Day One at the “Jumpstart your venture” workshop at TiE-ISB Connect also included a panel discussion on “Financing Your Dream”. The panel consisted of Mahesh Kanumuri of Aravali Partners, Ashhar Farhan of Packetcell Networks, Debashish Pattnaik of Goose Technologies, Lakshi Akkaraju of Musecurity Inc. and Prasad Yelamanchili of Teleonto. Rajat Gupta reports:
Session 4
Mahesh Kanumuri, moderating the discussion, asked the panel to begin with answering the question on whether or not it is necessary to raise VC money. Pattnaik, the founder of Goose Technologies said that he believed in raising money from day one, and that entrepreneurs should always be on the lookout for money. Funding results in due diligence, which may expose weak links which would otherwise have been overlooked. Outside money also tends to keep you on your toes. He cautioned entrepreneurs against raising money from the real estate guys.
Farhan, on the other hand, said that startups no longer need to raise money since costs are down and it is possible to run a company from a garage. A CEO can only do one thing – either knock on the doors of VCs, or reach out to the customers. Hence, at times, funding can end up being the sole purpose of the entrepreneur; you do not start a venture to raise money, but to build a business.
Lakshmi Akkaraju agreed, saying that raising money can bring some destruction, and hence it is important to choose your VCs. The wrong VCs can reult in the venture failing. And VCs don’t just bring in the money – they bring with them the experience and the network for making the a success. But it is no cakewalk either: VCs.will come once a month for a board meeting, and thell you how to run your business.
Prasad Yemanchilli said that we all look for wisdom from such sessions but it is mostly in hindsight, since there are no correct answers to the questions that the audience may have. While web startups may not require much money to begin with, but large product developments need big money. The customer is most important and if you solve his problems, you will get financing since VCs are equally desperate for deals.
During the Q&A, someone in the audience asked about how much one should shell out for early financing? Pattnaik said that while there is no set formula for it, one should remember that an entrepreneur builds his business for the current shareholders, and it is necessary to generate returns for them.
Farhan added that startups today have to be continuously on the ball – they may have to take important decisions in just a day, maybe even change their entire gameplan. This is not possible in case of VC funding because that need for approval from the VC can result in a loss of opportunity if the VC tajes time.
Patnaik said that it all boils down to desperation; Kanumuri concluded the discussion with a mantra of 3Ds for success: Desperation, Diligence will bring Delight.
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