Proto 2009: Need more ways for money to come in for your venture

I happened to attend the Proto event on Saturday July 25th, 2009. Proto is all about providing a platform to young and budding entrepreneurs to meet venture capitalists and other investors so that they can strike up a deal for that symbiotic relationship. There was a plethora of harried people around. The VCs were harried because they had to listen to entrepreneurs after entrepreneurs and understand their business models. The entrepreneurs were harried because they had to strike gold with that one investor who would provide them the lucre to make the going smooth.

The showcase had fifteen people presenting their interesting businesses in front of the audience. One could see the excitement layered with tension on the faces of their faces. Although only 15 start ups showcased their products, the rest of the nominees (88 of them) were also present and were trying to convince the investors to venture into their business too (so you see a lot of convincing was going around). There were all kinds of ideas and I hope each one of them were able to find the investor they were looking for.

This is a great way to network and a great way to find money for your business; yes, in a scenario when traditional funding from banks was not possible for a startup since they needed collateral deposit for a bank loan and thus this was the only way to fund their business. It is all different today. With schemes like the ‘Credit Guarantee Corporation for Small and Businesses (SMB)’ by which a businessman can get a loan from 25 lakhs to a few crores without collateral, this is the time for entrepreneurs to diversify in terms of the sources of their funding.

Although not completely. A bank is still a traditional source of money and thus, believes in the traditional models of business. Or according to Sukumar, President of the Knowledge Foundation, banks believe in tangible products. So if your model is that of tangible products which can be sold in the market to generate money and you’d be able to do it soon (i.e. generate the money), you can convince the bank with least difficulty and obtain a loan. For those whom it works, it is easier and simpler and takes less time. On the flip side, if you are developing a product or something whose performance or behavior you can’t really predict, go to a VC (or an angel investor or the likes). For example, a plan to design Radio Frequency Identity Card or an RFID card for slot machines in theme parks to replace coins will be an idea to be taken to a bank. An idea like a Facebook or Amazon should go to a VC.

With the MBA world today full of self ventures rather than high end jobs, it is important that more and more new ways for funding are developed. Funding from alumni, institutions, government also has to start in a big way. Money may not be the source of all happiness; however, it is definitely the source of all ventures.