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75 Startups you can bet on

Tuesday, 01 June 2010 00:00 DARE People - 75 Startups You Can Bet On
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This is possibly the one story that we worked the longest on. We started off by asking people to nominate startups and telling us why they think they would bet on that particular startup. We received over 600 nominations. Then started the task of collecting secondary data on each of

the nominations to figure out whether they pass our definition of a start up. The process of reaching the final shortlist involved many steps. At each stage, we had no choice, but to remove from the list, companies where the founders were not willing to share information. After the first round we were left with about half the number of companies that we started off with.

 

Defining a startup
For this story, we defined a startup as a company that was established at least a year back and one that was not more than five years old. Most of the startups we have considered have a product or at least a prototype out in the market. Newly established ventures within existing groups were considered wherever it was clear that it was a separate legal entity. Startups which were already above the 100 Crore turnover mark, (like for example the IPL) were not considered. Clearly we were looking for early stage businesses which were yet to spread their wings.

What will make us bet on you?
This was the critical question. Many entrepreneurs either did not have clear, ratified financial information. Compounding the situation was the fact that many were cagey about sharing the finer details of their financial performance – a situation that most VCs are only too familiar with during their initial meetings with potential investees.

So, we went about what will make us bet on a given company. We ended up with two significant parameters. Either the company should be able to clock significant growth in top line – we fixed our bench mark at being able to clock a turnover of Rs 100 Crore at the end of the next five years. Or it should have the potential to change the rules and disrupt the market segment it is playing in. We also said that we will add to our list a small number of companies which may not meet either of the two qualifiers, but which will make a significant social impact nevertheless. In this case, we used the potential number of people who would be impacted as the criteria for inclusion.

Next, we went about collecting available information on their products, clients, competition and potential market sizes. At this stage we wanted to ensure that we spoke to the entrepreneur concerned and also got their view of what their biggest strengths and challenges were. We also spoke to some industry experts to get a general feel about the future of particular industry segments, we never discussed with any of the experts any particular company, product or entrepreneur. We also made sure that we did not discuss with any investor any of the nominees.

From the final list too, a few entrepreneurs voluntarily withdrew, because of confidentiality issues or because they felt that at this point the publicity was not good for them – in most cases these were companies that were on the verge of tying up investments.

We started off with the objective of having a hundred companies in this list, but ended up with 75. Does that make it a better list? Absolutely not. We would have loved to have a full hundred.

Is our method scientific? We would say that the method is more rational than it is scientific. We would have loved to build up models that would help us predict which startups stood a better chance of making it big five years from today. But there was simply too little data available.

While we have listed the investors who have invested into these startups, there is no judgment being made about the investments. Do not try to create sub lists like no of companies per investor out of this master list. That is not how we went about compiling this list and such sub-lists would only defeat the letter and spirit of this story.

If your company was one of the 600 plus nominees and did not make it to the final 75, does it mean that you will not grow big or will not disrupt the markets? Absolutely not. At this point it could just be that we did not have enough information to make that judgment.

We are not saying that each one of the companies in this list will make it big or will end up disrupting markets. We are sure that some of these will not be around five years from now (some of them may be snapped up by bigger entities much earlier) What we are saying is that collectively, this set of companies stand the best chances of being successful five years from today, amongst the current crop of startups.

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