West indian culture

“The startup culture is booming in the city, but needs an investor base” | Nagpur News

Stories of billion-dollar startups have fueled the dreams of dozens of entrepreneurs to pitch the “next big idea.” While in India, the start-up hub is mostly centered around metros like Bengaluru, Mumbai, etc., Tier 2 cities are slowly emerging as incubation hubs for some unique business ideas. In an interview with TOI, Deepak Menaria, Founder of Lemon School of Entrepreneurship, said startups are growing in Nagpur at a rapid pace but the investor base to support seed funding needs to expand.
Q. How fast is the startup culture growing in Nagpur?
A. About seven or eight years ago there were probably around 40 startups in Nagpur or say Vidarbha area. Now we have about 450-500. So, the startup story is growing at a rapid pace in our Nagpur region. I’ve seen this journey very closely over the past eight years, where more innovation is coming from small towns. They do good because they have suffered these problems and are the best at finding solutions related to them. In 2013 we had our first startup competition and only six entries came from Vidarbha, whereas now almost 70 entries come from here. This 10x growth tells us that we live in very exciting times.
Q. Do these ideas come mainly from young people?
A. Although there is no age bracket for entrepreneurship, people as young as 17 or in their 60s have ideas. This is probably the best thing about entrepreneurship, because there is no age barrier, no academic barrier. But to answer your question, yes, we find that the majority of people who come to us with ideas are in the 22-28 age bracket.
Q. What is the biggest challenge for people with brilliant ideas, pitching them properly to investors or getting the actual funds?
A. There’s a lot of hype about unicorn stories (a startup that has reached a billion dollar valuation) and that’s good too. But the problem it creates is that every young person now wants $1 million in funding. I tell everyone that getting financing is just one step, but not the only one for you. The main goal for you should be to have a plan to become sustainable, profitable and impact the world. There are a lot of things that have to happen between having an idea and seeking funds from investors. You need to test the idea, spend time solving the problem, and validate the idea. The validation approach is very important because it involves spending time with potential customers who will agree that yes, we need a solution to a particular problem. If you are able to do this, then obtaining financing will not be a problem.
Q. It seems that getting funding is not the problem.
A. Absolutely. There are enough investors in the world looking to invest their money in the right kind of business. The problem is more to find good ideas to put their money in.
Q. Do business ideas now only focus on technology products/services?
A. Most of them do, but we also have a lot of people who want to grow and innovate with traditional businesses. I always tell people that they should always leave a seat on the board to Mr. Technology. It will help you grow and have a wider impact.
Q. As the startup culture grows in Nagpur, what does the investor scenario look like?
A. This is an area where we can still improve. What we need is a local base of investors who have the vision and the appetite for risk for the first rounds of financing. The risk is inversely proportional to the stage of the activity. In the beginning, investing in businesses is very risky, but the potential returns are very high. And if you invest later, the risk is low, but the returns would be too. I believe having a group of angel investors from the local community is crucial because it creates the right kind of ecosystem in which startups can flourish.
Q. What advice would you give to anyone looking to pitch their ideas?
A. The most important thing is not to rush. There’s an appropriate time to pitch and it happens after you’ve done a lot of research, both on and off the pitch. Investors are not just looking for an idea, but a proper plan on how that idea will turn into a successful business. Entrepreneurs must remember that if someone invests money, they don’t do it for charity but for returns. The investor therefore thinks in terms of exit strategy and return. All of these things should be clearly identified by these pitch ideas.

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