Indian Accelerators are from Mars and startups are from Venus

Yesterday I was at the AngelPad demo day, invited by my friend Thomas. 12 companies presented their products & traction in a breezy 3 to 3.5 minutes per startup. Overall, super high quality of presentations and a great set of companies.

Some initial impressions.

1. Each had 12-15 slides, crisp transitions and a really good flow to their presentations. Most 90%+ teams were 2 founders, but only 1 person presented when another was standing at the front with the co founder.

2. No live demos, and the pitches had a consistent flow to them. A one sentence “what we do”, a good description of the problem and some market stats, sizing. Some even had screen shots of their product.

3. It was a packed house and I had a chance to meet (and reconnect with) over 60+ investors. Most of the investors were impressed with the presentations and also with some of the ideas themselves.

I also had a chance to meet with 9 of the 12 founders. They had really excellent follow-through and I got 7 emails this morning to schedule time for follow ups to discuss their fundraising.

I also got to ask them what they really liked about the program, the schedule and the help Angelpad provided.

Many stated Thomas’s personal involvement and his passion to help companies first. They were so happy to have his time and guidance, that they had felt privileged to have him as their mentor.

A few of them mentioned the location and some of the other mentors as the second best thing in the program, followed by the group of other startups that were in the same batch as them. They felt they were truly motivated by the other teams and a sense of camaraderie was obvious.

As part of the Microsoft accelerator we have reached out to 28 accelerators in India over the last few weeks to get everyone together for a day of best practices and sharing. The event itself is a closed door, 1 day session at Bangalore, and over 20 of them have committed to being here. Our intention was to understand how other accelerators viewed success so we can help figure out our engagement with them and startups overall.

We get many questions about our accelerator and the top one is why we don’t give startups money.

In speaking to entrepreneurs, investors and other accelerators in the US, the TOP item they felt startups need is mentorship and advice to get many things right.

In my small sample of Angelpad startups they seeme to value the same thing.

In India, most (not all) startups only value money. Its a small amount really, ($10 – $25K), but somehow that small amount seems to indicate a sense of “skin in the game”.

I can totally understand that, but for an accelerator such as ours, that small amount does not really make us committed to the startups any more than without the money.

Second, the angel networks and investors in our mentor program don’t like the fact that Microsoft puts money in at the early stage, which creates a perverse incentive for us to “get a return from our investment”.

Third it creates an issue for other strategic investors (such as Qualcomm, which has looked at one of our companies for an investment) and venture investors, who prefer clean capitalization tables.

Unlike other accelerators which are not a corporate program, the key value to Microsoft from our program is startup engagement. We take pride in engaging with the startups and are extremely happy if they are successful, but the financial return from our investment is going to be largely negligible to us. Even if 1 of the 11 startups “makes it big” and we owned 6-10% of the company when it went IPO or got acquired, it would not be a significant dent to Microsoft by any means.

I understand why most Indian startups don’t value mentorship, the space, free food, customer traction, marketing planning, PR with blogs & press, full time design help and credits on technology platform.

I have learned from Angelpad that our primary motivation should be to ensure the next batch of companies value those things more than an investment of $10K to $20K.

I understand the bar is much higher to provide mentorship to the same level as Thomas, but that’s the goal we are aiming for.

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13 thoughts on “Indian Accelerators are from Mars and startups are from Venus

  1. Shashi Maurya

    I think you make a very important point here about startups over valuing the importance of capital at the initial stages and under valuing the importance of mentoring, market / consumer feedback, exposure, network, free facilities etc. that accelerators provide. These factors become more important in the incubator model which typically house non-software startups / projects that have a longer product development cycle.

    The best thing to do in these cases is to make founders realize that capital could follow traction and a sustainable model, but the probability of the other way around happening is lower.

    Reply
  2. Amarpreet Kalkat

    A big reason of that is that many of the startups going into the accelerators here are those that should have been coming out of accelerators an year ago.
    With more accelerators now, it is changing and is probably different already for MS accelerator startups (from the couple that I know there), so what they would look for and value should ideally change too.

    Reply
  3. Pranay Srinivasan (@pranaysrinivasn)

    In India, IMHO, most founders are not ‘comfortable’ monetarily. The comfort of an Angel fund backing the entrepreneur on the strength of getting admitting / demo-ing at an accelerator would hopefully put a bootstrapping entrepreneur at mental ease while appreciating the mentorship, the value-adds, and the connections the accelerator offers.

    In India, most founders are fighting far more basic and day-to-day battles than those comparitively in the USA. And here too I may be wrong. But most Indian founders woefully underpay themselves, if at all while starting up. So a cheque to tide over expenses allows the founder bandwidth to assimilate the advice that mentors offer.

    Thanks,
    Pranay

    Reply
    1. Mukund Mohan Post author

      I don’t think the founders in US are monetarily well off either.

      Most only have enough money to pay rent and food. They don’t travel spend money on marketing programs etc.

      Reply
      1. Pranay Srinivasan (@pranaysrinivasn)

        Sure, and I would agree to that.. But What I have seen in India is that even sometimes basics are hard to come by for Indian founders.. in doing what is best for startups especially if they have the calibre to be chosen for an accelerator, some money would help.

        On an aside, its also a social proof kind of validation, where in India, even a small amt of money as funding / grant / invested is a HUGE deal as if to say, ki haan, your startup is *worth* something now.. psychologically its a big win…

  4. Santosh AR

    Avg age of entrepreneurs in Bangalore is greater. they have quit jobs with safety nets. or could land good jobs. can understand why short term money is given importance. Most startups can bootstrap with own savings except for those who need >Rs.30k a month server costs to even build prototype before selling to first customer. Their problems aggravate where sales cycles are longer, first cheque arrives late and costs are substantial. Other founders need to accept there is no safety net. besides, expecting accelerator to provide money for bills doesn’t indicate own skin in the game.

    Good mentorship (with no money is fine) is an effective safety net too for longer term benefits.

    Reply
  5. Sumanth Raghavendra

    Excellent post, Mukund – good on you that you have clearly articulated the imperatives of the Microsoft Accelerator program.
    I completely heart what you are saying about the relative value of mentorship versus a token investment.

    Reply
  6. Ravi Mohan

    In India, ‘mentors’ are fairly low quality, since they are mostly people without a record of startup success, unlike in the USA, where mentors are mostly people who have had some success starting up. In India, mentors are mostly MBAs, ‘suits’ playing at investing/VC who haven’t built any successful companies. (not saying this is true about MS’ s accelerator program – of which I know nothing).

    You can’t blame founders for preferring money

    Reply
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