About Me

 

Utilizing this digital window to share my understanding of the funder and founder relationships and….
several other things that intrigue me!

November 2018

Artha, Brand, Entrepreneurship, Investments, Learning, Venture Capital

I find it extremely hard to empathise with founders who want to “maintain” a certain lifestyle with a large team and a swanky office to “feel” like an entrepreneur. Founding a start-up is a messy and dirty affair and there

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I find it extremely hard to empathise with founders who want to “maintain” a certain lifestyle with a large team and a swanky office to “feel” like an entrepreneur. Founding a start-up is a messy and dirty affair and there is no amount of sugar coating that can change that fact.
Founders who find motivation in the fluff of being an entrepreneur; a fancy office, a ton of employees and a flashy lifestyle have got it all wrong. Very few businesses start out that way and in fact very few ever reach that size. For every OYO out there, there are millions of no-name companies that are providing a respectable living to the business owner but aren’t making the 30 under 30 Forbes Asia list. In fact, the concept of OYO came to Ritesh because his business (Oravel) could only afford to put him up in shoddy two-star hotels. Today, he heads the world’s largest chain of single brand hotels. Similarly, the founding team of Wow Momos started out by selling momos at a roadside stall. Even I started my career living at $20/night hotels and knocking on people’s doors. And trust me, it wasn’t glamorous at all.
Therefore, individuals that are willing to put their salary as the last pay-out i.e. paying themselves after the salaries of their entire staff; those willing to reduce their lifestyle choices to adopt the ones their businesses can afford; and those who will make a Re 1 business expenditure work like a Rs 5 one, are the ones who should take the plunge into entrepreneurship.  The rest can wait!
95/2018

Entrepreneurship, Technology, Venture Capital

It is hard to gauge the independence of a rating provided by a rating agency since the company being rated is the one who pays the agencies’ fee. So, any agency that gives a company a rating that negatively impacts

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It is hard to gauge the independence of a rating provided by a rating agency since the company being rated is the one who pays the agencies’ fee. So, any agency that gives a company a rating that negatively impacts the company’s business bears the risk of losing the client to a competitor willing to give an insincere but higher rating. Therefore, each time an IL&FS type fiasco takes place (where the rating agency is caught napping), it increases my conviction to find a team that can build an alternative, credible rating system.
One of the reasons rating agencies are out of tune with a business’s current affairs is because audited documents provided to them are already several months old. In contrast, vendors of the same company have a constant finger on the pulse the business, because they frequently transact with the company. A delay or default in payment tells vendors that the business is in financial distress. Although litigation is the next logical solution, vendors have traditionally avoided it due to difficult enforcement and lengthy court procedures. However, this changed under the recent NCLT laws that allow an operational creditor to take a company to court to get its dues quickly.
In many cases, a simple legal notice from the creditor could lead to a resolution because the defaulting party wants to avoid NCLT and the risk of all its creditors demanding their dues. Therein lies an opportunity!
If there was a platform that allowed vendors to create and send legal notices to its debtors and track how many were resolved and how many got taken to NCLT, it could use this information to create a reliability index for companies. These ratings could then be listed on a separate website accessible to vendors looking to trade with a company. A vendor/company looking to do business with a new company can use this platform to assess reliability by viewing a transparent record of the company’s payment history. On the other hand, this will incentivize defaulting companies to clear their dues and improve their rating, thereby attracting better business terms.
A need for this alternative rating system is evident from the 9000 cases that were filed on the MSME Samadhaan platform to recover 2600+ crores. The 50bn owed by Essar Steel to its operational creditors is another prime example and this is the tip of the iceberg, but a massive business opportunity.
94/2018