Before they decided to start Venture Nursery, India’s first angel-backed startup accelerator, Shravan Shroff and Ravi Kiran had traversed different routes in their lives. Shravan came from an entrepreneurial family, and had built a strong business in the entertainment industry, while Ravi Kiran came from an advertising background, having dedicated over 20 years to it. A chance meeting at a Mumbai Angels meeting in 2010, led to the founding of Venture Nursery.
The idea was simple, “To hone startup founders who had no dearth of exuberance, but a clear lack of experience and understanding of the nuances of running a business”. Venture Nursery aimed to identify weak links in startups and consolidate them to evolve in the right direction. Founded in March 2012, Venture Nursery has accelerated 21 startups, of which 15 graduated and 13 are active and growing well. Beginning with 10 members (including Shravan and Ravi Kiran) in 2012, VentureNursery, currently, has 30 members in its team in addition to over 80 mentors-in-residence.
Based on its belief that the venture ecosystem needs to focus primarily on maximising the success potential of founders and startups, VentureNursery undertakes intensive and immersive coaching and mentoring role in the chosen startups and helps each with end-to-end infrastructural and learning support. With an obsessive focus on quality, VentureNursery, currently, conducts four boot camps a year in Mumbai and accommodates two startups in each for a three-month period.
The VentureNursery Alumni includes branded budget hotel chain OYO Rooms, video interview platform Talview, fashion and lifestyle social commerce platform Klip, crowdfunding platform Catapooolt, travel startup SeekSherpa, artificial general intelligence company InvenZone, last minute hotel booking company Hotels Around You among others. In an exclusive chat with Inc42, Ravi Kiran spoke to us about the program, the intent and the angel investing scenario in India.
Criteria For Selection
The most important criteria for a startup to be considered for admission to Venture Nursery program is whether the founder has found a real world problem to solve or in business terms is the product-market fit clear? Says Ravi, “About 80% of new businesses shut down due to bad product market fit.”
A good product market fit ensures that the business will have customers but the product. It is also evaluated, whether the market identifies is a growing one or is it just a passing faddish market? So it is important that the problem identified is a problem worth solving and it is an intense nature i.e. lot of people are facing that problem.
The accelerator also looks at the founder’s commitment to the problem, his ability to solve it, his willingness to stick to it, and whether he is disciplined enough to see it till the end. “Sometimes, the founders just come to us with a hint, and during the course of the program, they are able to identify the real problem,” Ravi added.
It started with six sectors, but now has mentored startups in 18-20 different sectors. As long as a startup has a real world problem and there are customers who would want solution, it doesn’t matter which sector it is operating in.
The Program
Every year, the accelerator receives 500 applications for each of its batches, out of which 100-150 make it to the second round. Out of these, only 5 finally make it to the program, and now this number has been reduced to 2 since last year. Till date, it has rolled out 7 batches, accelerating a total of 21 startups. Of these, 14 have graduated, 10 have been funded and 14 are doing well.
Following a customised curriculum, delivered by industry leading mentors, the three most important things each startup learns during the program are identification of right problems, achieving product-market fit and decision making. At the end of the 3 month old program, or on graduation day which is the 95th day of the program, the chosen startups must have started to build a solution around their identified problems. At the end of each program, startups graduating successfully are evaluated for investment by VentureNursery’s members, a strong group of committed and seasoned angel investors. The Investment Council consisting of three people from a group of 30 members who decides if the startups are fit to graduate and if they want to fund the company.
If the investors decide to invest in the startups, the investment size could range anywhere from $15K-$123K (INR 10 lac-INR 80 lac), with the average ticket size being $92K 8 (INR 60 lac). The amount depends on the stage of the company, and how much it requires to build a sustainable business. The council would also decide on the terms of investment, salaries of founders, the milestones to be achieved and other such details.
Simultaneously, the accelerator also runs a parallel track for startups that are in their early stage and need not go through the full program. These startups are eligible for a shorter duration.
The Mentors
The mentors at Venture Nursery started out as mostly friends of founders, who dedicatedly gave in 9-10 hours of their time, every quarter, to startups. As the program expanded, now there are 80 mentors on board who impart startups with the soft hacks of running a business. The notable thing is that mentors work pro-bono with the startups and are spending time to keep pace with the new ideas and new businesses.
In addition to mentors, it also has 30 odd investors as its members, who actively support promising startups through investments and also tap their networks to bring more such investments to the participating startups. These members pay a very nominal fee, which contribute about 10% of the expenses of the organisation. The rest comes from the personal investment of the founders.
The Angel Investing Scenario
“Many investors today want to enter the angel investing space with an investment mindset to multiply their earnings. They consider angel investing as an asset class. However, they don’t realise that angel investing means you have to play the role of an angel or literally adopt the startup. You should be interested in genuinely helping the founder to build a business.” said Ravi.
The intent of the angel investor should not be to throw money. He notes that not many ultra-HNI are willing to invest in the angel space. Seasoned investors are the ones who are drawn more to the space, and recognise the fact that angel investing can be a learning experience.
Commenting on the sectors which are drawing more angel investors, he said that as with other industries, waves happen in this space as well. “We have seen the ecommerce wave, the hyperlocal wave, the IOT wave. I don’t think waves are bad but doing random investing just on the basis of a wave, can make good money turn to bad money quickly.”
Advice For Startups
For startups, the two most important things Ravi says are having a commitment to success and discipline. The founders should have a determination to solve real world problems. In addition to this passion and determination, he also needs to have the disciple to see through things and work out a solution.
Many people have a lot of passion to solve such problems, but lack the discipline required to set up a successful business. He adds that startups should be ready to do whatever it takes to occupy the pole position in the space they operate. “If you want to exist to take the pole position for instance Oyo did in the branded accommodation space, then you have to be before the wave.” The fact that not a single startup funded by VentureNursery has shut clearly substantiate the wisdom of the founders and the prowess of Venture Nursery’s program.
The Accelerator Space
There are many other accelerators in India which are active in the startup ecosystem with different funding ranges, mentorship programs, focus areas, and equity terms. For instance, Hyderabad-based Catalyzer Startup Accelerator Program is a 101-day mentorship-driven entrepreneurship cohort accelerator program for startups. Twice each year, it selects up to 12 startup teams (or individuals) and helps them navigate the crucial first stage. Selected startups receive financial support in the form of pre-seed capital, work space, IT facilities and other resources. It provides funding in the range of $7.6k-$15.2k(INR 5-10 lakhs) on 7-12% equity.
Gurgaon based GSF Global Accelerator is a 13-week program, which aims to provide select startups with unparalleled access to venture and business networks, personalized & intensive mentoring, and initial capital. GSF Accelerator is designed to help product-oriented startups. It provides funding in the range of $25k-30K for 5-8% equity.
Bangalore based Kyron has introduced a new concept of ‘pre-accelerator’, which will admit about 20-25 startups. Such startups will be put through a six-month incubation period after which some would be handpicked by Kyron for its accelerator batches. It provides funding of upto $20k for 5-10% equity.
Focused on promising early-stage startups or first-time entrepreneurs, Bangalore based Microsoft Accelerator runs a program of 4 months, starting in January and July every year. Selected startups get strong mentoring, technical guidance and connections to other startups.
TLabs, an initiative by Times Internet, is a startup accelerator and early stage seed-fund in India for internet and mobile technology startups. Powered by a panel of 70+ mentors – that includes highly-experienced entrepreneurs and industry professionals, TLabs runs a structured and highly intensive four-month mentoring program for these startups. It also offers a funding of $15.2 K (INR 10 lakh) for 10% equity, a co-working space and a host of other benefits from prominent tech partners, to the startups it accepts for the program.
Founded by Dave McClure, famous angel investor from Silicon Valley, 500 Startups runs a 4 -month accelerator program open for all domains. It’s like a Startup MBA on steroids providing startups access to a network of 1000+ founders, 200+ mentors, and its staff for guidance and mentorship. It invests $100k in exchange for 7%, and charges a $25K program fee for a net $75K investment.
National Association of Software and Services Companies (Nasscom) also runs business incubator-cum-accelerators at Bangalore and Kolkata, and looking to open offices in Gurgaon, Navi Mumbai and Pune. Nasscom provides a central, well-connected, plug-and-play working space for startups to launch their operations, besides providing them one-on-one mentorship in line with its 10,000 Startups initiative to support technology entrepreneurship in the country.
Editor’s Note
While the above mentioned accelerators provide mentorship and funding on fixed terms, Venture Nursery steers clear of that. It hasn’t fixed a funding amount or equity range for investing in startups. The program is run more as an adoption and grooming centre for startups to take them to pole position rather than potential investment targets to multiply venture capital. Ravi candidly states that the startup ecosystem has also seen a wave with a number of accelerators sprouting in the last couple of years.
Venture Nursery clearly steers clear of such a wave, differentiating itself with its spirit of nurturing startups purely for the passion of it and not the moolah. It has reared fast growing startups such as OYO, the poster boy in the branded budget accommodation space. However, with the increasing number of accelerators and competition in this space itself, it will be interesting to watch how many ventures would opt for Venture Nursery and how many more such leaders will emerge from its nursery in the near future.
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