An overview of Government of India funding options available to tech start-ups

For a first-time entrepreneur in a technology play, funding is a crucial challenge that can make or break the fledging business.

While finding funding is crucial for all start-ups, technology companies need investors with special skills who can assess the inherent risks of a technology business. These risks could be those associated with a new cutting-edge technology or a radical business model. Either ways, a special class of investors is needed.

While angels and VCs come to mind first for companies seeking funding, lesser known are the number of government and government sponsored funds that are also available to tech start-ups. Close to 50 different schemes are available through government Ministries and Departments including Department of Scientific and Industrial Research, Ministry of Micro Small Medium Enterprises, Department of Bio-Technology and state-level organizations.

Types of funding available

Funds from these institutions can be obtained for diverse activities, including:

• Creation of lab models
• New product development/prototype creation
• Product enhancement
• Funding for participation in trade fairs and exhibitions
• Funding for patenting of innovations

Government sponsored funds fall into multiple categories:

• Technology development funds
• Funds for patent protection
• Technology in-licensing funds
• Technology scale-up/validation funds
• Market entry funds
• Expansion Funds

Some of the funds are available specifically for projects in areas like biotechnology and renewable energy and are managed by their respective ministries. For example, the Small Business Innovation Research Initiative (SBIRI) scheme offered by the Ministry of Bio-technology offers soft loans upto Rs.10 crore as early stage funding for high-risk, innovative ideas/products for commercialization.

Funds that grow with you

Some of the government sponsored schemes are tailored to grow alongside funded companies – they offer phased funding that can be tapped at different times. One such fund is the Department of Scientific and Industrial Research (DSIR)’s Technopreneur Promotion Programme (TePP).

Incubator-related Funds

More than 30 different Technology Business Incubators (TBIs) have been set up in India, many of them over the past 3-4 years. There are incubators that focus specifically on one area – such as biotechnology or start-ups focusing on technology solutions for rural markets, but there are also many that have a wide mandate. For instance, the Indian Angel Network supports companies focusing on a wide range of areas – IT, ITES, Internet/Web, Telecom, Mobile VAS, Education Technologies, Healthcare Technologies, Retail Technologies, Cloud Computing and Cleantech.

The TBIs are spread across the state and most (including the one set up by the Indian Angel Network) have been set up by institutions in participation with the National Science & Technology Entrepreneurship Development Board (NSTEDB), which is part of the Department of Science and Technology. The NSTEDB has a structured programme for setting up TBIs in association with institutional partners.

TBIs set up under the NSTEDB programme typically offer services such as (individual offerings may vary):

• Shared infrastructure, office space and common facilities
• Training including short courses
• Assistance on technology related IPR issues, legal and quality assurance services
• Marketing assistance
• Assistance in obtaining and clearances,
• Assistance in preparation of business plans
• Facilitation for participation in technology shows/ technology clinics/ trade fairs

In effect, there appears to be a wide range of funding options to explore within the government. Industry executives who have tapped these avenues point out that some of the programmes could be structured better so that the funded companies have greater flexibility in structuring the investment. But the single biggest challenge before some of the government-run institutions that offer the funding is the lack of in-house skills in assessing and structuring the investments. This could come in the way of meeting the government’s macro objective of creating an environment where start-up innovations thrive. With the basic groundwork of creating a country-wide institutional framework in place, it is time then to make this ‘infrastructure’ work better to service the industry for which it was created.

Useful Links

• A comprehensive list of government funding programmes for start-ups
• A complete list of TBIs supported by NSTEDB

Now that trend is well established!!! Question is? What are the success mantras? According Raju Moza Principal Consultant, Roch Consulting “It is imperative for the existing eCom ventures to deliver. If they fail to deliver what they envisaged, the bubble will burst; the quality of the deals in this sphere are appealing, some are meant to mislead, in some cases merchants treats Deal Holder second citizen customer, so and so fourth …So these bunch of sites can be enabler in eCommerce or DISABle the whole eco system…lets c which way the wind blows…”

My experience in this sphere as strategist and having enabled some of exciting ecommerce projects along with our team at eQNova – One can build better product, with great designs: powering it with high voltage promotion campaign!!! Spend millions on Display ads- get the traffic on the site and even convert the traffic into customs. Though it is imperative but not the success mantra!!!!

Success mantra is, “Second action after first buy!!!!!”

Is your customer going to write on complaint forums after first buy or becomes your fans on social media, write +ve tweets, even testimonials? Earlier decades bad reputation took years to spreads, today’s it is minutes away…   So success mantra means –

1. Quality of the product and that WOW factor associated with it is!!

2. After sales support!!!

Trust me- even in Digital era QUALITY and AFTER SALES SUPPORT should be in your central circle of Digital Retail Venture priorities.

We at eQNova have simply refused to work with builder wanting to venture in to ecommerce domain. He had plans to spend Cores of rupees on advertising on hoarding; ideas and money for land-lock marketing campaigns. But had no clues about the problem his service was intended to solve. It was quite simple of him, idea was working in US; he will plunge in, sell his company after some time and make big money. New projects are very important to us, and working with non- serious players in not our philosophy.

But having burnt our hands initially working with such non- serious customers, we had not difficulty in saying no to him and have adopted it as principal philosophy … No matter what money is on the table we will not work with non serious initiatives.   In fact, we are proud to work with SME sector focused entrepreneurs.  Recently we have chosen to work with the person who is the master of his trade currently struggling with finances but very honest with his ideas / intent and very passionate person. As eCommerce enabler company eQNova should have no problem in giving wings to his dreams.

In fact I consider that our litmus test of our ability, working on these types of challenges gives me great satisfaction. So part of the assignment is to improvised his concept and bring it to level and help him interact with VC’s using services of our ecosystem.

Let us see which way wind blows….

Some of the benefits of creating a solid RFP include,

1. Receiving quality responses from service providers

2. Reducing the time it takes to negotiate the contract

3. No surprises further down the line

4. Documenting in-scope requirements early helps build internal consensus and organizational alignment

Listed below are tools and techniques to help solid RFPs for selecting the best service provider for your organization.

• Build an SOW first, and then build the RFP around it
• During a traditional sourcing lifecycle, organizations usually publish an RFP first, then select a sourcing partner second, and develop a Statement of Work (SOW) third. The problem with this sequence of events is that the real organizational requirements are revealed too late in the process. By then, you have already selected your partner and have lost your leverage.
• Instead, put your initial time and effort into building a solid and comprehensive SOW. Direct your team to document requirements, capture volume data, and identify service levels. In other words, build an SOW that you plan to use to negotiate the contract. Then build an RFP around this SOW.
• As a result, you gain a deeper understanding of your sourcing needs and are in a better position to pick the right sourcing partner. By publishing a highly customized RFP, you exponentially increase your chances of receiving a customized solution instead of the generic RFP responses. Most importantly, you avoid unpleasant surprises down the road and you know exactly what you are getting.
• Prioritize your service requirement as “must have” or “nice to have”
• Internally document your sourcing requirements as either “must have” or “nice to have”. This simple exercise alone will focus your team on what is absolutely important, reveal internal objections early in the process, and ultimately build alignment within the organization. In addition, knowing the difference between “must have” and “nice to have” allows you to quickly add / remove services when you are in the contract negotiations.

If done early in the competitive RFP process, you just might be pleasantly surprised at how eager service providers are to throw in “extra” services in order to win your business.

Pricing

Include a pricing template in your RFP, comparing service provider bids and pricing can be a challenge for anyone, especially if the bids come in different shapes, sizes, formats, and inconsistent definitions. Give to avoid this problem, include a blank pricing template along with the RFP. The template should include pricing line items, resource units, volume information, definitions, etc. The more direction you can provide the service provider, the better the response. The goal is to give specific guidance on how you would like to receive the pricing and to ensure consistency and uniformity in how the pricing is delivered. As a result, you get to control the level of detail in the pricing model. Since everyone is using the same template, the same line items, and the same definitions; comparing rival bids is a snap.

Document each party’s financial responsibilities,

In addition to adding the pricing template, I recommend that my clients add a Financial Responsibility Matrix (FRM) document to the RFP as well. As the name suggests, it is a document that outlines each party’s financial responsibilities. For example, if you are considering outsourcing your call centers, use the FRM to determine who is financially responsible for the services, the equipment, the scripts, and the T1 connection to the call center. In my opinion, it is always better to have an agreement on financial responsibilities early on. It gives you a good handle on your true costs and it prevents nasty surprises during contract negotiations.

Be upfront with your most important Terms & Conditions (T&Cs)

Now is the perfect time to include major Terms & Conditions (T&Cs) for the Master Services Agreement. Don’t be shy. Negotiating a Master Services Agreement is a time consuming activity. Including a list of your major T&Cs will help reduce this cycle time (as well as points of contention during negotiations).

Share with the service provider your preferred payment terms, intellectualproperty (IP) position, termination clause, at risk amount, etc. Document the most important terms and allow the service providers to respond. In a competitive bidding environment, you will be amazed at how open the providers are to your positions. Just by adding your term sheet you will not only pocket some big wins without a fight, but will also cut down the contract negotiations time.

Involve regional stakeholders early on

For scope of services that are global in nature, involve the regional stakeholders early on in the sourcing process. Getting regional executives to agree after the service provider has been selected or the contract has been negotiated is a political disaster waiting to happen. And, on a personal note, this is a sure fire way for you to get the short end of the stick. Bringing regional stakeholders on board early helps build consensus and buy in.

Inevitably, you will run into issues where services and SLAs will differ across regions. In such cases, it is best to create a global services baseline (SOW + SLAs), document the extra regional service requirements, and ask the service provider to price these requirements as uplifts (i.e. additional charge over the base fee). Then let the regions decide for themselves whether they would like to pay for the extra services. You will find that many regions, for both economical and political reasons, choose the global baseline.

Manage the people side of the sourcing equation

These days, mentioning the word outsourcing makes people nervous. If you are contemplating sourcing, don’t go talking about it to everyone. As a matter of fact, keep things under wraps during the early stages. Keep the sourcing team small and only involve the subject matter experts that need to be in the know.

When you are absolutely sure that sourcing is right for you, and then announce it to the general population. This needs to be done gently, carefully and with compassion. If some of your employees are going to be rebadged to the new service provider, share this with your organization. If you plan to redeploy your resources, share that as well. But not saying anything, especially when the cat is out of the bag, is what gets people nervous. It is always your best resources (the ones you would have liked to stay on and help you with the massive transition) that will leave first.

Keep the core team consistent

The team that has created the RFP, selected the vendor, and negotiated the contract, should be the same team that is responsible for transition and managing the day to day contract. In sourcing, continuity can work wonders. Information is not lost, minimal knowledge transfer is required, finger pointing is avoided, and the classic “it’s not my problem after tomorrow” syndrome is minimized.

Furthermore, since the team will ultimately be responsible for the daily management of the contract, they have a vested interest in structuring an optimal deal for themselves and the organization.

Adjust the business case

If you have not already built a preliminary business case, now is the time. If you have already built one, update it to reflect the specifics of the RFP. The goal is to keep adding granularity to the business case as you get further into the sourcing lifecycle. The business case should never be treated as a static document, but rather as a work in progress where information is continuously updated as new data is uncovered.

Eventually you can use your business case to track the actual benefits received. A word to the wise: try to build the business case model so that the pricing model (that you receive from the service providers) will integrate easily into the overall model. This saves you time, minimizes aggravation, and reduces chances of errors.

Pick a process and stick with it

My old boss used to say “Any process, even a bad one, is better than no process at all”. For RFP development, several processes are available in the market place. Some good, some not so good However, the key to a successful sourcing experience is not in what process you pick but rather that you pick one and then stick to it. I have seen organizations agonize over what process or approach to use and then midway into the project, change the rules of the games completely. This confuses your sourcing team, wastes time, and ultimately produces an inadequate RFP.

My advice: pick a process, customize it to your situation, and then stick to it. If minor changes need to be made, then by all means, do so. But keep the central theme the same and keep your team focused on developing a world class RFP.

Following these simple rules will greatly improve the quality of your next RFP. The more time you spend creating a solid RFP, the greater your chances of finding the right solution, with the right partners, and at the right price point.

The Art of Sales Communication

Too many entrepreneurs waste time and energy chasing sales prospects that have no potential. To increase your sales, you must learn to disqualify sales leads. Though it might seem like a skill better suited for your sales team, you, as an entrepreneur, should master it to get and stay financed.

Sales communication is different from advertising and marketing—it’s more personal. Too many salespeople make the mistake of spewing off hype-driven sales talk. But no one likes to feel manipulated, so this approach doesn’t work. Some sales people don’t even bother to explain the benefits of what they’re selling.

Key Points for Entrepreneurs

1. Be a shrink. We all bring our emotional baggage to every aspect of our lives. We all need to be loved and respected, and to trust others. In selling situations, many of these psychological buttons are pushed. Your sole job as a salesperson is to build rapport. Rapport leads to trust. Trust leads to lasting relationships and sales.

2. Set your objective for prospecting. Shifting your objective from getting the appointment to determining whether the prospect qualifies for an appointment is key. Next, you need to eliminate your fear of rejection. It’s easier to do this when you aren’t begging for sales meetings and you won’t be begging for meetings. Instead, you’ll identify your target prospects using specifics such as price-points, budgets, decision-making ability, and schedules. You’ll only make appointments with prospects who need, want, and can afford what you are selling and are willing to buy from you now if you meet their requirements. You’ll also learn to embrace the fact that disqualifying a prospect is just as valuable and important as qualifying one—whether you disqualify/qualify him or he disqualifies/qualifies himself.

3. Start separating real leads from unlikely ones. This type of prospecting is essentially a practice of sorting and identifying by talking to as many people as you can in the shortest amount of time. You’ll need to avoid the temptation of trying to create prospects—they simple cannot be created. This process involves learning how to disqualify a low-probability prospect and maintain control of the interaction. Remember, whoever asks the questions are in control.

Print out these reminders and tape them by your phone to help you when you call:

• I work with high probability prospects only. I disqualify everyone else.

• Pr • I don’t waste my resources on low-probability prospects.

• No is just as good as yes.

• A low-probability prospect is worse than no prospect at all. Remember the opportunity cost.

• I end the conversation if the prospect is unwilling to make a suitable commitment.

• When in doubt, I disqualify.

• I go into each call with no expectation of a result.

• True high-probability prospects will not allow themselves to be disqualified.

• You can call the same list over and over again and you will get a higher and higher percentage of prospects who say yes as long as you do the following:

Keep changing the offer.

Disqualify.

Don’t waste prospects’ time.

Don’t educate.

Stop spending precious months educating the prospect, who do buy in expectation of goods for free. Forget the concept of consultative selling. If they want consultations, they have to buy first.

4. Stay focused. Fear is what keeps most of us chasing sales leads that we know aren’t high probability. Here’s how to stay on track and further cement this learning into your sales process:

• You are training prospects when you disqualify them.

• Don’t make the same offer twice in a row—you’ll jeopardize your credibility.

• Deal with discomfort by acknowledging it and pushing through it anyway.

• Remind yourself this is the disqualification game.

• You have no power to make a high probability prospect. You do have the power to disqualify.

• Prospecting deserves 50% of your time. It is just as important as meeting in person.

• Twenty percent of the market doesn’t like its current supplier and would be receptive to switching.

5. Get to the decision maker when prospecting.

• Always try to get to the business owner or decision maker.

• When you cold-call the decision maker but get the gatekeeper, treat the person as if he or she is the decision maker.

• If the gatekeeper cannot answer your disqualifying questions, ask if he can put you in touch with someone who can, or bring the questions directly to the decision maker.

Remember prospecting is a disqualification process.

However, outsourcing isn’t just a matter of looking in the phone book and finding someone to do the job for you. You really have to know the job you want to outsource. You have to have a clear understanding of the service you want to buy so you can then measure its performance. But there are also things that can’t be measured, like quality of customer service. Company must also have a sufficiently skilled staff member to be able to manage the outsourcing. There must be someone who can manage booking the freight, ensuring deliveries are made and who can manage the contract with the freight forwarding company. It’s a bit like you steering the ship while they do the rowing.

Deciding to outsource certain activities in a business is the easy part; telling your staff that you are doing it is the more difficult aspect, even that can be done with proper preparation. Right now a lot of companies are overstaffed and they are thinking of cutting back on manpower. There is a downside to outsourcing in that you can lose control of that part of the business. In regards to ensuring that your staff doesn’t feel let down by your decision, it is paramount that management is honest with them and keeps them informed of all decisions. Management should be transparent with staff about the direction the business is taking and the pressures it may be under.

When talking to staff use inclusive language such as we and us rather than I, That way staff feel as if they are part of the process. Staff needs to know what is happening and how the decisions will affect them. SMEs are like families so there should be an element of collaboration when it comes to the business. Staff should be encouraged to be part of the decision-making process but at the end of the day it is the business owner that has to show leadership and make the hard decisions. You have to remember that you can’t make everyone happy all the time, but it is best to ensure there is continuous communication with staff.

▲MAKING IT WORK

■ Know everything about the part of the business you want to outsource.

■ Know how you are going to measure the performance of the outsourcing partner.

■ Know how outsourcing that component of the business will affect customers and staff.

■ Manage the relationship with your customers and outsourcer.

■ Ensure there is a continuous process of communication with you and your outsourcer — it’s not set and forget.

1.      Fix or fire: Penalty clauses help nobody and should be excluded from outsourcing agreements. Penalties detract from the partnership because they dole out blame, and the relationship breaks down as one party becomes defensive. However, customers need to ensure that vendors are in some way accountable. The only way that penalty clauses are going to work is if they apply equally to the outsource vendor and the customer CIO or IT manager, with both parties working toward the same view established up-front. Better than punitive monetary clauses is simply fixing any problems, with flexibility in the contract to terminate should that not be possible. The termination clause is valuable too, if the customer’s business changes and the vendor cannot cope with the change. It allows a graceful exit for both parties without being held to ransom by a piece of paper unable to reflect changes in the real world.

2.      Do your homework: Finding the right outsource partner can be a daunting task. There are many to choose from, and, while they seem to offer the same or similar services, there are in fact some key, if subtle, differences that can make or break a relationship. Researching via the Internet is the obvious launch point for an investigation into the market. The next is seeking referrals. Be careful not just to accept all referrals. Only accept those which refer to the same service your company seeks. If your business needs to outsource its call centre, then look at case studies and referrals of call centre outsourcing arrangements. Another key aspect of referrals is to ensure that they come from organizations with a similar culture to yours. A referral from an organization with a free and easy culture is no use to an organization that is heavily process-driven, with strict business rules. It is important to understand those parameters from day one, and to determine whether or not your business is a suitable partner for the outsourcing vendor and vice versa. Outsourcing is a long-term, strategic relationship that can be handled according to many of the tenets of good merger or acquisition practice. The need to conduct due diligence cannot be overstated, delving as deep as ascertaining how vendors train and develop employees, retention histories, contingency plans and experience in your industry, with your size of business and your business culture.

3.      Take stock for the future: One of the most important prerequisites to a successful outsource relationship is to make an accurate assessment of the current state of the customer’s business. That includes the existing infrastructure, the current service levels, pricing and more. Only based on that can both parties define the goals, the situation they want to create, service level improvements they are after and any cost savings, and ensure that they are measurable.

4.      Get beyond the rocky road: The decision to outsource is not an easy one to make, and once made the transition process may be challenging. It is imperative that the customer and the vendor relationship are able to extend beyond that period. One of the methods for achieving that is to ensure that senior management is truly behind the project.

Believe it or not, many of the smart businesses that survive this economic hardship are going to emerge more nimble, more competitive, and more globally-integrated. Outsourcing alone is not the answer; it simply provides a vehicle for enterprises to gain access to new talent, better process acumen, new technology and global markets, provided they venture into an outsourcing engagement with the right objectives in mind. There is a proliferation of service providers eager for business, and most of them will offer attractive short-term cost savings. However, clients must focus on forging a partnership with a provider which will work with them to add a lot more competitive bite to their business over a multi-year contract.

Key decision-points companies must take onboard when approaching outsourcing opportunities

1. Think globally.  One of the core differences between the current economic recession and those of the past, is the fact that all of today’s financial markets and economies across the globe are so much more integrated than they used to be.  The Internet and global communications revolution have created unprecedented access to global talent, where you can have your mainframe computers managed in Brazil, your general ledger consolidated in Hungary and your logistics analytics performed in India.  The need to enter new global markets quickly has never been as pressing as it is in today markets, and the right service partners can help you grow your business globally.  Having a ready support infrastructure that can support foreign payrolls, accounting procedures, local regulations etc. can save your company months of painful work to set up shop in new markets.

2. Focus on common standards.  Engaging an outsourcing provider which can provide common processes around a solid ERP backbone is critical. Smart enterprises are moving ever-closer to developing commons standards to support processes that can enable them to operate and compete as global entities, and this current economic predicament is accelerating this dynamic.  When you have rapid access to your global financial, HR, supply chain, customer and product information, you are in a position where you can make quicker informed decisions to enter new markets, sunset dwindling product or service lines and mobilize your resources and partners accordingly to respond to your existing and future customers.  ERP platforms are far more globally-integrated now than they were a decade ago.  These platforms provide a crucial backbone for supporting global business initiatives, and developing technology standards, such as XRBL and HR-XML, are helping firms re-use and optimize a lot of what they already have.  

3. Add discipline to your revenue cycle.  A good BPO provider can add discipline to your collections and speed up your cash-flow, eliminate bad debt and free up a more timely cash-supply. On the flip side, quality procurement processes help you keep the cash you currently have. This is critical in today’s tougher environment.

4. Approach cost-containment as an ongoing objective.   A good outsourcing partner should be able to help you sustain cost-savings over a long period, not simply at the onset of an engagement, through ongoing quality and process improvements.  For example, you may save $10 million in the first year or your engagement, but how about the subsequent years?  Those initial costs you saved will creep back if you don’t constantly refine your processes across your global supply chain.