FounderLabs Sept-Oct 2023

It is with immense pleasure and excitement that I welcome you to the inaugural edition of FounderLabs, a magazine dedicated to exploring the vibrant world of start-ups and the dynamic ecosystem that surrounds them.

The very essence of FounderLabs is encapsulated in its name: a lab of ideas, innovation, and ambition, where entrepreneurial dreams are nurtured and transformed into reality. Our mission is to be your indispensable guide, providing valuable insights, practical knowledge, and thought-provoking perspectives for both aspiring and established entrepreneurs. The magazine aims to be the heartbeat of the start-up community, fostering a collaborative environment where visionaries, investors, mentors, and enthusiasts come together to make a difference.

FounderLabs is not just another publication; it is a celebration of human ingenuity and a testament to the power of perseverance. In our pages, you will find success stories that inspire, failure stories that educate, and challenges that stimulate creativity.

Expect a diverse range of content that will cater to your entrepreneurial appetite. From in-depth interviews with trailblazing founders who have disrupted industries, to analysis of emerging trends and technologies that are shaping the future, we will leave no stone unturned in our pursuit of knowledge. Our seasoned team of writers, industry experts, and experienced entrepreneurs will provide you with a comprehensive understanding of the start-up landscape.

But we don’t want this to be just a one-way conversation. We encourage you, our readers, to actively engage with us, share your experiences, and pose questions to our experts. Your feedback and contributions will shape the future editions of FounderLabs and make it an even more valuable resource for the community.

As we embark on this exciting adventure together, I extend my heartfelt gratitude to all our contributors, partners, and most importantly, our readers, for making this dream a reality. Together, let’s explore the uncharted territories of entrepreneurship, navigate the challenges, and celebrate the triumphs that define the start-up ecosystem.

Thank you for joining us on this thrilling journey. Here’s to the spirit of innovation, the courage to take risks, and the determination to build a better tomorrow!

Happy Reading

MANOJ PAL Managing Editor

An effort to provide insights, practical knowledge and thought provoking perspectives”

STRATEGIES

Thriving Thrasio Model in India’s Startup Ecosystem

16

INSIGHTS

Unraveling the Flip: Why Fintech Giants opted for the reverse flip

18

INFOCUS

Why and When Should a Startup Pivot?

CONTENTS

founderlabs

MANAGAING EDITOR

Manoj Pal

SENIOR EDITOR Vandana

EDITORIAL

Neena Arora

DESIGN Ruchi Sinha

Registered Office: A-130, A Block, Sector 63, Noida, Uttar Pradesh, 201301

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VOL 1, ISSUE 1 /founderlabsindia

Why Corporate Governance in

India stands tall in the global startup arena with more than 100 unicorns under its belt. Yet, recent cases of financial irregularities involving companies like Byjus and Mojocare have shed light on a crucial aspect often overlooked - corporate governance. It’s high time businesses prioritize this vital aspect to ensure transparency, accountability, and long-term success.

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What is Corporate Governance and Why Businesses Ignore It?

Corporate Governance is a system of defined rules, practices, and processes to run a business keeping in mind the interests of all the involved parties including the promoters, investors, customers, suppliers, government, and the community. Corporate governance ensures that a business is running in a responsible and ethical manner.

The ambition to grow fast is the primary reason for a startup to ignore corporate governance and conduct financial irregularities. This, however, has made investors wary with many of them considering an audit of even early-stage businesses. Consequently, ventures that are

financially disciplined and have corporate governance norms in place are the ones getting funding.

And as Boat cofounder and CMO Aman Gupta’s said, “Apart from other things, Founders need IQ, EQ and GQ. Governance quotient now will become more important than ever and it’s good for the ecosystem that Corporate Governance is taken seriously from Day Zero.”

Benefits of Corporate Governance

Corporate governance is an essential element of any business irrespective of its size. Adherence to it not only paves the way for growth over the long run but also builds the creditability and reputation of a business. It may even entitle the business to advantages in the form of additional benefits from the government and other investors. Some major benefits of corporate governance are:

¡ Builds Trust and CredibilityAdherence to the set rules and laws builds the credibility of a business not only among the customers but also associates.

¡ No Penalties and Legal

Hassles- Adherence to the applicable laws ensures that a business does not face any legal issues or attracts penalties.

¡ Identify Risks and Deal with Them- Corporate governance allows a business to identify risks and take preventive action in the form of the establishment of internal controls and checks.

¡ Improve Chances

of Getting

Funds- Investors prefer to put their money in companies following ethical business

As boAT cofounder and CMO Aman Gupta mentioned in an interview to PTI, “ Apart from other things, Founders need IQ, EQ and GQ. Governance quotient now will become more important than ever and it’s good for the ecosystem that Corporate Governance is taken seriously from Day Zero.”

practices and have in place sound accountability and transparency framework.

¡ Positive Work Environment-

By implementing corporate governance practices, any organization can create a seamless decision-making process. This creates a positive work environment and attracts talented people to the company.

Tips to Strengthen Corporate Governance

Here are some tips for founders to create a proper environment and ensure corporate governance.

¡ Establish a clear governance framework

¡ Give equal attention to governance issues and business growth

¡ Ensure transparency

¡ Outline responsibility for all

the people involved in running the business.

¡ Take into consideration possible risks and take steps to deal with them.

¡ Keep personal matters separate from business decisions.

The creation, implementation, and regular monitoring of governance practices at every stage of operations will result in improved decisionmaking, reduced conflict of interest, and enhanced efficiency levels.

Startup Governance Playbook

The Indian Venture and Alternate Capital Association, or IVCA has outlined a framework for corporate governance in startups. The ‘Startup Governance Playbook,” prepared in collaboration with professional services firm Deloitte includes broad guidelines for early-stage startups and Pre-IPO startups.

Corporate governance is an essential element of any business, irrespective of its size. Adherence to it not only paves the way for growth over the long run but also builds the creditability and reputation of a business. It may even entitle the business to advantages in the form of additional benefits from the government and other investors.

Unleashing IT Talent: Empowering Businesses for Success

TalentOnLease - Interview of Daya Prakash

At a time when IT has become an integral part of our lives, the requirement for specialists in the field is immense. TalentOnLease is a leading platform helping businesses find the best IT specialists. Here we talk with the company’s founder Mr Daya Prakash and the challenges and opportunities in front of him.

Tell us something about your background?

After starting my career in 1994 with an IT firm and heading the delivery for a large US organization, I got a break with LG in 2000. During my 13-year stint with LG, I worked at various levels starting with Head of Application to becoming the Chief Information Officer. I was leading the IT operations of the company for India. Subsequently in 2013, I launched my own consultancy to provide small businesses with CIOon-demand services.

How did TalentOnLease start its journey?

The problem of scalability of my consultancy led me to discuss this issue with my friends and we decided to work together to address the skill shortage challenge in the IT industry. We launched a platform that focused on hyper personalization and on demand economy. That was the start of TalentOnLease for providing Techies on Demand. We connected with several mid-sized IT service

Rapid Fire with the Leader

Q What is your biggest aha moment?

When I reflect back on the journey so far, the biggest aha moment for me has been see the value created for all our stake holders. There have been cases where we have been able to provide value to our clients by helping them realize potential revenue as well as overcome cost overrun situations effectively. On the other hand some of our partners have grown big due to business realization from TalentOnLease also have been able to save dollars for them by helping them effectively utilize their bench.

Q What motivates you to keep going?

The fact that TalentOnLease is addressing one of the biggest challenges faced by the industry that is shortage of quality tech talent. Our motto is to provide Right Resources at Right Time and at Right Cost. It is easier said than done and that’s what keeps me motivated.

Q What according to you are the three most important habits to be a successful entrepreneur? Passion, Perseverance and People Orientation.

Q Who did you approach for advice?

I have a set of mentors and entrepreneur friends who are just a phone call away and are willing to give me advise/guidance whenever I need it. It would have been impossible without their support to create a profitable bootstrapped business which is progressing on path of scalability.

Technology is an integral part of businesses and the adoption of AI has created new job opportunities in every industry. We at TalentOnLease strive to bridge the demand supply gap for IT experts with special skills.

companies to create a pool of readily available pre-vetted resources.

What inspires your entrepreneurial journey?

In my corporate career I did extremely well and I was looking for the next level of growth which was possible only through relocation to some other country in my current company or the other option was to switch job. After having spent so many years in the corporate sector, I was looking at a completely new set of challenges and was ready to venture into something new- that’s how the journey of an entrepreneur begun.

What are your views about the recessionary trends?

The economic slowdown and a tough economy are both harsh realities. But we must also accept that there is an enormous potential for the IT workforce especially since the pandemic has boosted the speed of the digital transition. There is immense potential for people who have enhanced their knowledge or upskilled and the demand for IT services will outweigh the supply. People who have not upgraded their skills or acquired new skills may find it to be a real difficult situation to deal with.

What was your biggest challenge and how did you pick up from it? The biggest challenge that we face is in balancing the requirements of our clients with the talent supply we have. Building trust and authenticity on both sides- our clients as well as partners is of utmost importance and a major consideration in running our platform. We try to achieve this by doing reference and background check of our resources.

How do you reach out to your customers and your other stakeholders?

As I mentioned our focus was on building a platform that is trustworthy and authentic. This has helped us acquire a lot of business through referrals from our industry connects as well as existing customers. We are getting a lot of business from the CIO, CXO and founder communities of which I am a an active part. Also, there is no dearth of business to genuine platforms like ours.

Our thrust has always been on building the reputation of the platform which provides trust and authenticity and there is a lot of business that we have acquired through referrals from our customers.

Accelerator Profile

India Accelerator: Helping Startups Grow India Accelerator is playing an important role in building a thriving startup ecosystem besides providing startups a unique opportunity to work with experienced professionals. Although the company’s main focus is on technology driven ventures, it is domain agnostic and open to help passion-driven businesses.

Founder: Ashish Bhatia, Mona Singh, and Abhay Chawla

Year of Founding: 2017

Location: Gurgaon

Mission: To create a noble ecosystem for founders to allow them to focus, build and grow their startups.

Nature of Business: It is a seed-stage accelerator program with Global Accelerator Network or GAN that helps startups grow. India Accelerator offers startups- mentorship, network, technology, and peripheral services like legal and financial assistance and capital under a structured program.

The company offers services in three categories:

1) Co-working space for office support, general business assistance and events.

2) A startup academy that helps entrepreneurs build up their idea into a concrete plan

3) Accelerator services to provide mentorship besides access to possible investors.

Programs Offered: India Accelerator offers:

1) A fixed-term, cohort-based program with two 90-day cycles a year.

2) A mentorship program to accelerate the growth of a startup.

3) A Demo Day wherein companies make pitches to investors.

Portfolio: More than 200 Startups with investments of about 100K to a million dollars in each of them as per the seed round.

Plans: It plans to incubate 100 startups annually besides foraying into overseas markets. India Accelerators has set up a 3200sq feet facility in Dubai to incubate startups in the fields of healthtech, AI, agritech, fintech and many others. It also plans to invest $15-20 million through its iAccel Gulf Business Incubator in the next 12-18 months.

Accelerators are playing an increasing role in the startup ecosystem by helping new entrepreneurs build a strong business. The accelerators support early-stage, growth-driven ventures by educating them, providing mentorship and funding for a fixed period of time.Here we talk about one of the leading accelerators helping Indian startups move ahead in their journey.

Youngest Female Angel Investor in Startups

With a brilliant mind for finance and a background in managing her family’s textile business’s investments, Kresha Gupta has taken the leap into the world of angel investing. As the fund manager of Chanakya Opportunities, she is now on a mission to empower small and medium enterprises, bringing her expertise and passion to fuel their growth and success.

Inspiring Journeys

Name: Kresha Gupta

Age: 24 Years

Fund Size: Rs 100 crore sector-agnostic SME -focused fund with a green shoe option of another Rs 100 crore.

Investment Plan: Investing in profitable SME and high-potential businesses in unorganised segment. About 51% of the corpus will be invested in startups in manufacturing, consumer products and technology.

Selection Criteria: The fund intends to invest in companies having the potential to get listed on SME exchange with a small IPO.

Experience: This Chartered Accountant is skilled in identifying investment opportunities and mitigating risks. She is involved with various startup communities and angel investing groups.

Kresha has been involved with stock markets for over five years. Her skills include identification of investment opportunities and handling the associated risks. Willingness to learn, open to new ideas and seeking new opportunities are some other traits that make Kresha a successful investor.

Thriving Thrasio Model in India’s Startup Ecosystem

With online shopping becoming an integral part of our lives, the Indian e-commerce sector is gearing up for unprecedented growth, projected to surge at an impressive CAGR of 27% by 2026. While numerous businesses find a platform on giants like Amazon, carving a distinctive identity and expanding their markets can be a daunting task.

Enter the game-changers of the e-commerce realm - the roll-up commerce companies. Among them stands the mighty Thrasio model, poised to revolutionize India’s startup landscape, igniting a blaze of growth and success for countless aspiring entrepreneurs. Get ready to dive into the realm of roll-up commerce and explore the incredible potential it holds for the Indian startup ecosystem!

Understanding the Thrasio Model

This concept of roll-up commerce was first successfully adopted and used by a US-based company Thrasio that became profitable quite early. The business model calls for identifying brands that have the potential to grow, acquiring them or associating with them and then working to expand their reach. The

company that takes over these brands helps them in expansion of sales, improved financial growth and the scalability of the brand.

The Journey of ThrasioInspired Indian Startups

Hoping to mirror the success and fortunes of the US firm, several Indian entrepreneurs launched in 2021, startups with a similar business model. These Thrasioinspired Indian ventures raised over $800 million in funds, both via the equity and the debt route.

¡ Mensa Brands- Founded in May 2021 by former CEO of Myntra, Ananth Narayaan, this venture has raised $335 million. The venture was valued at $1000 million in November 21. Mensa Brands reported a total income of Rs 217.89 crore and net loss of Rs 96.62 crore in FY22, its first year of operations. The brands acquired by Mensa include Pebble, Pretty Krafts, Karagir, MyFitness, MensXP, iDiva, and Hypp.

¡ 10 Club- Founded by Bhawna Suresh, this Bengalaru-based company acquires young e-commerce product sellers in the home and fitness categories, and scales them up. Prominent brands in 10club’s portfolio include Kraftseeds, Gate Garden and Kriti Kalash.

¡ Powerhouse91- The roll up e-commerce venture was founded in 2021 by Aqib Mohammed and Shashwat Diesh. Powerhouse91 has acquired several personal care brands, sports and fitness and general wellness brands.

¡ GlobalBees- This venture was founded by Nitin Agarwal of Edelweiss Financial and Supam Maheswari, founder of FirstCry. GlobalBees raised $260 million and acquired brands like ReyNaturals, HealthyHey, Absorbia, Yellow Chimes, Prolixr and The Better Home.

¡ GOAT Brand Labs- Formed by Flipkart Fashion Director Rishi Vasudev, this venture had received $86 million funding and

acquired several digital-first D2C brands in the lifestyle segment.

¡ Upscalio- This Gurgaon based venture was founded in 2021 by Gautam Kshatriya, a former Mckinsey consultant, Saaim Khan and Nitin Agarwal. It was able to raise $60 million funding from several investors.

¡ Evenflow Brands-This startup was founded in 2021 by ex-Uber executives Utsav Agarwal and Pulkit Chhabra.

The success of these businesses will depend on several factors like the pricing at which they acquire the brands and the funding method used by them. Acquisitions at exorbitant prices can create trouble and affect the valuations of these ventures. The segment is likely to witness consolidation in the near future with only two or three top players who have managed to secure a good amount of funding are likely to survive in the long run.

The ongoing funding winter and the stagnating growth in the D2C segment are also hampering the growth of many of these roll-up commerce ventures.

Thrasio model poised to revolutionize India’s startup landscape, igniting a blaze of growth and success for countless aspiring entrepreneurs. It focuses on assessing the growth potential of brands being taken over, acquiring them at the right valuation and achieving the right balance between growth and costs.

Unraveling the Flip:

Why Fintech Giants opted for the reverse flip

In a strategic shift, several prominent Indian startups, including Groww, RazorPay, and PhonePe, are opting for reverse flipping, a process that involves relocating their headquarters back to India. According to the Government of India’s Economic Survey 2022-23, this trend signifies a growing interest among Indian companies to leverage the matured domestic capital markets and gain seamless access to funding from venture capital and private equity sources.

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The allure of returning to the homeland is further amplified by the highly regulated nature of the Indian financial services industry, where regulatory bodies like the RBI and SEBI focus on safeguarding consumer interests through enhanced regulations. As the fintech landscape evolves, more companies are contemplating the move back home to embrace the opportunities that await in India’s thriving market.

Why Did Indian Start Ups Choose to Flip?

Before we understand the reasons for the reverse flipping, we need to talk about the benefits that

these units were looking for when they decided to flip or shift their base to countries like Singapore, Dubai, and the United States. The main reasons for flipping are:

¡ Personal preferences of the promoters

¡ The major market for their product is offshore

¡ Some incubators insist on a particular domicile

¡ Access to capital markets and hope for better valuation

¡ Better protection and enforcement of Intellectual Property Laws

¡ More conducive tax laws

¡ Special incentives offered by governments of other countries

Reverse Flipping: Costs and Benefits

Of the 20 Unicorns that shifted base outside India in recent times, three have already decided to go for reverse flipping. While PhonePe last year decided to shift its headquarters back to India, RazorPay and Groww too are moving along the same lines. And what has lured them back is the prospect of going public and raising funds for their growth. These businesses have realized that the Indian capital market and the country’s vast investor base can absorb large initial

public offerings. And this is better than going for smaller IPOs in the US market. Another possible reason is the uncertain situation in the wake of the failure of the SVB Bank. But the revere flip will result in significant tax payments to the

exchequer. PhonePe’s shareholders have to incur long-term capital gains taxes of about $1.2 to $1.3 billion as part of this reverse flip. Groww and RazorPay investors may also have to incur a massive tax liability as a consequence of reverse flipping.

The Indian government is taking steps to encourage reverse flipping by creating a favorable environment. It has already announced exemption for investors from certain countries from angel tax. The Economic Survey 2022-23 had included certain measures like simplifying ESOP taxation, streamlining of the tax processes and easing capital flow restrictions to accelerate reverse flipping by startups.

The government has set up an expert committee to bring back foreigndomiciled fintech startups to India and specifically to the GIFT city in Gujarat.

Why and When Should a Startup Pivot?

Few people know that behind the phenomenal success stories of YouTube and Instagram lies a powerful concept - pivoting. YouTube, originally designed as a dating site, transformed into the world’s leading video platform, while Instagram pivoted from a locationbased check-in service to become a thriving social media giant.

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Pivoting involves altering a company’s business model, product offerings, or marketing strategy to find success. This transformative strategy can be risky but holds the potential for tremendous growth and staying ahead of the competition. In this article, we delve into the art of pivoting, when to consider it, and how to successfully execute this game-changing maneuver to drive startup triumph.

What is Pivoting?

Pivoting refers to a company or a business changing its original business model or product or offerings to find success. A change in the marketing strategy to appeal to new customer categories is also a part of the pivot. This relatively fluid concept always involves a change in the business strategy of a startup.

This strategy of changing gears to a new business model is hard and risky. Startups should embark on a pivot only if they are convinced that it will be worth it. A pivot can happen at any stage of a company’s life and may involve scrapping a key product or a market.

When to Consider Pivoting?

Pivots are hard and it is difficult for a business to recognize that it needs to drastically change its business model. Some signs that indicate that a business needs to change its strategy are:

1. One Product Feature is Doing Well- If a review of your existing business model reveals that one feature or aspect of your product is being received well while others are not, you should consider pivoting that feature into a full-fledged product.

2. Business is not Financially Viable- Merely having a good business idea is not enough. It should be financially viable too. An objective analysis of

expectations. This could be due to many reasons including faulty products, high level of competition, overpricing, or changes in customer requirements. Change your business model to provide better value to customers.

4. Too Much CompetitionPivoting can also be considered if the market for your product is overcrowded and competition is tough. Differentiation is

your business idea will reveal what aspects are worrisome and burdening the finances. The business also needs to find ways to identify the available resources in a better manner. This helps in identifying a reference point for pivoting.

3. Poor Market Response- Another good reason to consider pivoting is when the market response for your product or service offering does not match your

the key to overcoming high competition. You will either need to modify your product or business model or adopt new marketing strategies to beat the competition. This is pivoting.

5. Shift in Your Goals- Another reason for pivoting could be a change in your goals or objectives. This could be because of changing regulatory environment or market dynamics.

YouTube’s evolution from a dating site to a video-sharing giant showcases the power of adaptability. Startups must recognize signs like market response, competition, or financial viability to consider a pivot. Thoughtful planning, decisive action, and embracing change are keys to unlocking new growth opportunities.

How to Pivot?

Pivoting is also difficult to implement and may demotivate the employees while draining the energy and resources of the business. So, it needs to be thought out carefully and planned well. This will reduce the chances of your business hitting another roadblock. Here are some tips to successfully pivot your business:

1. Discuss with StakeholdersAn important step in your pivot journey is to involve all stakeholders and discuss the reasons for pivoting. Talking your

investors, employees, and other associates into confidence will help you get better insights and ensure their cooperation in the whole process.

2. Be Decisive- Once you have decided to pivot, set a plan of action and implement it immediately. This will reduce the wastage of time and resources and help in improving business metrics.

3. Acquisition of New SkillsPivoting whether in the form of a changed product or strategy may

require the acquisition of new skills. Identify the skills required and ensure that your existing workforce acquires them. You may even need to employ more people who specialize in these skill sets.

4. Accept the Change HappilyAlthough pivot takes you away from your initial idea or business model, it is important for growth. Accept the change gracefully and let go of previous failures. This approach will help in a smoother transition while allowing you to focus on the new goals and objectives.

Pivoting can be beneficial for startups since it allows them to find new growth opportunities while staying ahead of the competition. But the timing of pivot is important to get the desired results. Startups can take the advice of their accelerators or other experts to identify their pivot strategy and implementing it successfully.

Pivoting, a transformative strategy, holds the potential to propel startups to new heights. Examining YouTube’s pivot from dating site to video platform, we learn the importance of recognizing market signs, ensuring financial viability, and adopting new skills. Embracing change and expert guidance pave the way to success.