge)

If you’re a startup looking for resources to help you succeed, Tandon Group has provided numerous startups with business advice and funding support for more than four decades. 

To learn more about our company, please contact us.

Tandon GroupGlobal Perspective Helps Founders Solve Local Problems

U.S Tech Giants & their Indian Counterparts

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U.S Tech Giants & their Indian Counterparts

  June 30, 2019
 

In the United States, the media religiously covers American businesses, partially because of national favor and partially because of the sheer economic size of established U.S. tech giants. Not to be outdone, India has quickly mobilized their workforce to compete with these tech giants who are working their way into India. They’ve steadily accomplished their goal with impressive results, such as the number of households with a disposable income of more than $10,000 has leapt from around 2.5 million in 1990 to nearly 50 million in 2015. Thanks to this massive growth, India has developed their own tech giants who are quickly rivaling U.S. firms. [1]

Ola vs. Uber

These two giants have been battling head-to-head for years now. Both companies have been battling in the court trenches with Ola fighting accusations of creating false accounts and cancelling them on their drivers. Uber itself is currently facing massive harassment charges which caused the CEO to exit the company ungracefully. Let’s start with Uber, which recently posted a $6.5 billion net revenue for 2016. They currently have over 40 million monthly active users and are operating in 450 cities. They also posted 160,000 Uber drivers and have close to 87% of the ride hailing market. Ola for itself is currently in 102 cities and has nearly 70% of the Indian market. They’ve posted impressive stats of 450,000 drivers with 5.9 million monthly active users. Ola says they generated $4.21 billion in revenue in 2015.

 Flipkart vs. Amazon

It’s the battle of ecommerce, and there are only two horses in the race for first. Each is posting mind-blowing numbers, and each are looking to outdo one another. Let’s begin with Flipkart, which is currently in rumors of merging with Snapdeal, and is positioned to move Amazon India out of their home market. Flipkart has 100 million registered users and currently controls roughly 43% of the Indian ecommerce market. They recently said they have 100,000 sellars and are doing roughly 8 million shipments monthly. Flipkart is valued at $11.6 billion and it is unknown what their revenues are currently.

On the other side is Amazon who is tough to beat. They currently have 304 million registered users, or roughly the entire population of the United States, and control 43% of the online retail sales in the U.S. Amazon had $136 Billion in 2016 net sales with $857 million in profit. Here’s something which will make every Amazon investor smile: In 2016, Amazon made just over ⅓ of total sales for black friday. In other words, Amazon is in a league of its own for ecommerce companies.

Paytm vs. PayPal

The mobile payment giants are next in line as these two firms face off to attract users into their sphere. PayPal was founded in 1998 in the U.S by the infamous “PayPal Mafia” which included the likes of Elon Musk, Reid Hoffman, etc. Paytm was founded in 2010 and has grown at lightning quick pace compared to PayPal, which is mainly due to the boom in spending India is currently going through, and the ability to raise capital so quickly. Let’s look at the statistics. We’ll start with Paythm, which currently has over 200 million registered users, 80 million of which are active monthly sending transactions. They’re accepted by 850,000 offline merchants, not to mention the additional million plus online merchants who use Paytm.

They posted 1 billion in transactions just last year, and account for 26% of all digital transactions in India and, in the cut-throat field of online wallets, this is impressive to say the least. PayPal on the other hand only has 169 million registered users, by has processed 4 billion in transactions in 2016. This is due to the overall wealth of the United States, and PayPal cannot complain because they had a net income of $384 million in 2016. Add to these numbers the fact that PayPal has 16 million merchant accounts and processes 18% of all ecommerce transactions.

Are you next?

These three technology giants are just the beginning of a long competition between the United States and India for tech supremacy. As the world becomes more globalized, from increased internet usage and improved communication, we’ll begin to see greater competition for market share. Luckily, each country has a savvy population who prefers to use their native companies, but only time will tell if this continues to stay the same.

If you’re a startup founder looking for resources to help you succeed, Tandon Group has provided numerous startups with business advice and funding support for more than four decades.

To learn more about our company, please contact us.

Tandon GroupU.S Tech Giants & their Indian Counterparts

Should Startups Focus on Growth or Profitability?

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Should Startups Focus on Growth or Profitability?

  May 23, 2019
 

This question has been asked in every major business on the planet. From concrete manufacturing companies in the 1950s to PayPal in the 1990s, and now the Facebook and Uber empires of today. They created a great product, have started to gain traction, recently got funding, and now they must ask, does the company focus on growth, or profitability? A point needs to be made from the outset: It’s mathematically impossible to maximize growth and profitability at exactly the same time. You’re either doing one or the other, and often it’s these decisions which will ultimately determine the success of your company.

Questions to Consider

First ask this question: “When should my company start worrying about making money?” This isn’t simple to answer because there are many subtle distinctions which need to be made for a right answer to appear. Are you a business-to-business (B2B) company? What is the economy like? Are you a first mover? Have you already achieved funding and is it easy to get additional funding? What are your personal goals with this business- are you trying to run a global company or a niche money-making side business?

Based on the above, if your company is business to consumer (B2C) than it’s smart to focus purely on growth. Reason being is the consumer behaviour is notoriously fickle while corporate behavior is relatively static. This means a B2C company needs to pour money into advertising spending while locking down their user base. Let’s look at Facebook as a case study.

When Facebook initially started they didn’t have a clear revenue model but the executives did know they had something groundbreaking on their hands. They reasoned it was critical to gain the user’s first, in massive spending sprees for growth, and would figure out the revenue model second. Thus, the Facebook advertising platform was born, and out of it a multi-billion dollar revenue stream.

Money for Growth

Let’s look at this problem from a different angle. We already asked if there was easy access to capital, either in the form of private equity or venture capital. Now, let’s assume you decide to pursue an investment from a private equity fund. If you do this they’ll most likely lay down the business with debt in long or short-term loans. Now, if you’re a tech company it’s not smart to go down this route, because tech companies generally need to focus on user growth. However, if you’re company is building a physical product, then going through a private equity firm might make sense.

Rules of Thumb

If you’re a technology company that requires user interaction for viability, than obtaining users should be your primary goal because the greater volume of users you have, the greater amount of time people will spend using your product. Thus, it’s in your interest to focus on rapid growth from the outset with plans to weather unprofitability. Eventually you’ll have to monetize but it can be unwise if done too soon or before critical mass adoption.

Second, if your company is developing physical products which are capital intensive and growth is achievable, but at a slower rate than profitability will be your best option. Reason being is that your company’s main goal will be reducing costs of production for goods sold, which inevitably leads to greater margins. Your massive growth will come from an initial public offering (IPO) which infuses the company with liquid capital which can then be used for greater growth down the line.

If you’re a startup looking for resources to help you succeed, Tandon Group has provided numerous startups with business advice and funding support for over four decades.

To learn more about our company, please contact us.

Tandon GroupShould Startups Focus on Growth or Profitability?

How Startups Can Generate Low Cost Leads

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How Startups Can Generate Low Cost Leads

  April 13, 2019
 

It’s the age old problem of business: How can my company or startup generate leads to bring in new clients without breaking the bank? If you’re a startup founder, or a marketing manager, we’re positive you’ve asked this question many times, and we’re sure you have the same problem many other startup founders have also. You’re on a shoestring budget, and running a major advertising campaign won’t work for you. Luckily, companies have solved this problem before, and if you follow these three tips below you’ll have a starting point for your lead generation machine.

1. Build a Social Media & Blog Presence

Having a solid social media presence from Facebook fans to Twitter followers is a great way to generate leads. There are a couple ways to build your online sphere of influence. First, start doing massive amounts of keyword research which follows the search queries your customers ask, and create a list of the top 30-40 searches you can find. You’ll need this because one way to build trust with potential customers is by creating a blog where you answer these questions with in-depth analysis. Doing this will leverage your company as the authority figures in the space.

Second, create infographics which visually explain the search queries you researched, which is also a great idea for generating B2B leads. The brain processes visual content 60,000 times faster than text, and in a fast paced world this means quicker understanding by your audience.

Third, set up Google Alerts, which notifes you anytime a person online is asking questions related to your startups field of expertise. You can then go and manually answer questions with a comment or post. This is a hidden growth hacker tactic which will improve your website’s SEO presence with the amount of backlinks you build over time. In addition to this, answer questions on Quora. You’ll not believe the amazing response you’ll receive by providing well thought out answers to a person’s problem.

2. Retarget, Retarget, Retarget

If you don’t know what this is then you need to learn about it right now. It’s slowly becoming the most effective advertising method on the internet to generate leads. Retargeting works by keeping track of people who visit your site and displaying your retargeting ads to them as they visit other sites online. It converts window-shoppers into buyers. Generally, 2% of shoppers convert on the first visit to an online store. Retargeting brings back the other 98%.

Here’s a quick way to make the most of your retargeted ads. First, segment your website visitors by preference. Next, create customized ads for each group of people. Finally, and most importantly, put the ads up in a positive way which means don’t stalk your website visitors. Only show the ad up to 12 times in a 30 day period. People can get intimidated if you immediately follow them around constantly blasting them with advertisements for something they just viewed.

3. Partner with Affiliates & Joint Venture Partners

Affiliate marketing, sometimes known as performance marketing, can be one of the most effective tools for promotion on the internet. An affiliate program lets you use a talented and savvy sales force that’s only paid when they sell a product. You decide how much the commissions will be for those sales, and your company only pays out when you get paid. This does mean you’ll not receive the full profit on your sales because you’ll need to deduct the commision from your payout, but it also means you’re not spending any money on advertising because there are other smart people willing to promote your startup!

Working in tandem with another entrepreneur is another strategy which can be used to leverage low cost leads. A joint venture (JV) is when two firms/people unite to achieve a marketplace goal that neither could achieve alone. This works best when you partner with a company/person in a similar but non-competitive marketplace. Your JV partner would ideally be targeting or have customers who are identical to the ones you’re looking to market to. It’s a low cost strategy which will quickly boost both of your reputations.

To learn more about our company, please contact us

Tandon GroupHow Startups Can Generate Low Cost Leads

Entrepreneur’s Checklist for Hiring New Employees

the entrepreneurs checklist for hiring new employees

Entrepreneur’s Checklist for Hiring New Employees

  March 6, 2019
 

Startups that succeed start lean and it’s a mindset you need to have because the wrong employee is incredibly expensive. The U.S. Department of Labor estimates that the average cost of a bad hiring decision can equal 30% of the individual’s first year potential earning. If you’re a startup with little to no sustainable income then a wrong employee ranges from disastrous to fatal. Not only does a wrong hire waste productivity, it can actually cause surrounding employees to lose effectiveness. [1]

Below is a good checklist for hiring new employees:

1. Make your job description clear: Often the determining factor when hiring the wrong employee is an unclear job description. It’s crucial you’re crystal clear about what exactly the job entails, with a detailed description of how the employee is expected to perform. In addition, you must know exactly what type of person fits the job description well. Every employee is just as important as your technology.

2. Keep record of potential employees: You need to track each candidate, including their strengths, weaknesses, expectations and interview notes. Throughout the hiring process this information becomes valuable when you begin to cross names off your list.

3. Run background checks: It’s highly recommended you run a background check on every employee. Ensure you have a consistent policy in place so every employee knows what is being checked. For instance, as the founder you’ll want to run a background check that reviews criminal records, driving records, and any watch lists. It’s also recommended to run a check of credentials and/or credit score.

4. Know your EIN: Once you’re ready to hire employees you will need an Employer Identification Number (EIN) from the IRS. An EIN is required to pay business taxes based on the number of employees you have. You only need 1 EIN number which covers the entire business.

5. Have your taxes in order: Every business in the U.S. must keep records of their taxes. Each business is required to withhold money from every employee’s paycheck to ensure taxes are paid correctly. There are two forms which must be completed: W-4 and W-2. The W-4 form is used for every employee and it must fill out before they begin work. This provides you with the correct information for taxes. The W-2 form is sent to the employee and IRS. It shows all taxable income including retirement contributions and benefits.

6. Have a proper payroll system: There are two options for this. Do payroll internally or outsource to a company like Workday or ADP. Either way, make sure you’re addressing your business’s payroll needs.

7. Obtain business insurance: All businesses with employees are required to have workers compensation insurance. You can do this through a couple of ways, the most common are to have a broker, self-insure, or through your state’s Workers Comp Insurance Program. Many startup founders neglect to buy insurance until it’s too late, and they’re forced to pay out of pocket for issues which will eventually happen. Don’t let that happen to you.

8. Keep a file on every employee: It’s vital to keep information on file for all employees. This provides the company with a barrier for any problems which could or could not occur. For instance, some of the data you’ll want to keep is full name, address, emergency contact, a copy of signed contract, and any reprimands or accolades within the company.

This checklist provides you with all the necessary steps to onboard a new employee. Your staff are crucial to the company’s success. Nobody can run a business in a vacuum, and now you’ll know what to look for and what to avoid. Good people are difficult to find, but if you’re at this stage then luckily you already know what you’re doing.

To learn more about our company, please contact us.

Tandon GroupEntrepreneur’s Checklist for Hiring New Employees

Syrma Technology Carries On Tandon Group’s Award-Winning Legacy

2018 Elcina 1

Syrma Technology Carries On Tandon Group’s Award-Winning Legacy

  September 28, 2018
 

Among India’s tight-knit electronics community, industry awards are a big thing. Beginning with Tandon Group Chairman M.L. Tandon’s fledgling Tandon Corporation in the 1970’s—which would quickly become a major exporter of components for IBM’s original personal computers­—Tandon companies have garnered a substantial total of plaques and trophies from national trade organizations and regional industry groups, reflecting both quality of manufacturing and quantity of successful exports. These awards are often bestowed at elaborate gala ceremonies, with attendees in full Indian formal dress, as well as appearances by senior government officials.

Our latest award, presented to Tandon Group’s primary manufacturing wing, Syrma Technology, represents one of India’s most prestigious electronics industry honors, the 43rd annual ELCINA-EFY Awards. Created by the Electronic Industries Association of India (ELCINA) in 1976, these awards are widely considered benchmarks for India’s electronics leadership, with categories spanning contributions to innovation, entrepreneurism, quality, exports, research and development and environmental stewardship. After capturing last year’s 1st Prize for Quality in the SME segment, ELCINA-EFY judges lauded Syrma as 1st Prize in Exports – Medium Scale in 2017-18, outpacing similar-sized India manufacturers in volume and efficiency of global logistics.

Quality Determines Quantity

“We consider bottom-line exports as actually a culmination of the other award categories,” said Syrma CEO Sreeram Srinivasan. “By securing long-term customer relationships and delivering world class end-to-end design, manufacturing and logistics services, we’re proud to carry on the high standards of excellence established by the original Tandon ventures.”

A Tradition of Excellence

Visitors to the lobby of Syrma’s Chennai headquarters are immediately struck by the company’s impressive trophy case, holding over 50 gleaming awards received by Tandon electronics companies over the past four decades. Today, Syrma ranks among India’s leaders in development, manufacturing and global export of precision electronics, including printed circuit board assemblies (PCBA), custom magnetic and memory components, and leading-edge hardware and software solutions such as RFID tracking and next-generation Internet of Things (IoT) applications.

Advantages of India

Taking full advantage of locations within India’s Special Economic Zones (SEZs), a recently revamped Goods and Service Tax (GST) structure and other generous government incentives, Syrma represents a leading example of Prime Minister Narendra Modi’s 2014 ‘Make in India’ initiative, promoting the country as a worldwide manufacturing hub across multiple industries.

Srinivasan and other senior Syrma managers gratefully accepted their latest ELCINA-EFY Award at this year’s awards presentation, held this past September 14th in New Delhi.

Learn more about Syrma Technology at www.syrmatech.com.

Tandon GroupSyrma Technology Carries On Tandon Group’s Award-Winning Legacy

What You Should Do If You Can’t Raise Startup Capital.

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What You Should Do If You Can’t Raise Startup Capital.

  June 26, 2018
 

What if you can’t raise startup capital?

Raising startup capital can be crucial if your business requires a certain critical mass to survive.
Unfortunately, more companies fail to raise capital than those who successfully do. The good news is that there’s a million ways to raise money and you only need one of them to work. Today, we’re going to talk about what to do if you’re having trouble raising startup capital.

Firstly, we need to address the fact that most people go out looking for funding far too early. If you’re serious about raising money, and don’t have a successful acquisition under your belt, then there’s a few things you need to accomplish before you ever reach out to investors. For starters, you at least need some sort of initial version of your product/service and ideally a concrete proof of concept. Your proof of concept doesn’t need to be a million people using your product but it does need to be some people using your product, giving you regular feedback. This shows investors that there’s actual demand for what you’re offering.

Stay Close to Home

One thing we see all the time is hopeful entrepreneurs never actually tapping the full potential of their network. Most people don’t realize it but they almost invariably have a group of people around them who want to back their ideas and believe in them. Think about it… If your family and friends aren’t willing to invest in your idea, why would a professional investor? Jeff Bezos’ parents mortgaged their home and invested over $200,000 into Amazon while it was still nothing but a pipedream. If you haven’t already tapped your network and asked your friends and “friends of friends” then it’s too early to be going to investors. Also, if you haven’t gone to your family then it’s definitely too early to be going to investors. Keep in mind you don’t have to ask for a lot of money but, in most all cases, you can get enough to at least show proof of concept.

Get Creative

If your friends and family have already helped you and you still can’t get investors behind you then now it’s time to get creative. What do we mean by get creative? Well, let’s look at a great example. Back around the 2008 presidential election Airbnb was nothing more than a fledgling startup that was struggling to stay alive. The founders had already raised money from their family and racked up thousands of dollars of credit card debt in order to get their proof-of-concept off the ground. Even after doing all of that, they weren’t able to raise money from professional investors. So what did they do? With the election right around the corner the founders thought fast and devised a money-making strategy completely unrelated to Airbnb’s business. Brian Chesky and his co-founders created special label cereal called “Obama O’s” and “Cap’n McCain’s” and sold nearly $30,000 worth around the time of the election. They used this money to keep Airbnb alive until they could convince investors to join.

Crowdfunding

Speaking of getting creative, crowdfunding is one of the most creative things you can do. Up until the last 10 to 20 years, if you had a great idea you had to go through industry gatekeepers to get your idea funded. The advent of the internet change all that. Never before in human history have normal people been able to get their message out to millions, without spending much money. Crowdfunding isn’t just for small projects anymore either. Over the last 10 years, crowdfunding has helped raise billions of dollars for promising startups and business ideas. If you thought your company wasn’t a good idea for crowdfunding you might want to reconsider. This can be the basis for a multi-billion dollar company. Sites like IndieGoGo, Kickstarter, and many others now make it ridiculously easy to set up a campaign. Even if you don’t hit your target, it’s worth a shot.

Persevere

The next thing you may want to consider is that you just haven’t tried enough times yet. There are countless stories of brilliant entrepreneurs who had to try many more times than they thought to get their idea across. For example, Tim Ferriss was turned down by twenty-six publishers before one picked up his book The Four Hour Work Week, which went on to be a global phenomenon. How could so many publishers miss out on a homerun opportunity? It’s hard to know, but the one thing that’s for sure is that if Tim would have gave up on his twenty-fifth publisher no one would probably know who he is. How many pitches have you made? …Probably not enough. Even if you pitched a hundred investors, the hundred and first might say yes. So our advice is to simply persevere and never give up. Failure is only permanent if you let it be.

“Why?”

This is one tactic we can promise you not many entrepreneurs use. After every single investment decision you get you need to be asking investors, “Why did you say no? What can we do to improve?” These two questions can unlock the sea of doubts that investors are thinking about when they’re reviewing your opportunity. Once you’re able to understand why they’re saying no, you can go back, adjust your messaging, and then knock the next pitch out of the park. While it might seem obvious, most entrepreneurs don’t do this. They make the same pitch over and over hoping one investor will just say yes. However, if you improve after every single pitch, you’ll eventually land in a meeting where everything goes perfectly, you address every concern, and investors are nipping at your heels to get involved.

Know when to pack it up

Last but not least, unless you want to spend the rest of your life pursuing this idea, have the courage to know when to call it quits. This doesn’t mean you’re giving up on your entrepreneurial aspirations, it simply means that is this idea, at this particular time, isn’t going to work out. If you can make that distinction and then act quickly on it you could save yourself years of pointless work and move on to your next venture. Don’t get this confused with someone who simply jumps from idea to idea but understand that if two-hundred investors have told you “No,” even after improving your pitch every time, then there might be a fundamental flaw in your plan. Chalk it up as a learning experience and move on to the next. Your odds of success will be dramatically higher, after all you’ve learned.

Do you have one more pitch in you?

At the Tandon Group we’ve invested in dozens of successful companies in the Consumer, Wireless, Defense, and IT industries. We’re always looking for the next big opportunity and can especially help emerging startups expand into the Indian marketplace. With offices in Silicon Valley and multiple offices across India we are truly a global investment partner. If you think you have what it takes to be the next big success, reach out to us. We’d love to be your partner for the road ahead.

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Must Know Terms For Startup Founders

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Must Know Terms For Startup Founders

  June 18, 2018
 

If you’re an aspiring entrepreneur, at one point, you may need funding. You will need an amazing pitch to obtain seed through series B investments. To do this you must know the language every venture capitalist uses. Below are the most common terms every startup founder should understand. Who knows, maybe knowing this words going into your next pitch will get you the funding to launch the next big thing!

 

Accelerator (“Incubator”) — A center where startups are mentored by other successful entrepreneurs who guide the founders through development of an idea to launch, and sometimes beyond!

 

Burn Rate (Runway) — A term to describe how quickly you are spending money in comparison to how soon you believe the startup will break even, or more importantly, generate a profit. Normally the burn rate is a financial projection based on current spending and applied probability decision making.

 

Early Adopters — A savvy person in your marketplace who will use the newest and greatest product or service available. Read the highly recommended “1,000 True Fans” blog post for a clear meaning of early adopters.

 

Exit Strategy — A term EVERY startup founder needs to know. This is an explanation of how, and when, you plan to sell the company. Who is going to buy your company, and why? Your investors are in the game to make money, and you will increase your odds of funding by having the exit strategy thought through.

 

FMA (First Mover Advantage) — First mover advantage means you have a product which will create a new market or industry. It takes incredible innovation to get the first mover advantage, but if you have this then point it out immediately.

 

Freemium Business Model — This is a business model pioneered by applications and software. The business releases most of their product for free to the public in order to gain market traction. They then upsell the customers who want the updated or more advanced version.

 

IP (Intellectual Property) — This is anything from a patent to a trade secret — like the formula for Coca-Cola — and can be a vital asset to your startup. For instance, Google has IP in the form of their search algorithm.

 

Loss Leader Pricing — Selling a product at a loss with the expectation of getting repeat business from the initial customers. Normally this would be recorded as a marketing expense when doing the financials.

 

Market Penetration — This answers the question: “How much of the market can you acquire in _____ (period of time)?” Every venture capitalist require startup founders to understand the market thoroughly enough to make this prediction.

 

MVP (Minimum Viable Product) — First coined by Frank Robinson, and then popularized by Eric Ries, MVP is the bare-bones version of a product you think will provide a proof of concept. The MVP will generally give you an answer to whether your idea is going to work or not.

 

Pivoting — Generally means a move from one market segment to another. Say from early adopters to mass market.

 

Responsive Design — A term used for software development. It means your web app is responsive to desktop, tablet, and most importantly mobile screen sizes.

 

ROI (Return On Investment) — A performance measure used to evaluate the efficiency of an investment. ROI measures the return in relation to investment. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment, and the result is expressed as a percentage or a ratio.

 

Split Testing (A/B Testing) — A way of conducting controlled experiments with the goal of improvement. Optimizely says: “This marketing methodology is frequently used to test changes to signup forms, registration pages, calls to action, or any other parts of a website where a measurable goal can be improved.”

 

Term Sheet — A document which outlines what investors are going to receive for providing an investment in your startup. If you get this congratulations, you’re well on your way!

 

Valuation — This measures the total value of your start up it. For instance, say you get an investment for $2 million for 20% of your startup. The startup’s valuation would be a total of $10 million.

 

Value Proposition — The elements of your product or service consumers would be attracted to compared to your competition.

 

Hopefully these terms help you better understand the startup culture, and the language venture capitalists use. If you have a startup, Tandon Group wants to work with you! We’ve had successful exits and helped grow companies to millions of users. Reach out to us if you think your company is the next big thing!

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