Transcript of the Interview
Tell us about Z Nation Lab and what it is you and your team do.
Shashank: Z Nation Lab provides an ecosystem to tech entrepreneurs and startups by bringing together high quality mentors, subject matter experts, experience professionals, investors and VCs across Sillicon Valley and India. All under one roof, to invest smart capital and curate a community that offers an environment for innovation to thrive.
With a strong presence in the US-India corridor, we have become one of the pioneers in this Silicon Valley-India ecosystem through our 'Access Silicon Valley' program. We have been instrumental in successfully mentoring close to 20 startups, along with concluding our pre-accelerator program in 2016. The program was specifically curated for Indian startups aiming to make a global footprint. We have made 7 investments based on our investment thesis. Some of our initiatives in 2017, which will include Coach 2017, our startup roadshow across 9 cities, 9 states, to identify early stage, disruptive, technology startups and invite them to participate in our startup bootcamp.
After the tremendous success and positive feedback of our first bootcamp in 2016, we intend to run 3 startup bootcamps with a batch size of 15 - 20 startups in 2017.
Your accelerator focuses on the US - India corridor. With such strong growth in the Indian market, why should a startup look towards the US? Is it funding, talent or other reasons still?
Shashank: What's been happening in India, I speak from my previous background where I was heading the research division of VCCEdge; in the last 8 years we've seen the advent of venture capital and private equity funds creating quite an impact in the Indian market on growth stage companies.
We still face a number of challenges in terms of number of exits through IPOs and strategic buy outs, but venture capital and private equity has gone a long way in India. What is essentially lacking is the startup ecosystem in terms of Series A rounds and the support system in terms of mentorship and guidance for the startups.
In the last one year, in the last two years in fact, we have observed that a lot of these accelerators and incubators have awoken. The ecosystem has really evolved from where it was in 2009-2010, when I first arrived in this industry.
What we are essentially trying to do with Z Nation Lab is not precisely what the other accelerators are trying to achieve. I think the ultimate objective for everybody is to support the startups, but our objective is to identify the startups which we feel can go to Silicon Valley, where some of our partners are based, coming from various domains, from IoT to sensor technology.
There's a lot going on, on the tech side, from our end. In today's day and age, where every startup has to have some sort of technology embedded in their business model. How we end up encouraging these startups to come on board and validate their ideas is through a tech mentorship via our bootcamps.
Over there the idea is basically to identify the startups which are at a very early stage and the program is designed to get these startups introduced to investors from Bali as well as in India as well as a host of venture capital partners along with other professionals, under one roof. Then we put them in a cycle, which basically acts as a validation for us in terms of the potential for growth and scale, both in and beyond India.
Therefore the idea over here is to give these guys an idea of why it is important nowadays for when you're starting out to identify the global opportunities for improvement and see how much you can scale in the shortest duration. The gestation period for funding is also short. Our objective is, if you can come in early and identify these startups which can scale very quickly globally, that would be mission accomplished for us.
Shashank, to make it concrete. The Indian market obviously has so many problems that are specific to the Indian market. What is it concretely that an Indian startup can take away from their time in Silicon Valley or even from mentors in Silicon Valley, that they can then translate directly to the Indian market?
Shashank: Our proposition to the startups is clearly via our ecosystem to provide insights with big data and IoT segments specifically. Our domain expertise through our mentors and advisors on board from Bali as well as in India helps them with the global outreach through our corporate partnerships.
To give them a perspective in terms of which tech solutions are being used in developed nations like the US and Europe. By identifying the problems that they can solve, we can find ways to scale, both in India and the world.
The lines are blurring today: a problem in India can be a global problem as well. If everything is embedded in technology as a platform, it essentially at some point in time will merge. Our objective is to bring in experts with Z Nation Lab and help these startups evaluate their technology, validate their product and help them pivot if necessary, to redefine the entire solution or problem statement which the startup is aiming to solve.
Let me ask you a different question. India is a very competitive market for startups. Which means that everybody is fighting for exposure and distribution. How are the Indian startups figuring out distribution and exposure. This is very different from Silicon Valley. Silicon Valley is a bubble, where, if an influencer backs a product, they get hundreds of thousands of sign ups immediately. That kind of ecosystem in India, moreover in Asia doesn't exist. How are startups figuring out distribution?
Shashank: I tend to answer this question through an example. What's happening in India, is the following, from an investor's perspective. While the venture capital industry has been thriving for the last ten years in India, they have essentially been making large ticket size investments and promising the returns to come. Frankly speaking, we haven't seen the large exits that were promised.
In that context, a lot of companies have been funded in the growth stage, or in a slightly later stage, five to ten years in, which definitely did not have an exit strategy through an IPO, only through strategic buy outs so far. Corporates play an important role in terms of looking at strategic files, case in point being, PropTiger buying Housing.com or various other corporates buying out startups in later stages, which were funded by venture capital funds.
What Indian startups are now seeing, which was already a global trend and now picking up steam in India, is that they are now getting an opportunity to work with an evolving ecosystem of incubators and accelerators, but not only independent incubators and accelerators, but also those operated by large corporate houses, incl. various banks or corporates in healthcare and IT, who are taking these startups at a very early stage, not with the perspective of buying them out, but also looking at the PoC, industry connections and most importantly, driving their distribution cycle, traction and early revenue.
That is something that is happening in India and it's a very good sign. While the late stage VC investments evolved in the last 8 years, now we are seeing a timeframe where this side of the journey, the early stage, is starting to find investments from the ecosystem.
The next stage is looking to be quite exciting for the Indian ecosystem, not only through the contribution of early stage funds, but also most of the corporates understanding the power of young startups disrupting the traditional corporate business models. These are the trends impacting startups in India and with these partnerships across various cities in tier 1, 2 and 3, I see that startups are now in a place to quickly address the initial challenges which they face in terms of acquiring clients, distribution, traction and so forth.
What are some of the ways that a founder can figure out that their startup has the potential to go global?
Shashank: How we do it at Z Nation Lab is as follows. Let's say it's a tech-enabled startup in data analytics, they become part of our bootcamp, we put them through a four to four-and-a-half week pre-accelerator program where they run through various business models in terms of lean startup methodology and tech validations through our mentors in Bali, Silicon Valley as well as in India.
We help them figure out how they can essentially incorporate technology on an urgent basis. How we do that is also through our partnerships in Silicon Valley, let me give you an example. One of our startups recently got shortlisted by the UC Berkeley program, where they'll be getting help to build an entire platform. These are the various ways in which we help these founders understand how to scale their technology at a very early stage and the next steps they need to take in the coming 6 to 8 months.
It's essentially through that pre-accelerator program and connecting them to various mentors on board and advising them once on board, along with the current Z Nation Lab team and venture team.
What do you expect from a startup applying to Z Nation Lab and what are your criteria?
Shashank: We are essentially looking at early stage startups. These could be startups with a PoC, maybe a prototype ready, or even very early revenue or traction. There've been startups which have been at an idea stage. While we might not always be very excited by just an idea, if the idea is powerful and the team looks stable and exciting, we can sometimes still go ahead and pursue that.
We cover the entire spectrum in terms of where the applications come from in terms of early stage startups, whether it's launch, beta-testing, proof of concept or just an idea.
Very strong case-to-case. For instance, we were evaluating an astrology website, which was one of its kind. Before we came in, they were very early stage, less than a year old. They had a significant user base in terms of subscriptions and revenue. but they were at a loss for how to scale this up. This was all organic so far. This was exciting for us. We wanted to understand how, without any marketing, they had organically grown to this size.
Another example comes from various startups which were part of the program and were starting out. Even if they only had one or two clients, with ties to corporates, we thought that was fine as long as we saw potential to, in the following two or two-and-a-half weeks, help them get traction and have their ideas validated.