Everyone is looking to invest in Startups with “disruptive” & “patentable” ideas as they seem like the most lucrative investment to be made with with returns ranging from 40% to 4000% over a three to five year period.
This is true when it comes to that 10% of the 10% of startups which actually get off the ground, which translates to just 1% of the companies which startup. You have a 2.63% chance of winning in roulette at any casino in the world.
Some of the numerous reasons that these odds are so low is that though many entrepreneurs are very talented and their ideas seemingly disruptive, the market for these ideas is less interested than the investors and way less enthusiastic than the founders. In addition to this, founders seldom come with experience of starting businesses, running businesses and growing businesses in addition to their lack of experience with product development lifecycles.
The following infographic which is an extract from the forbes.com website shows us that the fundamental reason that an entrepreneur should start a business, which is to address a market need in order to make money, is the very reason that 42% of the startups fail, this is in addition to other controllable factors such as cash flow, quality of team, cost and pricing. This is most often because entrepreneurs and investors alike get married to their idea and often fail to see beyond it obvious benefits.
Dhi Bridge is an incubator of the Dhi Networks Applied Knowledge Foundation which is India’s first IoT (Internet of Things) focused incubator. Founded by serial entrepreneurs and supported by industrial expert mentors while being associated with ISBA (Indian Science and Technology Entrepreneurs Parks and Business Incubator Association), it has taken a very different approach to incubation.
IDEA AND TEAM IDENTIFICATION
Identify entrepreneurs with patentable ideas and talent to convert their ideas to products. The idea must be to connect things and compatible with the lines on which we are building out platform GNISS.
We first insist that the team attend a course in Starting a Startup. This is a comprehensive course excluding the technical aspects of a startup and focuses on the strengths required and the challenges to be met in starting , running and growing a startup.
This course, which is just for two days, gives an entrepreneur an overview and introduction to marketing, sales, management, accounting, finance, business communication and government compliances. Where the individual member feels they require more knowledge there are specialised courses covering those subjects.
On completing the course, the team is analysed through a series of interviews and test performed by experts in the same field and other required fields to grade them on the following:
With the permission of the entrepreneur and covered with the security of the a non-disclosure agreement with opinions of mentors and industrial experts, we evaluate and validate the idea from a technical feasibility and a commercial feasibility
INTERNAL FEASIBILITY STUDY
Once the team and the idea have been vetted, based on the proposed bill of materials and time period for development, we do an internal estimation of real cost of creating the MVP (Minimum Viable Prototype). The founders go into the market over a period of one week to meet the potential customers for the product they propose to develop as part of a required process. They are also depending on their non-technical skills recommended courses to improve in the role they intend to play in their organisation.
PROPOSAL TO POTENTIAL INVESTORS
Backed by a detailed evaluation of both the team and the idea along with some market survey we help the entrepreneur build a business plan to be offered to potential investors. These investors also go through an evaluation process to ensure that there is some synergy between the investor and the investee team.
AGREEMENT WITH STARTUP FOUNDERS AND INCUBATOR
Once an investor has expressed interest in investing in a particular team, a pre-incorporation MOU among the investor, investee and Dhi Bridge is signed with the roles of each one defined as well as an agreement to set up a company in which the investment is to be made, incubated and in which the founders and their team will work in converting their idea to a product.
FORMATION OF STARTUP
The startup is formed as a private limited company in which the investor, the founders and Dhi Bridge have shares in accordance with what was agreed upon in the pre-incorporation MOU. A shareholder and founders’ agreement is signed among all the shareholders. The founders at this stage file for a provisional/full patent of their idea/product.
INCUBATION OF THE TEAM AND IDEA
Once the company has been formed, and based on the various evaluations and feasibility studies, the new startup is assigned the required space along with all the components, equipment, connectivity required to execute the development of their idea into a working product. The team is also encouraged to spend some time educating themselves on the role they are playing in their organisation through role specific courses which allow them to be prepared to run their company once they graduate. During this stage they have access to various mentors and industrial experts along with the co-workers in the incubator to accelerate the development of their product while meeting/exceeding expectations. The also have access to non-technical advice for business processes management and finance.
During the incubation of the company, which would typically range from six weeks to twenty-four weeks, we as an incubator would constantly monitor the progress of the startup and through mentoring and coaching ensure that the project is in line with the original idea, within budget and will be delivered on time. We keep the investor updated on a weekly basis of the project. During this time we also also work with industries/markets to assist the startup create demand for the product they are developing .
VALIDATION OF PROTOTYPE
The process of conversion of an idea to a prototype is monitored closely, but before the prototype can be displayed to anyone for commercial valuation, the prototype is validated by industrial experts to ensure that the original idea specifications are the minimum achieved in the prototype
ACADEMIA – INDUSTRIAL COLLABORATION / SEED INVESTMENT
While validating an idea at the early stages of incubation, it is our endeavour to ensure that the idea satisfies a need in industry. While this would be an ongoing process from incubation to graduation we prefer that a startup’s seed funding requirement is achieved through a serviceable order. If the prototype is one which would only have industrial value once the product is complete then we have a bank of investors to whom we propose the startup for a seed round of funding.
At Dhi Bridge we offer the opportunity for anyone to invest in startups through investments as low as US $2000/-. Through our identification, assessment & training monitoring and acceleration, your finance, advice & mentoring by experts, we strive to minimise the risk of an investor while providing a strong backbone and platform for startups. This backbone would help in improving the chances of success for startups which we incubate.
GRADUATION OF STARTUP
Once the prototype is complete and validated as per the original plan submitted by the founders, we consider the startup ready to be graduated. However, in case they need assistance in further growth acceleration they will be guided and helped in accelerating their startup through our network of businesses and individuals looking to support startups.