Sunday, November 13, 2011
Anjana Vivek Founder of Venturebean Consulting, A Venture Consulting Firm
An Interview with Anjana Vivek
Founder of Venturebean Consulting, A Venture Consulting Firm
In this month’s Vartalaap we feature Anjana Vivek, the founder of VentureBean Consulting, a venture consulting firm and a Guest Faculty IIM Bangalore. She is a chartered accountant who works with VCs and business leaders in the areas of business planning and strategy. Other positions held by her include Vice President, Corporate Advisory Services, Ernst & Young Private Ltd., heading the due diligence practice in South India and COO of the Entrepreneurial Centre at IIM Bangalore – NSRCEL. She is an author of three books and a widely read blog and is now writing a column for DARE magazine on women entrepreneurship. In this interview, she talks about her career, learnings and gives advice to young entrepreneurs who want to market their business ideas.
Q-1: A Bsc in Physics from Delhi University, becoming a Chartered Accountant, a professor in Finance and then to consulting and working with venture capitalists and investors. How have you enjoyed your journey through these diverse assignments?
At each stage of my journey, I have discovered more about my interests and what I can do and cannot. This self-discovery is propelled by an urge to dig deeper to understand what motivates me and gives me true joy. Each role has helped me understand what I like to do and how I want to work. This is what I have enjoyed about my life journey till date. I still have miles to go on this voyage of discovery.
Q-2: If you were asked to pick one moment/ incident which changed your career or the way you did business, what would it be?
The single most joyful moment in my professional life was when I realized I had passed the CA exam. I can still remember the thrill of that moment when I saw my results; I felt that I could conquer the world.
The first was getting into a senior role in a Big four consulting firm after a few years of flexi-time work. Another was being invited to teach as a Finance Professor, despite having no degree other than a CA. Something else which stands out is a couple of mails from students who have thanked me for making an impact on their lives. It is these incidents which have strengthened my belief that hard work and merit, without compromising on ethics does indeed pay; and I thank God for giving me the courage to be myself in today’s volatile business environment.
Q-3: You have been associated with the Venture Capital industry in India for a long time now. What major transformations have occurred and how do you see Venture Capital in the near future?
In the past there were a limited number of VCs investing in Indian companies. VCs typically favour select industries to fund. If a particular industry was a favourite of the season, several investors wanted to fund it, and entrepreneurs in other industries found few takers.
Today, things are very different. Many investors, formal and informal have entered the market. This ranges from angel investors, typically high net worth individuals and entrepreneurs who have been successful in the past, to large VC and Private Equity funds. They provide a range of services, from funding to mentoring to helping in the operations if required. The investment amount ranges from a few lakhs to several crores. So, yes in one sense the industry has grown. But in another sense, if you are an entrepreneur, it is still not so easy to get money. Sometimes fund raising can take 6-9 months and takes away precious time from business activity. At the end of this, there is still no guarantee that the money will be raised. In the future, there will be more VC funding available and a variety of investors, with different advantages and benefits.
Q-4: Funding a new start up is considered to be a subjective decision. What are the 3 top things you would look at when funding an entrepreneurial venture?
a) The core founding team, including factors such as the capabilities of the team, their interest in running a venture, their ability to think on their feet and their reason for venturing into their own business, plus their value systems and integrity. Thus I would look at capabilities as well as skill sets and value systems.
b) The market that is being addressed or new market that one is attempting to create, i.e. why would a customer pay for the product and/or service. The aim to make this a successful business venture (i.e. create value in the long term) etc.
c) The approach taken by the start-up to create value, i.e. what makes the entrepreneurs stand out amidst the clutter? This could be their ability to be innovative or thinking differently or just their approach to the whole aspect. This could be something that is intangible and may not be easily measurable.
Q-5: How big a role does Marketing play when it comes to the success of a new business idea?
Marketing is the key. If people do not discover that the product/service exists; then however good it is, there may be no one to pay for it.
Q-6: There are a lot of good ideas, but not all good ideas make good business. What do you think is the reason for these failures? Any common thread running across all of them?
The key to success is to offer what someone (a customer) wants or perceives she wants and not sell what you can sell.
Keeping a close watch on money and spending: Billing and collecting. Often entrepreneurs do not bother to collect what is due to them and focus only on delivery and sales. Thinking short term instead of long term: Many times one may just act without thinking through the impact of decisions. It is good to set aside time to periodically measure and monitor what is happening in the business and then set in place an action plan that can be dynamically modified. Human beings measure weight, BP, sugar, cholesterol etc. periodically. Companies also need to be monitored to see if they are in good health.
In summary if entrepreneurs keep aside time to think, then they can introspect and plan. This can help them fix things that are in their control.
Q-7: What would be your advice to young graduates wanting to start their own business and looking for funding from a VC firm?
I have a put together a framework that helps view any investment/M&A decision. Just like you look at the PAT (Bottom line, i.e. profit after tax) in the case of a company, for any deal, this is the PBRT frame work:
a) People: This is the key. So if the graduates are interested in looking for VC funding, they must first look at the background of the investors, i.e. would they be a value add to the start-up, money add is not value add. Sometimes investors can deplete value, despite them bringing money into the company. For example, if someone with a negative reputation invests in a company, the promoters will also be tarred with the same brush. So I would suggest, in the eagerness to get money today, do not lose out on your tomorrows. There are enough stories of entrepreneurs who have struggled and succeeded without much money in the initial days.
b) Business: Look at the business angle, market, revenue, profits, value creation etc. In the initial days of the business, when value is yet to be created, it may be preferable to take smaller sums of money (seed capital) from angel investors and other early stage investors, for a small stake in the company. As value is created, more equity can be diluted for larger amounts of money from VCs. Keep an eye on value created and the value drivers and risks of the business.
The graduates can attempt to write a business plan; there are several formats and tools available today. The plan may just be a summary one, on paper. Some details of what they can put in the plan are the team, product/service details, business model, financials (in a start-up much data is not there so that they can list different scenarios from pessimistic to expected to optimistic), marketing plans etc. A note on writing a business plan is available for download at www.slideshare.net/anjanavivek
c) Regulatory: Many times people neglect regulations and their impact on business. The IPL saga of sweat equity, foreign investment etc. is an example of this. Think through the business structure i.e. corporate vs. partnership and the legal and tax impact of getting funding and giving away equity for mentoring etc.
d) Time: Review your plans across multiple time frames for improving the quality of your planning. What are your dreams for yourself, where do you want to be in 15 years? Give reign to your imagination; this is the foundation. Then come down to earth. Where do you want to be in 3-5 years? Finally, what are the actions you need to take today if your business is to survive for 3-5 years? What is essential to do today to survive?