Inspire Minds to Change Lives

Ratan Tata's words of inspiration - Inspire minds to change lives

On Courage: I am, unfortunately, a person who has often said: You put a gun to my head and pull the trigger or take the gun away, I won't move my head. 

On Successful People: I admire people who are very successful. But if that success has been achieved through too much ruthlessness, then I may admire that person, but I can't respect him. 

On Leadership: It is easy to become a number one player, but it is difficult to remain number one. So, we will have to fight with a view to remain number one. 

On Nano: This project (the Nano) has proven to everyone that if you really set yourself to doing something, you actually can do it.

On the Need to think Big: We have been. . . thinking small. And if we look around us, countries like China have grown so much by thinking big. I would urge that we all, in the coming years, think big, think of doing things not in small increments, not in small deltas, but seemingly impossible things. But nothing is impossible if you really set out to do so. And we act boldly. Because it is this thinking big and acting boldly that will move India up in a manner different from where it is today. 

On Risk: Risk is a necessary part of business philosophy. You can be risk-averse and take no risks, in which case you will have a certain trajectory in terms of your growth. Or you can, while being prudent, take greater risk in order to grow faster. 

On Risk: I view risk as an ability to be where no one has been before. I view risk to be an issue of thinking big, something we did not do previously. We did everything in small increments so we always lagged behind. But the crucial question is: can we venture putting a man on the moon or risk billions of rupees on a really way-out, advanced project in, say, superconductors? Do you restrict your risk to something close to your heart? 

On Employees: The way to hold employees today is to make their work and their day-to-day activities in the company exciting enough for them to stay. Not everyone will stay, but I think if we can empower more people and are willing to pass on the responsibility for that, and if people are satisfied and motivated, there's less chance of them wanting to leave and go to a competitor. 

On Low-Cost Products: It should not be, cannot be, that low-cost products come to mean inferior or sub-standard products and services; definitely not. The aim is to create products for that larger segment — good and robust products that we are able to produce innovatively and get to the marketplace at lower costs. 

On Customers: We should be treating the customer in the same way that we would want to be treated as customers. 

On Innovation:Barriers to innovation are usually in the mind. 

On Customers:There was a need to re-focus and look at how your customer sees you, and to pay more attention to what the customer wants rather than what you think she wants. Are you really the most cost effective producer? Are you aggressive enough to grab marketshare? Will you endeavour to dip your toe in the water and do something that you haven't done before? 

On Innovation:If you are a little innovative or a little bit of a gambler, and you make a product which is either ahead of its time or has an evolutionary design, or has features that work into a person's perception, then you have an acceptable product. 

On Questioning:I kept saying, please question the unquestionable. I tried to tell our younger managers just don't accept something that was done in the past, don't accept something as a holy cow. . . go question it. That was less of a problem than getting our senior managers not to tell the younger managers, 'Look young man, don't question me.' 

On Speed:Today, the world does not afford you to luxury of being a slow mover. Nor are there any holy cows. We have to be aggressive, be far-sighted enough to look into the future and we also have to be pragmatic enough to say that if we really are not in a leadership position in a particular business, we should look at exiting that business. 

On Icons:The kind of company one would want to emulate is one where products and technology are at the leading edge, dealings with customers are very fair, services are of a high order, and business ethics are transparent and straightforward. A less tangible issue involves the work environment, which should not be one where you are stressed and driven to the point of being drugged.

On Introspection:All companies need to keep looking at their business definition and, possibly from time to time, to see if that definition needs to be redefined. If you take the example of Tata Steel, they could say that they are a steel company and find themselves in a shrinking market where steel is under threat of being replaced by some other material. The question is: what do we call ourselves? One view was that steel is a material, so can we be a materials company? We don't have to be in all materials, but can we be in composites, can we be in plastics, laminates, etc? The automotive business needs to think similarly, and so does the chemicals business. We have to keep looking at ourselves and asking: what is our business?

On Innovation: My outlook on R&D is that it is an absolutely necessary thing for us to do. And I don't think we are doing enough. The point is not just spending money; it's how many patents you file, your innovation rate and your product development. . . If today you were to give everybody a mandate that they can spend 3 per cent of their revenue on R&D, assuming they can spare the money, I don't think many companies would know the what, where and how of spending that kind of money, other than to put up an R&D place and buy lots of equipment.

On Customer Relationship: Where we have direct dealings with our customers, it is important that, at the middle-management levels, they are shown courtesy, dealt with fairly, and made to feel that they are receiving the attention they deserve. The interface with the customer should be a seamless one.

On Risk: There have been occasions where I have been a risk-taker. Perhaps more than some, and less so than certain others. It is a question of where you view that from. I have never been a real gambler in the sense, that some successful businessmen have been.

On Ethics: What worries me is that the threshold of acceptability or the line between acceptability and non-acceptability in terms of values, business ethics, etc, is blurring.

On Success: I would not consider myself to have been tremendously successful or as having failed tremendously. I would say I have been moderately successful because there have been changes.

On Survival: The strong live and the weak die. There is some bloodshed, and out of it emerges a much leaner industry, which tends to survive.

On Challenges: If there are challenges thrown across and those challenges are difficult then some interesting, innovative solutions will come. If you don't have those challenges then, I think, the tendency is go on to say that whatever will happen, will take place in small deltas.

On Planning: We never really plan big. We are not in keeping with what is happening around us. When you go to other countries around us you see it visibly that we are just back in time. And yet we have so much to offer.

On Commitment: We have to clamp down on deviations from commitments. For ensuring greater commitment to performance, we also need to have a system which rewards performers and punishes those who don't perform.

On Risk: We have is to be less risk-averse. We have been a very conservative house and we have been applauded for our conservatism but today we need to take more risk. We don't need to be flamboyant or cavalier but we need to be less conservative than we have been.

On the Future: One hundred years from now, I expect the Tatas to be much bigger than it is now. More importantly, I hope the Group comes to be regarded as being the best in India. . . best in the manner in which we operate, best in the products we deliver, and best in our value systems and ethics. Having said that, I hope that a hundred years from now we will spread our wings far beyond India.

On Resistance: You will probably find the resistance (to change) more from those who haven't been doing well.

On Change: Change is seen to be needed, and fast, so long as it does not affect me. We want to see change but if you suddenly tell me that I am the company that has to go, or has to be cut in half, or three of my businesses have to be hived off, then all of a sudden, the very person who made the noise about change is now saying, 'You don't have to do this.'

On Humility: I would hope that as people who might take an elite position, would be considered amongst the elite in the country, you will always display humility in the manner in which you deal with your fellowmen, both in your company and in the country and you will continue to have passion in the areas in which you will work.

On Doubt: On many, many occasions you would have doubts on whether what you are pursuing is the right thing. But if you do believe in what you are trying to do and you pursue it and stay with it in a determined manner, I am quite sure you will succeed.

On Problems: There are solutions for most problems. The barriers and roadblocks that we face are usually of our own making and these can only be demolished by having the determination to find a solution, even contrary to the conventional wisdom that prevails around us, by breaking tradition.

The Right Timing...

"We are a team of two looking to enter the KPO business. I am a medical doctor with a postgraduate degree in hospital administration, with seven years work experience in healthcare management. Currently, I am working as a healthcare analyst. My partner is a software engineer with three years experience in developing various business applications. Both of us come from a middle income background. With my expertise in the healthcare space and my partner’s in the IT space, together we are looking to start a healthcare KPO in either Bangalore or Gurgaon. Since both of us are sole breadwinners in our families, we would like to have your guidance about how to move out of our current jobs slowly and go about our venture? Is it advisable to work part-time? Also, we are also worried about the capital investment needed for this space, since we both earn a salaried income, how do we go about convincing investors to invest in a completely new company?"

Raman Roy Chairman & Managing Director, Quatrro 

Your intention of starting a KPO business is noble and I would encourage you and your partner to actualise your thinking. I would, however, suggest you take a relook at the order and the timing of what you want to do and when. Any business revolves around fulfilling customer needs and, to state the obvious, the objective is to generate sufficient revenues to cover costs and be profitable. Whether it is a KPO or any other business the principle remains the same. Everything in the business needs to be architected to meet the needs of the customer. The competencies and capabilities of the management are necessary but not sufficient conditions. The customer needs (and thus the product proposition) are typically complex and need more than just the capabilities of the entrepreneur or the management. What you need to answer is, what is the product proposition that you have for your customers and what do you need (in addition to you and your friend) to be able to deliver it? How is this product proposition that you are (or will) construct compare with what is already available in the market to the customer and how is your proposition different or superior? In cases where the product proposition is not different or superior, how do you intend to compete with the competition and is the market large to have your offerings in addition to what is available today? Are your price points acceptable to the customer and sufficient to allow you to make a profit to meet your personal objectives? 

As you prepare a plan to answer these questions the answers to what all has to be done and when it has to be done typically starts to emerge? Let me explain. Look at creating a business like cooking an exotic dish. You first need to have some idea of the end result of what the exotic dish is going to be. Then you need the various ingredients for the dish like meats and vegetables of various types, spices and condiments of various types, other garnishing and sauces etc. An expert chef will add different quantities of the ingredients at different times depending on need and what end result is needed. The chef may decide to make a particular dish as he/she has some ingredients available... but he/she still needs to get the balance items based on the needs of the dish. In the same way, for a business you need a combination of skill sets, capabilities and competencies packaged together as a product proposition for the customer who will pay a price for the ‘product’ or ‘service’. From what you state, between you and your partner you have the domain knowledge and capabilities in the healthcare and IT arena. You need to ask what else is needed to create a value proposition for your target customers. Obviously, you and your partner will use your competencies and your knowledge of your areas of expertise and your understanding of the needs of the customer to create this ‘proposition’. You then need to validate the proposition and answer some basic questions. Based on the answers you will modify or fine tune the product proposition. Once you have a somewhat realistic product proposition you will ‘flesh’ it out or ‘explode’ the proposition to determine what all is required in addition to the skills you and your partner bring as also the timing of the needs of all the inputs needed. 

This will form the first business plan for your offerings. The essential content of this plan will be the timing that you and your partner need to follow to join the new venture, the funding needs and the timing of the funding. Some realities: Competency in a particular domain (healthcare and IT in your case) alone do not guarantee a product proposition that will be attractive to the customers and be profitable. A good product proposition alone does not mean it is a business plan. A business plan does not guarantee funding. Funding does not guarantee success. All these are necessary steps... some of these steps are sequential and some can be done in parallel. 

Your questions of whether to work part-time or full-time and how to tie up the funding comes as an out come of this planning process. The product proposition and the business plan can be conceptualised part time or full time. If the planning process is robust then the answer will leap out at you from the business plan itself. The business plan discussed with potential investors will also tie up funding and once the funding is tied up you and your partner will be able to determine if it is worth taking the risk of leaving the jobs and tying up the other ingredients of the product proposition. There are three constituents to a business: customer, employee, and investor. The business plan has to address all three. If you can cater to all these three constituents then you have a good business. I have seen meticulous and detailed plans that lay out week by week what will happen and I have seen “cowboy” shoot from the hip attitude that says ‘we will figure it out’. Both can succeed... The only common element that I have seen is that all successful business have customers that are willing to pay for the services/products. In the end that is all that matters. 

Managing your Finances: The Money Man.

Managing The Money Men

Money, it’s a crime. Share it fairly but don’t take a slice of my pie —Pink Floyd.

They might as well have been singing this song for professional investors who invest seed capital in businesses that are now ready to bloom. But to bloom, these businesses need more capital and these investors are not excited about it as they do not want to get diluted and lose control. They also don’t want professional investors into the business as it dilutes their stakes. This affects the business models and many times companies with good business models simply fold up.

RK Reddy, when he moved out of Fractal Analytics blamed the fallout on this phenomenon. “It is happening everywhere in India. Getting funding for new ventures for young businessmen is not easy in this country. It is not like the US where even venture capitalist help you in your funding requirements before you are even a graduate. India in this respect still has a long way to go,” he says. Mr Reddy is the co-founder of Fractal Analytics who moved out to start on his own along with another partner due to the difference with the investor in Fractal Analytics.

When Mr Reddy passed out of IIM-A, he and his friends thought getting professional investors to invest in their ideas will be easy. They were from the same batch of IIM-A and had enough work experience to get seed capital. But that was easier said than done. He and his friends had a tough time talking to investors and then finally ended up with a professional investor who invested the initial seed capital to start Fractal Analytics. No venture capital or institutional investor was interested in putting the seed capital.

Another services firm founded by a group of professionalsturned-entrepreneurs thought they had solved their one of the most pressing problems when they finally found a business group willing to fund their start-up. But like any relationship that goes through different phases, this one hit a rough patch a couple of years into its existence. On one hand the entrepreneurs had everything they asked for — investors who were on the board but did not interfere in the daily functioning and the strategic decisions were taken by the management team. “This is one of the biggest nightmare for an entrepreneur. But we were very lucky in this,” recollects one of the founder-promoters.

However, on the other hand, a passive investor was not the ideal recipe for growth. As the entrepreneurs soon found out as they grew bigger. Now they needed more management bandwidth and from professionals who could bring in more than money to the table.

The choice was a difficult one. Either the founders or the investors had to dilute their stake and make a compromise. Expectedly, the investors were unwilling to dilute their holdings. At this stage, the company could’ve gone the Fractal way with the founding team and the investors going different ways, and one of the members of the founding team chose to do exactly that. Frustrated by the slow pace of growth when its peers where growing much faster through acquisitions, one of the members moved out.

A solution was reached a year and many months later when the investors finally agreed to sell part of their stake and the company was able to get in an investor who would take the firm to the next level. “Had we done this earlier, we could’ve probably grown much faster. But sometimes you simply have no choice but to be patient. Indian culture is different from the American culture,” says one of the founders who stayed on.

Venture capital firms face these problems on a regular basis where they see a clear conflict between the promoter and the investor. These firms though invest in companies at the seed capital levels, they do it only if that sector is in vogue. In many cases these firms do not want to take a contrarian view and prefer to go with the trend. “Many venture capital firms will not have issues investing into a firm that is into social networking but will not invest into a business that is based on knowledge or hard skills,” says an entrepreneur who has moved out of a firm to join the competitor.

VCs on the other hand do not like to be tagged based on trends or any other parameters. Each and every venture capital firm operates differently and works in terms of domain expertise. If they do not understand the business they simply want to avoid the investment. In general they prefer businesses that are already on a growth path than be the seed investor.

“Individual investors work well when it comes to seed capital or absolute start-ups. Their requirements and expectations are different.

But when the company is on a growth path, institutional investors work better for the firm. These new investors are in a better position to help and guide the firm as compared to individual investors,” says Alok Mittal of Cannan partners, a firm that provides venture capital. When there is a VC there is a healthy board process which is absent in the case of an individual professional investor. Getting the VC funding at initial levels or seed levels is not easy in a country like India. Good business models will suffer in the hands of individual investors and this may kill entrepreneurship in India. Though VCs are saying that they are looking at good business models which require seed capital, these firms are more interested in how fast a company can be taken public and latch on to market capitalisations while the trend is hot.

Like Mr Reddy says: “Before I start something on my own, I will first look at the quality of investor. Everything else comes later.”

Article Resource:
The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Estimating Startup Costs.

Estimating Startup Costs

ONE OF the toughest things in starting a business is, well, figuring out what it’s going to cost you to start. It’s tough because startup costs are a moving target, easy to underestimate and almost always subject to change. Here are five rules that can help you start figuring the cost of starting.

Have a solid plan — then change it. Most business startup stories say that you have to have a business plan. And you do. But that’s not the beginning and end of figuring out your startup costs. Jeff Shuman, professor of management and director of entrepreneurial studies at Bentley College, says, “The conventional wisdom is that an entrepreneur sees an opportunity, comes up with a business plan to capitalise on it, determines the capital that needs to be raised, raises the capital and then applies it to building the business described in the business plan.”

There’s one major problem with that model, says Shuman: It all hinges on getting the business right the first time, and that doesn’t often happen. “In reality, it’s likely that some of your initial assumptions are pretty good and others aren’t going to be worth the paper they’re written on,” he says. Shuman and others say that figuring out your startup costs means regularly reviewing your assumptions and changing your initial business model.

Writing a business plan is good because it forces you to write down literally everything you are going to need to start your business — legal help, tax help, office supplies, equipment, postage, office space, employee salaries, insurance and so on. But that initial plan is likely to change repeatedly as you learn new things and incorporate them into the plan.

Be willing to pull back. It’s tempting to add up everything you need for the fullfledged business you imagine, and decide that that’s what you need to start out. But pulling back and looking for a smaller model can give you a way to get started while also preserving capital.

Shuman uses the example of someone who calculates that the total cost of starting a retail business in a local mall is going to work out to $150 a square foot. “You could start that way and write a business plan based on that amount,” he says. “But maybe you’d be better off putting a pushcart in the mall and testing what the demand is for your products at that location.

“This consumer testing reduces your initial startup costs. The result is that the initial cycle of your business is dedicated not so much to generating profits as to generating information. With this, you can fund your business on a cycle-by-cycle basis,” Shuman says. “When you go for the second cycle and for expanding your business, the numbers are now based not on focus groups or surveys but on real-world experience.”

Calculate prices, time correctly. Calculating your initial cash flow is part of figuring out your startup costs. It’s an area where businesses are sometimes less optimistic than they should be. “Small-business owners may under-price their product or service, thinking they have to come in at as low a price point as possible to compete,” says Barbara Bird, chair of the management department at Kogad School of Business at American University. “They don’t necessarily need to do that.”

Correctly estimate your startup time. Yes, when beginning a business, time can literally be money. Let’s say you’re going to have fixed costs such as a monthly lease. If you have to make improvements to a space before you can actually open for business, those fixed costs are going to be additional startup costs until you can actually open for business.

I’ve watched many entrepreneurs draw up a timeline for their ventures and get tripped up on the zoning, safety and inspection requirements imposed by local agencies. For that reason, I think one of the first places a prospective new business owner should go — even before approaching a lender or leasing agent — is to the local government planning or license department. Construction permits and inspections can push a startup’s prospective opening date back by months. If you fail to figure in the cost of this additional time, you could be short of working capital right out of the gate.

Be realistic about the cost of money. Many small-business owners self-finance their ventures by running up big balances on their personal credit cards. Others tap the equity in their homes. But self-financing isn’t a practical option for larger ventures.

Carnegie Mellon’s Emerson says that startups should figure in the cost of capital when determining initial expenses and cash flow. “The cost is usually based on what the interest would be that similar cash invested in something with similar risk would command on the market,” Emerson says. “It’s usually a figure that is a few percentage points or more above the prime rate.”

Adapted from Microsoft’s Small Business Center website.

Revolutionalizing E-learning.

E-learning comes of age

2001 was the year of the dotcom bust. That was also the year when Bangalore-based techies, KS Karthik & Anil Chhikara launched their e-learning co.

THE aftermath of the dotcom bust in 2001 was a tough time for technology entrepreneurs to start a venture as investors, customers and potential valuations suddenly vanished into thin air. So, when techies KS Karthik and Anil Chhikara came together with a startup dream, the path ahead was doubtless going to be thorny.

But, unlike other techies who put together quickrich dotcom businesses and went down with the web world collapse, the two Bangalore-based techies eyed the potential for training college graduates to be jobready for the software outsourcing industry and other sectors. In a city where giants such as Infosys and Wipro were beginning to hire vigorously, the two entrepreneurs sensed a growing need for structured corporate training.

Thus came into being 24x7 Learning with a mission to go beyond the regular definition of technology-enabled learning. “Since there are already a lot of players in the e-learning space catering to the primary and early education institutions, we decided that the focus should be on implementing our products at higher education namely colleges and universities to help them meet the corporate requirements,” says Mr Chhikara.

In six years, the company has grown to have more than 120 customers across industry segments such as information technology, retail, pharmaceuticals and hospitality. Its clients include Wipro, Satyam, Patni, Aditya Birla Group, Bharti Airtel, Ashok Leyland, Convergys, Accenture, JPMorgan and ING Vysya.

But, the ride was not smooth for the fledgling firm. “The internet bubble had just burst, there was no fresh investment coming through and the economy itself was swaying. Under difficult times, a lot of companies had announced budget cuts and the first axe came upon training costs. Thus we saw our market shrinking in our first two years itself,” Mr Karthik said.

The founders were quick to realise that success of any e-learning implementation was not about technology but about how e-learning fitted into the learning culture within any corporate organisation and how e-learning initiative was promoted internally within a company. “When we started, we had no plans to create a learning management system. We wanted to consult companies to implement a skill improvement system and then in due course may be look to acquire a product IP ourselves. But the initial hiccups forced us to come out with LearnTrac which now is our bestseller. Also, since we had not (received) venture funding during this phase, there was lesser pressure on us to do or die,” recalls Mr Karthik.

KS KARTHIK (SITTING) & ANIL CHHIKARA Founders, 24x7 Learning

So how did it survive this downturn? The company focused on innovation and invested in product development despite its low revenues. It also chose to let its business model be flexible. It thus evolved from being a consultancy to a product company.

Once it waited out the lean period, business started to pick up. Companies and educational institutions showed openness to adopt technology and implement novel ideas in training, helping 24x7 prosper. Today, the company claims to be the largest e-learning implementation provider in India and says its learners are dispersed across 25 countries. Seven out of 10 top software outsourcing companies and six out of 10 top business process outsourcing companies are its clients.

It has also made a dent into the university sector. BITS Pilani set up an e-library with 24x7 Learning’s technology, giving its students online access to hundreds of engineering and technical books.

So what lies next for this start-up? The company wants to work with state institutions to develop their distance learning programs. “What the universities have is purely raw content with them. We would look to develop the content online by using their curriculum,” says Mr Chhikara. Increasingly, state governments such as Maharashtra are realising the need for having a competent and skilled manpower to match the incoming investment. The company has already implemented its SkillBridge solution in SNDT University for nearly 1,000 students based on the institute’s own study material.

The firm hopes to close its current business year with a revenue of nearly $6 million. With research body IDC expecting the global e-learning market to touch the $28 billion mark by 2008, the company is readying itself to face global competition. “May be this competition would help us evolve further,” says Mr Karthik.

Article Resource:

Ritwik Donde is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Startups called "Starship Enterprise".

About 24x7 E Learning

Beginning as an 'eLearning' company and spreading roots as India's largest eLearning implementation company, they have grown into a company whose holistic solutions permeate to every individual in an organization, and in the process makes a difference to the nation's intellectual capital. 'Talent Lifecycle ManagementSM' is what they call it. It is a natural and enriching process that's responsive to dynamic market needs.

They help

• Enhance the talent pool for enterprises at the pre-recruitment stage
• Train existing employees to upgrade their skills
• Nurture leaders for tomorrow

For more information on 24x7, log on Successful Entrepreneur - E Learning

Questions Venture Capitalists ask an Entrepreneur.

Questions VCs ask a Successful Entrepreneur.

WHEN raising money from venture capitalists or angels, you’ll want to meet as many as possible. They won’t all invest, but each time you pitch, you get better. Each time you pitch, you get asked different questions, get different opinions and ideas. It’s worth it to pitch as many people as you can, as often as you can. Some questions will get asked over and over. And you’ll discover those patterns quickly enough and adjust your pitch accordingly. If you have a lessthan-stellar answer to a question that gets asked once or twice, it’s not a big deal. But if your weaker answers are to the most common investor questions, you’ve got a problem. With that in mind, here are some of the more common questions investors will ask:

SO WHAT’S YOUR BUSINESS ALL ABOUT?

The wording of this question will change, but this is the classic “elevator pitch” question. Translation: “In the shortest amount of time possible, grab my interest by the proverbial you-know-whats.” Sell them quick, with something simple and powerful they can remember; and keep reiterating that message throughout your presentation.

WHAT’S THE BARRIER TO ENTRY FOR COMPETITION?

For Web 2.0 startups, this can be tough. The question comes from VCs and angels that might not be as familiar with the overall industry and the ease with which many web applications can be built. They’re looking for a real technological barrier that might not exist. Some answers that might help you skirt this topic: launching big, building a devoted community, key partnerships and/or customers (before launch), we’re cooler than everyone else (this won’t work.) None of these answers are great (for a host of reasons.)

WHAT’S GOING TO STOP BIG MONSTER COMPANY IN YOUR SPACE FROM COPYING YOU?

This is almost identical to Question No. 2 but it’s more commonly asked because there’s always competition. And, it’s usually from the “big bad wolf” company that’s got tons of money, lots of market share, a huge staff and years of experience. For starters, don’t say, “What competition? We don’t have any.” There’s always competition. Secondly, this is a tough question to answer. What is stopping “big bad wolf” company from copying you instantly and smashing you like a bug? Generally, you can argue: We can move more quickly. Big bad wolf is too busy managing what it’s doing to innovate. They’ll acquire us rather than copy us (if you have examples, use them.)

HOW FAR DOES THAT MONEY GET YOU?

Have a good answer to this question. Couch this in product and financial terms, i.e. “It gets us six months past launch, when we expect to be cash flow positive.” The best way to think about this is to calculate how long the money will last if you earn zero revenue. Count backwards by four-six months and that will tell you when you need to start the process of raising more money. If the money is only going to last you four-six months, you need to start looking for more money almost immediately (which isn’t a pleasant thought.)

WHY ARE YOU RAISING THE MONEY YOU WANT TO RAISE?

The amount you’re asking for is critical. Make sure you’ve done your financial homework. Don’t tell them your numbers are conservative, just explain to them how you arrived at them.

DO YOU HAVE ANY CUSTOMERS? HAVE YOU SPOKEN TO POTENTIAL CUSTOMERS?

Investors are looking for traction, or at least the inkling of traction. As soon as possible, try and get a few potential customers to say, “Sounds interesting.” You might even use them as references. This raises the comfort level for investors and helps answer the question, “What’s the market?”

WHAT’S YOUR MARKETING STRATEGY?

For early stage companies this is a very tough question. Chances are “just getting to freaking launch” is what you’re thinking, but that’s not good enough. And “launch big” is equally uninspiring. Think about presenting a timeline of events and customer acquisition numbers that you’re anticipating, tied to marketing. Throw in a variety of strategies that you’re going to do or researching. Marketing will be critical to your success, so you better plan for it sooner rather than later.

WHAT ARE YOU CODING IN?

Investors do want technical details. This is an easy question to answer at least (assuming you know!)

HOW ARE YOU HANDLING TECHNOLOGICAL INFRASTRUCTURE FOR SCALING?

Investors want technical details. They want to know that you’ve thought about the behindthe-scenes technology to support your system. When customers are signing up faster than you can process their credit cards (don’t let that happen!), will the system stay running at a reasonable speed? The further you get along in the process with investors, the more technical details they’ll want.

WHAT’S THE TEAM LOOK LIKE? WHAT ARE YOUR BACKGROUNDS?

Investors want to know the backgrounds of the founders. If you’ve got people on staff, they’ll want to know who, why you hired those people, and who else (and how many) you need to bring on board. They’ll want to know how quickly you expect to grow the team over time as well. Although there are common questions you’ll get from venture capitalists and angel investors, what’s more fascinating is that each investor will ask different questions. You can’t be prepared for every question, but even if you get new ones, the more comfortable you are pitching (because you’ve done it so many times), the better.

Reference:
(From entrepreneurship site Instigator Blog)