In "Funding Your Startup and Other Nightmares", authors Dhruv Nath and Sushanto Mitra recommend that founders should evaluate their startup or potential startup using a ''PERSISTENT framework''.
This framework is about solving a problem, earnings model, risks and how to mitigate them, size of the market, innovation, scalability, team, entry barriers, identifying a large niche where the entire market is crowded and traction.
Nath and Mitra, founders of the start-up Lead Angels, say that successful startups tend to fit into this framework, whereas failures miss out on one or more parameters such as size of the market, team or risks.
"Therefore, it is useful to evaluate your startup within this framework," they suggest in the book, published by Penguin Random House. The book has a foreword by Sanjeev Bikhchandani, founder and vice chairman of naukri.com. Does every start-up need funding?
"If you are building a solid product, you would most likely need money to build it. If you are in a business where rapid growth is the only way to stay ahead of competition, yes, you would definitely need funding - perhaps lots of it. If you are trying to build a consumer brand, you have no choice -you must raise money," the authors say.
"Also, even if you do need to raise money, funding and valuations should not be your focus. Focus on building your business. If you can do that, the funding will come. Don''t chase funding. Build a successful business, and let funding chase you," they write.
On the impact of COVID-19 on funding, Nath and Mitra say that businesses have slowed down, even if temporarily, and people have lost money.
"That doesn''t mean they (people) will not invest, but they will perhaps be far more choosy. And that brings us back to our favourite theme - ensure that your startup is PERSISTENT, and you stand a better chance of getting angel funds. By the way, this is true for any crisis, and not just COVID-19," they write.
According to the authors, while the COVID-19 crisis has made things tougher for everyone, at least in the short term, it has opened huge opportunities for some companies.
They also say that policymakers have realised that startups provide growth in the economy and generate jobs.
"And all in double quick time with limited capital. Therefore governments across the world - including the government of India - are going all out to support startups. Not only does the government provide grants, it also gives significant tax exemptions to start-ups registered with Startup India," they say. PTI ZMN RB RB
Disclaimer :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI