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The December 09 edition of Startup Saturday Kolkata had seen Mr. Arnav Ray, CEO, Array Consultancy, suggesting a plan of action for a successful Startup. After his MBA from SP Jain Institute of Management and Research, Mumbai, Mr. Ray had worked at TCS, Infosys, American Express before joining his family corporation, Array Consultancy as the CEO. During this tenure he has closely observed the growth of companies from a Startup to an enterprise that operates in highly competitive setting of the US, UK and India.

As Mr. Ray puts it, the origin of any endeavor is inevitably the Idea – a unique strategy. Not only should it be a product of an innovative mind but it should have realistic estimates of the target consumer, a revenue model, a team, collaborators, alliances etc. To start with, the idea should be organized and documented into a business strategy. This would be the flexible ‘Business Bible’ to be followed during the growing stages of the Startup. Mr. Ray stresses that a systematic business plan is a prerequisite to analyzing the feasibility of the idea. Besides creating a road map and help in identifying the options to succeed, it provides insights to improve the business concept and manage the project in a structured manner. Further, it also becomes easy to communicate the idea to lure prospective investors.

Having prepared the ‘Business Bible’, it is imperative to begin the planning process with analyzing Economic-Industrial-Cost and doing a market research. This demands a wide range of knowledge from many different business disciplines: finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others. These vary more or less depending on one’s business idea. Besides, taking care of the business model, finance, projecting sales and cost, a good business plan also analyzes the risks associated with the venture and its capital structure. It can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines.

“A good business plan can help to make a good business credible, understandable, and attractive to someone who is unfamiliar with the business. Writing a good business plan can’t guarantee success, but it can go a long way toward reducing the odds of failure”, observes Mr. Ray.

The most important and perhaps the most troublesome aspect of a business startup is that of funding. A large number of great ideas are not realized due to lack of funding. Thus, a considerable component of the business strategy should involve this aspect. The common sources of funds are Angels, Venture Capitals (VC), Bootstrapping equity, Corporate Ventures and Holding Companies. Some others are in the form of debts as Trade Credits and Commercial Bank Loans. Obviously, VC’s invest their money on a new venture with a lot of faith. Hence it goes without saying that the funds go to the startups whose ideas convince the VCs most.
So what does a VC look for in a Startup? The general attributes are a great idea, an ideal, well prepared entrepreneur, a suitable business and revenue model and a well laid out business plan. Besides these VCs look for features concerning the uniqueness of the idea and its USP, the management team and most importantly the ‘Value’ deal- five years down the line what will it receive from this investment?

In the initial stage of building the management team and completing product development, possible sources of finance are the Angel Investors, traditional VCs, Consulting firms and Incubators. The expansion stage of a firm ranges from expansion of production, marketing or sales capabilities and provision of working capital, to the state of substantial growth of the firm till it breaks even. During this period the Mezzanine Financiers are traditional VCs, buyout firms, corporations and investment banks, who continue the funding process in the later stage as bridge financiers also.

Mr. Ray signed off with the notion that perseverance and futuristic vision on the entrepreneur’s part with an urge to satisfy consumers with the full value of their money, always bridge the gap between a startup and a successful corporate.