Start ups

 Meaning of Startup
A startup is a young company founded by one or more entrepreneurs to develop a unique
product or service and bring it to market. By its nature, the typical startup tends to be a
shoestring operation, with initial funding from the founders or their friends and families.

One of the startup's first tasks is raising a substantial amount of money to further develop the
product. To do that, they have to make a strong argument, if not a prototype, that supports their
claim that their idea is truly new or a great improvement to something on the market.

Though a vast majority of start-ups fail, some of history's most successful entrepreneurs created
startups like Microsoft, founded by Bill Gates; Ford Motors, founded by Henry Ford; and
McDonald's, founded by Ray Kroc.

 Basic Start-ups problems

The following are the basic problems faced by startups:

1. Fierce Competition

The corporate world is quite fierce. There is always a competition going on between
the giants. Competition poses one of the biggest challenges for the survival of
startup businesses. And if you have an online business startup, the competition gets
tougher. In order to survive in this competitive business environment that covers
both traditional and online businesses, the startups need to play aggressively, and
punch above their weight to gain the much needed recognition amongst the clusters
of ever challenging and expanding businesses.

2. Unrealistic Expectations

Startups tend to face challenges when they set ‘unrealistic expectations’ following
a booming success. Sustainability requires consistent efforts. In order to succeed in
a competitive business world, startups need to have high but controlled
expectations, keeping view of the resources available, the extent of growth
potential, and other market factors as well.

3. Hiring Suitable Candidates

 One of the most important factors that define organizational culture within a startup
company is the synergy of the team. A team comprises of individuals with similar
capabilities and identical focus.There is a huge pool of aspiring individuals
available. Selecting a suitable candidate that fits the job well enough is a peculiarly
tricky task. It is one of the biggest challenges facing the startup businesses in this
digital age.

4. Partnership Decision Making

Partnership is the essence of success. And this logic holds true for startups as well.
In this ever-expanding and ever-changing digital era, where organizations need to
battle hard for their survival, startups also find it difficult to find trustworthy
partners. It’s really a big challenge for startups today. Going into a partnership pays
great dividends for the startups, but they need to consider a variety of factors before
making any decision to collaborate with another company working in the same
ecosystem. To reap out maximum benefits out of a partnership, startup businesses
should look for organizations that enjoy a sound presence within the market and a
good reputation amongst the industry giants.

5. Financial Management

Money begets money. Remember the fact that when income increases, the
expenditures also increase. There is no doubt about it. One of the biggest challenges
that startups face today relates to financial management. It is a fact that small
startups rely heavily on financial backups from the so called investors. At times,
when there is a cash influx, small firms, most importantly startups tend to find it
really hard to properly manage their finances, and they bog down against the
pressure. In order to address this kind of situation, startups need to play a safe and
cautious hand, by keeping all the cards close to their chests. Taking help from a
reputed financial consultancy firm may really help out in managing financial crises
facing today’s startup businesses.

6. Cyber Security

This is the digital age. And surviving the challenges in this age requires small
startups – especially the ones operating online – to be super agile to counter the so
 called online security threats. Hackers are everywhere, and they are going to take
advantage of any loophole within the systems installed within a startup firm. The
rate of cyber-crimes has increased dramatically during the past couple of years. The
percentage is going to increase in the coming years as well. Startups that are active
online do face online security threats. Be it unauthorized access to startup’s
sensitive information, employee records, bank accounts’ information, or any other
related information that is deemed important for the survival of a tech startup, they
are at risk. In order to safeguard the all important online data, startups need to have
robust and military-grade security systems in place. A virtual private network
(VPN) connection serves the purpose of protecting a startup’s information, and
employee records, by offering the much needed encryption and data security to the
startup’s employees, thereby restricting unauthorized access to organizational data
over the web.

7. Winning Trust of Customers

Customer is the king. And that’s absolutely right. Winning a customer’s trust is one
of the most important challenges that businesses in general – and startups in
particular – face today. With a highly satisfied and loyal customer base, startups
can scale and make progress towards excellence. Customers are the real force
behind a startup’s success. Their word-of-mouth power and their presence on social
media can give tech startups an edge against all the traditional businesses. To win
customers’ trust and loyalty, startups need to work aggressively to implement a
customer-centric working philosophy, so as to enable them to succeed in their
pursuit of attaining the height sustainable growth and progress they desire to
achieve in this tech-savvy and challenging business world.

 Sources of Financing Business Startups

In the early stages, startup companies have little or no revenue coming in. They have an idea
that they have to develop, test, and market. That takes considerable money, and startup owners
have several potential sources to tap:
  Traditional funding sources include small business loans from banks or credit unions,
government-sponsored Small Business Administration loans from local banks, and
grants made by non-profit organizations and state governments.

 So-called incubators, often associated with business schools and other non-profits,
provide mentoring, office space, and seed funding to startups.
 Venture capitalists and angel investors actively seek out promising start-ups to bankroll
in return for a stake in the company once it gets off the ground.

(Note: You need to explain them in detail as we have already discussed this in previous
chapters.)

 Cases of Indian Startups

1. Co-Founder of MobiKwik: Upasana Taku

Mobikwik is a mobile-based digital wallet that allows digital payments. Users can add
money to the wallet and conduct online transactions. The co-founder of MobiKwik has
quite an inspiring story for budding women entrepreneurs. Upasana Taku is an ideal
candidate for every high paying job in the corporate sector with her NIIT and Standford
Degrees. She was employed with PayPal in the US and it wasn’t until 2008 that she decided
to challenge her potential and join MobiKwik as a Co-founder by 2009. MobiKwik was
initially started as a recharge platform and later matured into a digital wallet.

2. Co-Founder of Yatra.com: Sabina Chopra

Popular travel bookings portal Yatra.com was co-founded by Sabina Chopra, who set up
this platform when travel commerce was just growing in the Indian market. By identifying
the potential of travel commerce in India and people moving towards cheaper or easier
travel, Yatra was already in place. As the need for online bookings grew, Yatra was a ready
platform that people were able to easily access. Sabina was the former Head of India
Operations of eBookers, which is also an online travel company based in Europe. Along
with this, she was also working with Japan Airlines which further adds to her experience in
the travel industry. The second annual Women Leaders in India Awards, 2010
acknowledged her work and she was declared the winner in the Travel & Tourism group.
 3. Founder of NyKaa: Falguni Nayyar
The founder of Nykaa.com, a beauty, and wellness e-commerce platform, has an experience
of 25 years in financial services! Falguni Nayyar was the former Managing Director of
Kotak Mahindra Group and after 25 years in the industry, she decided to take a leap of faith
with Nykaa. A graduate from IIM Ahmedabad, Nayyar was extremely determined and
focused to leave behind corporate life and begin something of her own. Her hard work
and diligence towards developing Nykaa showed results when top brands began
signing up on their platform. L’Oreal, Johnson & Johnson, Unilever, etc were some
big companies that tied up with the platform. Nykaa’s network currently is 850+
brands strong, making it a leading site for retail partnerships. With more funding
raised by private investors, Nykaa plans to expand to more physical stores and also
be available as a mobile application.

4. Zomato: An Indian Startup acquiring the world

Zomato initially named as Foodiebay was started in 2008 by Mr. Deepinder Goyal. It is a
restaurant searching platform providing in-depth details with autonomous reviews and
ratings. Foodiebay, the initial name was changed to Zomato in November 2010 to increase
their reach among people. To differentiate themselves from their competitors, Zomato
concentrated on adding approx. 18,000 new places to eat from. Along with they also
decorated many special features, such as pointed to particular dishes or opening times”. To
be the largest resource in food supply market, Zomato bought urbanspoon, a leading
restaurant service providing portal for $52 million to enter US, Canada and Australia to
leverage local insights and experience and to expand their business in overseas seeing the
future goal and objective.

Vision of Zomato:
 To expand to more 50 countries

Milestones:
 Number of listed restaurants: in 2008 it was 4000 restaurants which increase to 94000 in
2013 and currently 384,100 in Q1 of 2015.
 Monthly visitors of Zomato increases to 35 million in 2014 which was 11 million in 2013 and
0.015 million in 2008.
 Yearly revenue of Zomato in 2008 was 0.06 crores which increased to 11.3 crores in 2013.
 Spread in 21 countries worldwide.

Success Factor:
 First mover advantage
 Strong content platform
 Efficient employees
 Good rating mechanism and social platform
 Funding from experienced source

Strategy of Zomato: Zomato works with keen interest on various strategies to achieve their
goal. It includes
 Financial strategy: To increase their fund and revenue
 Marketing strategy: To tap their customers from across the globe
 Growth strategy: To grow continuously and increase their customers and page traffic
 Globalization strategy: To expand themselves across the whole globe as a leading service
provider

Marketing Strategy
 Featured and user friendly website
 Global mobile app
 Focusing on digital marketing channels for potential customers
 Acquire the competitors: To be the largest resource in food supply market, Zomato bought
urban spoon for $52 million to enter US, Canada and Australia
 Simpler review and rating system
 Integrating other tools in their marketing strategy has given them wonderful hike in their
business.
 Sales promotion: Coupons and price-offs
 Direct Marketing: Phone call and direct mail

Investments
In August 2010, Zomato got its first round of funding of $1million from Info Edge, India. And
in September 2011, got its second round of funding of $3.5million from the same financier.
Next year Zomato upraised its third round of another $2.5 million from the same investor and
again in early 2013, Info Edge funded fourth round worth $10 million which gives them a
57.9% stake in Zomato. Seeing the future and growth of Zomato, Sequoia Capital and Info
Edge, India in November 2013 funded Zomato with $37 million. Info Edge now owned 50.1%
of Zomato on an investment of INR 143 crores. The total funding raised by Zomato till
November 2013 stands at $53.5 million. In November 2014, Zomato came up with a fresh
round of funding of $60 million at a post-money valuation of ~US$660 million. This round of
funding was jointly headed by Info Edge India Limited and VY Capital, with involvement from
Sequoia Capital. This made a total funding of over US$113 million for Zomato. Recently in a
fresh round of funding in April 2015, Info Edge, India has invested an amount of Rs 155 crore
in Zomato. Info Edge said in a statement “Being Info Edge’s fair share of Zomato’s recent fund
raises of USD 50 million”. Upon completion of the allotment of shares, Info Edge’s aggregate
investment in Zomato will be about Rs 484 crore. As the website was launched, it became
popular soon and expanded rapidly, covering many important regions of India including
Kolkata, Mumbai, Bengaluru and Pune by the year 2010. Apart from being a service provider
within India, Zomato.com now has branched to overseas in the regions of Philippines, New
Zealand, Qatar, South Africa, Sri Lanka, the United Arab Emirates and the UK as well.
The website covers a list of over 1, 20,000 restaurants across all these regions catering to
more than 15 million customers worldwide. With its headquarter in New
Delhi, Zomato.com is providing career opportunity to over 350 employees all across the globe.

Social media Strategy

Zomato uses different platforms to engage their customers with them like, Facebook, twitter,
blog etc.

a. Facebook
There is a huge engagement of customers on Facebook. Zomato has more than 600k strong
Facebook community.
b. Twitter
Twitter is a place where Zomato is sparkling. It has more than 114 k followers there. Used as
a conversation platform with the customers, Zomato is doing a great job in engaging their
customers on their page. They answers all the queries raised over the platform by the customers.

c. Blog

Sharing and updating with all the latest updates is a key point for any organization. Zomato
uses their blog as their mouthpiece to share all the latest updates.
 d. Pinterest

The platform shares the food experience with great content to attract their customers. The
company needs to do a lot of job to make its followers on this platform which will certainly
work in their promotion.

e. Instagram
This platform lets the user share the foodie photographs just by sharing it using the tag #
Zomato. The image automatically gets shared on the microsite.

Success Story
The key factor for Zomato success is its marketing strategy and in-depth knowledge of their
competitors. Zomato aims to be a place where the foodies hangout. The company has spread
in 20 countries with its headquarter in New Delhi, India providing service to over 35 million
values customers per month. The list of registered restaurants on the website has increased to
384,100 till March 2015.

Facebook, Twitter and Pinterest are the 3 main platforms which made the base for the success
of Zomato with a deep presence among their customers. Other than that, Zomato has
extensively invested a lot over SMO’s, SEO’s and has worked a lot to improve its UI and make
it more user interactive. Side by side with a goal to branch globally, they also invest much on
TV ads to bombinate Zomato.

Pankaj Chaddah, the co-founder of Zomato agreed, “ads on the mobile app have changed the
revenue game for them”. More than 50% of their total traffic comes from their mobile apps.
“Using location-based services to target ads around a consumer’s physical location helps make
this decision easier” said Chaddah.

Sanjeev Bikchandani, co-founder of Info Edge and Zomato’s largest shareholder said, “the firm
will focus on segments such as online food ordering, restaurant booking, subscription-based
services and billing inside of restaurants”.
(Note: You can discuss any Indian Startup case study like Zomato in detail)

References:

1. https://dsim.in/blog/2015/04/14/zomato-an-indian-startup-acquiring-the-world/