Of ShopVeg shutdown, startup accelerators and response from VentureNurseryNovember 1, 2012 2012-11-01 17:54
Of ShopVeg shutdown, startup accelerators and response from VentureNursery
Of ShopVeg shutdown, startup accelerators and response from VentureNursery
We recently covered shutting down of ShopVeg, Mumbai’s first online grocery startup and the entire saga around VentureNursery accelerator program that they were part of (read : Online grocery store, Shopveg shuts shop due to lack of funds [Expectation mismatch with the accelerator?]).
While covering the update, we reached out to VentureNursery with candid questions, with a basic premise that the entire accelerator/incubator ecosystem in India is still developing and as a neutral medium, we should get both the points across (without making it overtly sensational).
Here is the response from VentureNursery team:
Pluggd.in : When VentureNursery mentions that they are an ‘Angel backed Accelerator’, it does throws a perspective that the firm will provide a sure–shot funding. What exactly do you mean by the positioning of ‘Angel backed’.
VentureNursery: Angel-backed means literally that – that we are promoted by two active Angel Investors [Shravan Shroff and Ravi Kiran], who have built powerful businesses in their careers and have made over 30 angel investments between them.
We are further supported by 10 individual angels and 2 early stage funds. Our individual angels, who constitute one of the four anchors of our program, have made over 200 angel investments between them, are aware of the joys and challenges of angel investing and know how to mentor start-up promoters. Most of them are entrepreneurs themselves and many have been associated with formal angel investing in India from its inception. Several are involved with other accelerators, which have been around longer than us.
All these individuals have agreed to be part of VentureNursery because they are motivated to see young entrepreneurs get a fair chance to build sustainable business through right mentoring and funding. All of them already invest privately and as part of one of the angel networks, so VN is not supposed to be another funding vehicle or channel for them.
All their names are in public domain and anyone is free to verify their credibility.
VentureNursery is proud to have some of the most seasoned angel investors supporting it and provides access to them for mentoring and funding purposes, but does not influence any individual angel’s decision about funding. It is part of our standard acceleration agreement that VentureNursery’s angel investors have a right, but not obligation to invest, subject to successful graduation.
Nowhere has VentureNursery claimed to provide ‘sure-shot’ funding to any incubatee company, VentureNursery does not consider such a promise practical, nor is it its mandate. This is what we have said on our website, which has been in public view for months (link):
Pluggd.in: What’s your take on the entire ShopVeg issue? Was there a promised funding which didn’t happen?
VentureNursery: We want to state categorically that there was never, repeat, never, any promised funding to any of our start-ups, including ShopVeg. If anything, we had gone out of way to explain to all 15 start-ups who attended our individual and personal counselling session that we are not a fund and if they believed all they needed was money, they need not join our program. Some liked our proposition and continued dialogue with us and some didn’t.
Some of the other facts on the ShopVeg issue are as follows:
- ShopVeg made significant progress in developing a deep understanding of the online vegetables and groceries business during the acceleration program. The promoters have themselves been quoted by CNBC Awaaz on this.
- This was mainly possible due to about 100 hours invested in the ShopVeg team by VN’s angels-in-residence, advisors, Charter Angels and other industry experts.
- The promoters received deep counseling across 11 areas – Business and Financial Plan, Customer Value Proposition, Marketing Plan, Supply Chain and Logistics, Payment Solutions, Accounting, Legal, Fund Raising basics, Selling the Business [angel pitch], Digital Marketing and Human Resources.
- ShopVeg made several alterations to its original business plan as a result of the mentoring process.
- After the pitch ShopVeg made to the VN angels, VN’s investment council comprising three seasoned Charter Angels made a recommendation based on their assessment of the scalability of the business, the promoters’ ability to build it and to raise multiple rounds of funding that would be required in future.
- It is important to remember that since VentureNursery is not a fund, the decision to invest is left to each individual angel investor and their willingness to invest is a strong indicator of not only their own enthusiasm, but also that of future enthusiasm by follow on investors.
- ShopVeg was informed on Sep 24 / 2012 about the VN angels’ decision not to offer funding.
- The ShopVeg team was advised by VN and its Investment Council to think seriously about whether this indeed was the business they wanted to build and are committed to and take the decision accordingly on whether to pursue or cut their losses.
- Initially, the ShopVeg promoter team expressed their conviction in the business and in fact, informed us that they had met a few VCs to raise money.
- Eventually, on Oct 10, we read on a trade website about ShopVeg’s decision to close the business
- VentureNursery supports ShopVeg promoters in their decision and wishes them well. We believe that the promoter team is smart, capable and talented and will succeed in their future endeavors.
- While we empathize with the ShopVeg promoter team and believe that decision to close the business could not have been easy, we also believe that the promoters have taken a very mature and just decision
- VentureNursery’s avowed role is to maximize the survival chance of start-ups and also to provide much needed clarity to promoters. It therefore becomes our responsibility to paint a picture of reality and not create the slightest delusion about the business. In this context, VentureNursery feels vindicated about its role and believes the ShopVeg promoters’ decision will save them precious time and will stand them in good stead in future
About Accelerators, VentureNursery and its program:
We agree with the Pluggd.in editor’s assessment that a lot of entrepreneurs do not really understand the difference between accelerators/incubators and angel investment process. We believe that all those who are committed to developing the venture funded entrepreneurial ecosystem in India, must do their best to provide clarity and coach start-up entrepreneurs on an on-going basis.
Young entrepreneurs need to be communicated about the role of right mentoring and relative role of mentoring and money at different stages of the enterprise.
Specifically on accelerators, since there are only a few of them at present and since most of them are new and still evolving, they are bound to follow different models. While some follow a stipend based arrangement popularized in the West, some don’t. Some follow us a light mentoring and virtual acceleration model, while some others may not. In general, however, accelerators are not about money, they are about mentoring and getting a business ready for money and success. That’s the single message everyone must repeat.
For an individual entrepreneur team that gets acceleration support, they must be clear about their goals, compare as many accelerators as they practically can and take a considered decision. An accelerator is like a business school, you can’t be casual about it, if you are serious about your career.
Gyan Vs Mentoring
We have read some comments on websites and blogs that use term ‘gyan’ in a derogatory way and say mentoring = gyan and ask if anyone really needs it. We believe such a view causes more damage to the ecosystem than any real good. Smart businessmen know that populism and pandering to anyone’s ego has very little use in business. We believe in mentoring, our angels-in-residence have benefited from it directly during their careers and are committed to provide mentoring and coaching to those who care and where we feel it can do good.
We believe that in India, committed, active and purposeful mentoring is in short supply, not money.
Recommended Read : THE list of accelerators and incubators in India.