If you are looking to start any kind of company in India, remember this rule – “First generate revenue, then build a business. External funding of any kind is only to scale the business, not to start it“. Innovation driven entrepreneurial ventures (unlike services companies or businesses that resell other products) are extremely hard in India. Given that it takes so much time to get things going, the first question most entrepreneurs need to think is “How quickly can my company generate revenue?”.
If you are looking to get funded by Venture capital (and I know 5 VC’s very well, to say this is the truth and the law). VC’s in India will NOT fund any company without a proven and repeatable revenue model. Yes there are exceptions, and some VC’s may fund the “show me momentum and traction” startup, but dont bet on it.
So that then begs the question, how do we sell in India?
If you are a consumer startup, charge people early, and often. If your business model is based on large number of users paying no money, then figure out who will pay for those large number of users. If your product or service is primarily based on selling to other businesses, then this post is useful for you.
1. Like any other place, businesses and people buy from people they know and trust. The hardest part is to start to build those relationships. Start early. If you are a local (from India) tap into your college/ school network. If you have worked/lived abroad for most of your working career, join your alumni organization. Chances are high that your college alumni network has a few folks in high positions at companies in India. I personally know of many alumni networks which have regional chapters in the large cities in India. Go meet and schmooze. There’s no alternative. If you dont like doing that, get someone in your team who likes to do that.
India can seem like an old boys network and it will be that way until you crack the first few. Then you are in that “old boys network”.
Some tips I have picked up while trying to sell in India – HR folks have time, no money. Sales & Marketing folks have money no time. If you get an appointment with a sales VP or head of sales and your product helps him/her, go out of your way to make it easy for them to buy your product in your FIRST meeting. I know this is different from “dont try to close in your first meeting” advice you get in the US, but it is what it is. Building a relationship takes time and most of these people dont have time. Make your value proposition compelling enough for her to say “Okay, if this does what you say it does, we will trial it for X days and pay you for it”.
2. Quickly understand the company’s culture. If you are trying to sell to a company which rarely uses consultants or outside help, realize it will take you very long to get the purchase order process completed. Most services companies (Wipro, TCS, not Infosys) prefer to use inside resources and will build software than buy it.
3. Remember the element of service tax. Its a 10% overhead you have to account for. If your product is to be sold for Rs. 100,000 realize you’ll get that minus 10% which the company will keep and report as TDS. When you file taxes at the end of the year, you can apply for a refund, which you will probably get after 2+ years (if at all). So the best is to add that as an element in your quote. If you want to get Rs. 100,000, price your product at Rs. 111,111 so you get Rs. 100,000 after 10% tax.