Ashish Kumar from Tekriti Software

Disclaimer: Tekriti is not in the process of raising any capital currently. Not that we are against it but we haven’t felt the need of it, based on our current plans. Also - I haven’t had any official talks with any investor - I am just putting down my findings as per my discussions with people who have tried the same.

One of the questions I have heard a lot in the last month is “How does Tekriti take care of its finances? Are you guys funded?”. I, initially, used to get a bit surprised because I thought that it was a lame question to ask since we have already been in business for almost a year now - and had stopped receiving similar questions in the past few months. After putting in a bit of thought - I did realize that it is because I have been interacting a lot with a class of people that I was not interacting with for some time. These people are potential candidates for Project Managers at Tekriti having many years of working experience in the industry, potential sales guys that can further help take Tekriti to next level or potential partner companies who we can work with on different products. Some interesting things came up in front of me because of all these discussions which further led me to do some reading on the web and I find it suitable enough to put at my blog.

If you are looking to raise capital (venture money - not the angel funding), you need to think about the things mentioned below. Note that you can raise money without doing this much of homework too but you will most likely not get a good deal or will not have the bargaining power that you should be having.

• Have a business plan: Of course, this does not need any explanation. You need to know what you are building, who you are building for and how you are building that.
• Have paying Customers: Have at least 2 customers for your product. Well - this applies only for a B2B model - but the idea is that your customers are not only your well-wishers and friends but somebody who is genuinely interested in your product - from a pure business point of view. The investors really want to see the capability of the actual product and not just the idea and that perfectly makes sense.
• Revenue Model: Figure out the basic revenue model, if not the complete model. So - you probably don’t have the volume - which is fine. But you have figured out that for every $10 that you are spending, you are making $11. Doesn’t matter if, in the absolute terms, you are making only $10,000 (or even less) but at least you know what you need to do to increase your revenues.
• Unique Selling Proposition (USP): Have a unique selling proposition! It’s not always important to do different things but things that you are doing differently. Any industry, any market - you will always have an opportunity to do things in a better way and adding more value than the current value provided by existing players. Investors will love that.
• Barrier to entry: Think about the barrier to entry for other businesses in your area. It might still be okay if the only advantage that you have is that you are the first one to do that - but at least you have thought through that process.

My understanding is that you should look for venture capital if you are looking to scale up your business and strike potential partnership or acquisition deals. But if you are still in the process of figuring out your business, don’t go for the big money. I will not say that you will not get money if you don’t follow the above approach - just because there are many investors and also there are people who trust their gut-feeling more than the logic. But, for even that, you need to have a strong core team.

But, if you are really lucky, you don’t need any of the above. But don’t ride on your luck for too long.