Exclusive: FreeCharge co-founder Sandeep Tandon says it’s important for start-ups to first understand the problem and not force the idea to investors

For a young country like India, this is a great time to foster the start-up culture. Easy flow of capital, perfect place for innovation to thrive, more aware consumers and Government’s active participation are the driving forces to the growth of the eco-system.

But one wrong hurried step and everything will go down the drain. Learn the start-up sutras from the co-founder of one of the most successful start-ups in India, FreeCharge, Sandeep Tandon; in chat with Business Insider.

What is your opinion about start-ups and ecommerce space in India?

The start-up culture in India is here to stay. It will hit its share of speed bumps, but will survive and evolve to be stronger. I see no reason why it will not rival Silicon Valley in all aspects.

With the ever increasing access to connectivity, there are business models possible in India today that could not have been viable just five years ago. With increasing smartphone penetration, India presents an amazing market opportunity with 300 million connected Indians. This has unlocked a vibrant start-up ecosystem from the young tech students who are coming up with new disruptive technologies to rule the market.

Easy access to capital allows the Indian entrepreneur to think big.

What are the difficulties faced by start-ups in India?

Start-ups in general face a set of unique challenges whether in India or anywhere else in the world. Among these are market forces, technology viability, fundraising and attracting and retaining the right talent. In India these challenges are coupled by some of the regulatory issues and lack of clarity in policy directives.

As I continue to mentor start-ups, I hope to see that a better environment develops to offer the right advise to start-ups in corporate regulations and legal matters.

Finally, improvements in the physical infrastructure will dramatically improve productivity, bringing down operational costs for these up and coming businesses.

What kind of start ups, according to you, have the maximum potential in the current scenario?

I love what hyper local starts up like Grophers and Peppertap have done in the on-demand grocery segment, Snapdeal and Flipkart in e-retail and Ola and Uber in the shared economy.

They are all attacking large markets and changing consumer behaviour. These models do require large amounts of capital. Each of these companies has its own set of challenges as they scale their business models, but it’s exciting to see the innovation coming out of them.

Personally, I feel we are yet to see start-ups that will disrupt some major segments in our economy. Healthcare and education technology are two areas, I believe are currently underserved. These sectors are very bureaucratic, but I view them to have tremendous potential as well.

While we talk of services for the urban population, I feel rural India carries the most potential for a start up to make an impact not only economically, but socially as well. Technology enablement of rural India can change the course of this country.

What are the difficulties of raising funding in India?

Very often I see start up entrepreneurs too focused on raising capital. They view a venture capital investment as success. While it’s a meaningful milestone it’s only the start of the journey for a start-up. Not the end goal. The first thing an entrepreneur should do is to identify the problem and then think deep about his/her solution around the problem. Spend the least amount of money to demonstrate that a minimum viable product has traction in the marketplace.

What factors should start-ups keep in mind before raising funding?

Timing plays an important role in defining when to fundraise. First and foremost, start-ups should focus on the market and the value proposition of their product. Refine the product as much as possible and get initial market data before raising capital. This helps attract the right venture capital or strategic investor. You don’t want the investors to define your product. The investors are great resources to advise and broaden your network, but you cannot expect them to be operationally involved. They have many investments and would not be able to efficiently manage if they spent time dealing with internal company issues.

Before raising capital, entrepreneurs should try to first use friends and family resources to put together the idea, to understand the opportunity and take advice from people in the industry that they want to serve. Understand the problem. Don’t force the idea.
(Image credits: ptbn)