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December 2017 Startup Scene

Published on: 2017-12-17 11:19:40     637 times read    0  Comments
Accelerating the Growth of Startups

Though the arrival of business accelerators has backed up startups, there is still a lot of catching up to do.

--BY NIKEETA GAUTAM

The journey from coming up with a business idea to realising it is not easy. The excitement behind starting a business is one thing, but the real challenges begin to appear once it gets going. From managing the flow of cash to handling teams properly to understanding and identifying the market needs, startup ventures find themselves in a difficult place right from the start.  For the first couple of years, profits are usually out of the question for most of them. This stage is the most crucial and exhausting and people generally call it quits at this point. 

The failure of startups are generally attributed to factors such as cash and team management problems, the perfect product syndrome, focusing on multiple products or services at once or ignoring sales and human resources. In such situations accelerators come as rescuers who can assist the budding entrepreneurs in ways such as providing mentorship, managing growth capital for the needy ones, and in other multiple areas. 

Concept of Business Accelerator in Nepal
Business accelerators have been active in Nepal for only a few years. It all began in 2014 when two Dutch companies One To Watch and Rockstart started a 100-day accelerator programme called the Rockstart Impact.  Rockstart is an accelerator based in the Netherlands, and Rockstart Impact is one of its accelerator programmes designed for the growth of impact startups in South Asia countries including Nepal. One to Watch is a joint venture founded by Nepali and Dutch individuals which helps startups to connect with investors in The Netherlands who want to invest in businesses that can create an impact. 

“There was a huge gap to get investment-ready companies at that time. There was no clarity in the compliances part. So, the growth of startups was going quite slow,” says Niraj Khanal, co-founder of One to Watch and founder of the business accelerator Antarprerana. “This way, business accelerators came forward to help innovative and impactful enterprises and also to connect the young 
entrepreneurs with investors,” he adds. 

Can They Stop Startups from Failing? 
 According to Khanal, there are basically two major reasons for the failure of startups. “Many are gripped by the ‘perfect product syndrome’. This causes them to always think that their products must be accurately perfect. This ultimately leads to the failure of the budding business ventures,” he says. “Here is the role of mentors to share their experiences and teach the startups to apply the lean approach business model,” he adds.

 Another factor attributing to the failure of startups is their inability to define the targeted customer groups properly. “With the assistance of the accelerators, they start internalising that startup is just a temporary organisation and feel the need to graduate from that stage. It helps them learn to define their customers gradually,” Khanal mentions, adding, “The generic issues may be different for different businesses. But some major problems are the same for all. The accelerators provide solutions to those problems. “

Kavi Raj Joshi, founder of Startups Nepal and NEXT Venture Corp says the unclear business model is another reason for the failure of startups. The lack of clarity makes them focus mostly on one aspect such as products and sales and ignore other important aspects such as after sales service, customer care and human resource management. The experienced mentors give them right suggestions and the accelerators connect the entrepreneurs to the right networks so that they can have a better understanding about all the necessary elements required for the proper functioning of businesses. 

“Besides this, when the young entrepreneurs who have been working all alone meet other people in like-minded groups, start peer-to-peer activities, listen to each other’s problems and when mentors suggest them practical applications, they will be motivated thus reducing the chances of failure,” he opines. 

According to Willem Grimminck, Director of One to Watch, the focus of his firm is to motivate the existing startups to continue with their endeavours. “We do support startups. But that is not our ultimate objective. We actually are a fund manager and our ultimate goal is to make the companies capable of investing and by developing a pipeline via acceleration programmes at the same time, we support the startup ecosystem,” he says.  

Apart from the mentoring programmes accelerators are also assisting the startups by organising other events. Rockstart Impact, for instance, also organises many inspirational events for entrepreneurs aiming to motivate them to continue in their business journey in positive ways. “Through these regular discussion programmmes, we are also preparing the entrepreneurs and aspiring youths to join the Rockstart Impact accelerators programme in the future,” he says.

Bringing Corporate Accelerators
The demand for accelerator programmes has been increasing in Nepal in recent years as more young people are attracted towards entrepreneurship. Though the big corporate houses in Nepal are mostly limited to their profits and are not much enthusiastic about innovation, things seem to have been changing lately as they have now felt the pressure of continuous innovation and disruption and to learn from the young entrepreneurs. 

A few Nepali corporate houses such as CG Group and Jyoti Group have started showing interest in working with startups. Globally, Microsoft Ventures of Microsoft Corporation, GenNext Hub Accelerator of Reliance India, and Foundry Unilever of Unilever and The 10 Startups recently launched by the travel fare aggregator booking.com are some of the corporate accelerators that have been helping the budding enterprises. 

Joshi is hopeful that the interest of large corporate houses in accelerator programmes will grow in the coming days. “It can be a very good learning curve for young entrepreneurs. It can encourage them to continue on their journey,” says Joshi. “In the meantime, it will also help the corporate houses to make a business out of the products and services of startups that are viable to them,” he adds. According to him, accelerators in Nepal are not particularly focused on any specific sector.  “If the corporate houses start business accelerators, they will focus on specific sectors and utilise their in-house expertise and experiences. It can help sector specific mentors to come ahead,” he says. 

One to Watch Director Grimminck has a different view.  According to him, business accelerators should be independent and market focused. “Corporate houses might be interested to run accelerators. But ultimately their focus is to leverage the skills of the startups and entrepreneurs in their own system. The accelerators in the startup ecosystem are entrepreneur centric and this is the way accelerators should work,” he says. 

Meanwhile, Om Rajbhandary, Chairman of Brihat Investments says that engaging with the startup ecosystem depends on the philosophy of the corporate houses.  “There are business people who might just be interested in growing their business. However, some businessmen may be genuinely interested in helping the growth of entrepreneurship in the country,” says Rajbhandary who is also the co-founder and chairperson of Antarprerana business accelerator programme. 

“Starting an accelerator comes afterwards. But first, the corporate houses must help to create an entrepreneurial environment within the organisations,” he says. “It is important to have an entrepreneurial spirit among the staff of the organisations so they can themselves develop and market products or services in efficient ways. This will help corporate houses to achieve better business performance and also work towards creating a viable and sustainable market which is beneficial to everyone,” adds Rajbhandary.

 Sustainability of Accelerators 
New accelerators have joined the Nepali startup ecosystem mostly over the last three years.  Their heads say that they have been concentrating their efforts on developing entrepreneurship in Nepal.   “We are here not just to make money, but to make entrepreneurship more accessible. Nevertheless, it is necessary to sustain ourselves,” shares Joshi. 

According to him, there are few programmes by which accelerators can sustain themselves through corporate partnership. “We also invest in business ventures so as to make ourselves sustainable. In this regard, we have so far been the first investor in every startup company that we work with and our objective is to continue doing this so as to generate revenue,” mentions Joshi. 

Grimminck considers that since the concept of business accelerators is new in Nepal, Rockstart Impact will still take some time to figure out a revenue model for sustainability. “Accelerators in the developed country not only focus on the mentorship and finance, but also work for the R&D aspects of the startups. So, here too, the accelerators should work on this part. This will help the startups learn about the importance of the R&D aspect of business. On the other hand, this is also a way for accelerators to become sustainable,” he says.  

Almost all accelerators in Nepal have their own revenue models. Antarprerana, for example, levies certain charges from the startups for mentorship.


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