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Ray Newal, managing director of Techstars India, put together its accelerator’s first batch in India this year Image: Nishant Ratnakar for Forbes India
Rohit Sen traded in London’s financial markets for over 12 years with the likes of Bank of America, Merrill Lynch and Goldman Sachs. Three years ago, he returned to India to build something that would give the youth, especially those with ambitions but little money, a head start. He teamed up with fellow Goldman Sachs worker Nupur Gupta to start Nira to give small loans to urban India’s low-income-earning youth. In 2019, it was among the 10 companies selected to be part of the first India programme of startup accelerator Techstars.
“We’re first-time entrepreneurs… there are a lot things that we are figuring out and making a lot of mistakes along the way,” says Sen, who holds degrees in economics and management from Oxford University and the London School of Economics. “Therefore, for us, the main attraction (of Techstars) was mentorship. These mentors are challenging us on why we are doing what we are doing and the really interesting meetings are when they ask us questions that we haven’t thought of.”
Sharing Wisdom David Cohen, David Brown, Brad Feld and Jared Polis started Techstars in Boulder, Colorado, in 2006. They were part of an angel network and realised that the startups in the American city weren’t getting much out of angels except money. That’s when they, along with a few like-minded investors, decided to offer more. They had built and exited companies, and felt they could share their wisdom with other entrepreneurs. “That’s what we have to offer. No one really knows how to achieve success, but at least we can avoid making the same mistakes that each of us has made,” explains Ray Newal, managing director of Techstars India, which has its office at co-working space WeWork in Bengaluru.
Over a decade ago, the group in Boulder eventually evolved into an accelerator, offering a 13-week programme. Techstars has now had some 1,700 companies across the world that have taken its programme. Some prominent ones include PillPack, which sold for $1 billion to Amazon last year, SendGrid, which was acquired for $3 billion by Twilio this year, and cloud platform provider Digital Ocean.
The first few weeks of the programme is dedicated to what is called ‘Mentor Madness’, says Newal. The chosen startups cumulatively have 600-plus meetings with 50 to 100 mentors. “What we are hoping is that through the process of being open to weaknesses, we can deconstruct the business, take into account new things and reconstruct it so that it is a lot more robust,” says Sen.
Newal is excited about the first batch he has put together in the country. “I’m proud of the fact that we are running this accelerator in India. It’s hands-on and much more so than any other accelerator that has come into India,” he says. “It’s about giving them, through the 13-week programme, two years’ worth of growth. It’s rigorous for them and for me.”
Prior to Techstars, Newal, a dropout from York University in Canada, had built mobile video streaming startup Jigsee between 2008 and 2013, when it saw an exit. Its product was downloaded 5 million times in nine months since its launch in India. He says had such an accelerator existed then, the company would have grown even faster. After selling Jigsee, Newal went back to Canada and among other things, became a mentor to local entrepreneurs. So, when Techstars thought of starting the accelerator in India, he seemed like an ideal candidate. Newal returned to the country in mid-2018 and the first programme began in February this year.
Sophisticated Execution Redwing Aerospace is one of the companies of the first Techstars accelerator batch in India. “We are trying to solve the last-mile logistics problem using drones, delivering cargo like polio vaccines, blood samples and so on,” says Anshul Sharma, CEO and co-founder of the Bengaluru-based Redwing. His two co-founders, Arunabha Bhattacharya and Rishabh Gupta, and he bootstrapped the venture about a year ago. They’ve finished the first phase of a pilot project in Papua New Guinea, working with the US Center for Disease Control. Plans for the second phase involve restocking polio vaccine vials there. “Health workers there have to walk up a hill for three days before they reach the clinic to store the vials,” says Sharma. “The drone can cover the distance in 40 minutes.”
Techstars is helping Redwing move from the stage of demonstrating a technology as a pilot project to where it can be a viable business. The fact that the accelerator has invested in other drone companies helps as it provides access to entrepreneurs working in the area of drones, in India and overseas. “We aspire to be a national carrier, so we need the connections that Techstars can provide,” explains Sharma.
Over time, Techstars’ programmes have become sophisticated in structure and execution. It now invests $120,000 in each of the companies that comes through a given programme in return for 6 percent of common stock, which is like the accelerator fee. This year, Techstars will do 480 investments through 48 programmes that it runs. “We have a fair amount of capital deployed in these companies. If you look at Series A-level companies in the US, we are in 5 percent—one out of 20—cap tables. We’ve done this a lot,” says Newal.
As part of the programme, Techstars offers founders office space. And instead of booking them in hotels or giving them plane tickets, it gives $20,000 per company. In the first week itself, each company is also offered the option to take a convertible note for $100,000. The startups who take it do so in return for 2-5 percent of their stock, depending on their valuations.
As part of ‘Mentor Madness’, Techstars assembles between 50 and 100 mentors and each of the companies gets to meet them for 20 minutes each. The idea is to ensure the companies become good at talking about their businesses and get quicker in explaining what they do.
The mentors are united by what Techstars calls the ‘give first’ philosophy. They are not there for personal gains, but to ‘give back’. They have to go through a ‘mentor manifesto’ which has 18 components that help them prepare and know the startups even before they meet the founders. The focus is on the Socratic method or a cooperative dialogue, which involves asking a lot of questions. Through the process, the startups end up developing and stumbling on different hypotheses. That’s part of the acceleration.
The founders of Ambee, another company in the first India batch, junked a large chunk of their original business model within the first few weeks at the accelerator. “Before we joined the Techstars programme, we were a B2C, B2B and B2G business. We thought we could do everything,” says Akshay Joshi, co-founder and CEO. “We’d raised a small amount and were confident that we could go down the hardware route. We thought we could sell air quality monitors and portable air purifiers.”
Meeting the mentors helped him and his fellow co-founders, Madhusudhan Anand and Jaideep Singh, get clarity on the business. “A month into Techstars and after speaking to some 50 people from all walks of life, we junked the B2C business,” says Joshi. Ambee has now decided to focus on data aggregation, sanitisation and dissemination. And further focus on large businesses and organisations as its main customers.
(Clockwise from top left) Nupur Gupta and Rohit Sen, co-founders of Nira; Ambee co-founders Madhusudhan Anand, Akshay Joshi and Jaideep Singh Bachher; Arunabha Bhattacharya, Anshul Sharma and Rishabh Gupta, co-founders of Redwing Aerospace Labs, were all part of Techstars’ first accelerator batch this year Image: Nishant Ratnakar for Forbes India
“We build environmental intelligence at Ambee,” says Joshi. “We believe there isn’t enough data on the environment surrounding people, on air, water, all of that. It’s a massive burden… pollution and climate change are the world’s largest killers.” At Ambee, they feel everyone should have access to better information on things that affect their lives. The startup wants to be able to tell people what the air quality is like around the area where they live on a daily basis.
“We are at Techstars because if you look for guidance from someone, they need to have been there and done that. Techstars is also known for giving back to the community. We’ve seen it in the first few weeks itself, with a lot of the local entrepreneur community involved,” says Joshi.
Techstars’ international network is a huge advantage too. “It’s pretty much structured as a family, you ask and people do whatever they can to help you,” says Joshi. In the first month of the programme, Joshi, Anand and Singh had one-on-one meetings with people from five countries. “That’s empowering and it wouldn’t have been possible without Techstars,” says Joshi.
Testing Resilience Before it started a full accelerator programme in India, Techstars was active in the startup ecosystem in the country through its ‘Startup Weekend’ initiative. Over the last four years, it has conducted about 300 Startup Weekends, which brought together entrepreneurs, those wanting to start ventures and others from the ecosystem to share their experiences.
Startups in Techstars’ Bengaluru programme recently assembled to listen to Vidit Aatrey, whose ecommerce company Meesho has raised nearly $65 million by building a marketplace for small businesses, even allowing homemakers to connect their Facebook pages to the platform and work as resellers. “If they can do it, so can we,” Aatrey said at the event called Founder’s Story as part of the accelerator programme. He was referring to how Flipkart founders Sachin Bansal and Binny Bansal became billionaires by selling their ecommerce behemoth to Walmart.
“Flipkart’s massive exit has given a reference point to founders across India,” says Newal. India has changed in other ways too. There is a lot more funding available today, including international capital that is India focussed. “That’s something that has stepped up since I built my company. Investment and capital were in much shorter supply back then,” points out Newal. On what’s missing, he adds, “Mentorship is something that we can still do better in India.”
On that front, Techstars is finding examples of founders in India who are doing a great job of giving back. That’s a big opportunity Techstars sees: To bring together founders in India and those from across the globe to help Indian entrepreneurs.
The role of the government and regulatory environment are crucial factors too. Taxation is an area that is crying for improvement. Newal says one must make it easier for angels, micro venture capitalists (VCs) and VCs to fund companies, recognising that their funding happens at a critical juncture in the life of many ventures.
Collectively there is also a need to help entrepreneurs better understand what it means to build a startup. Exits happen way too early in India with most promising startups. It’s tempting to take the $20 million or $30 million buyout when it presents itself. “We must be able to stand behind our entrepreneurs and help them get through the difficulties and build their businesses to where they can get larger exits or find other paths to exit,” says Newal.
Resilience is another trait Newal looks for while deciding whether to include a startup in the accelerator programme or not. He says he looks for people who have faced challenges in life—an illness or supporting family through a tough time. These things, he says, give him a perspective about their ability to deal with struggle and overcome it. A question he often asks entrepreneurs is: “How do you see the world in five years?” He doesn’t want fortune tellers, but is looking for ideas on how the market might evolve and how the founders will grow with it.
“What I’m looking for is, if sometimes the market turns left instead of right, how will they handle it? Are they prepared?” says Newal. If there is clarity, Techstars is there to do the hand-holding.