Founders’ Imperative — Building scalable enterprises!

Building enterprises that sustain, grow, impact, and endure!

“I wish to build a big business in the future”

expressed my colleague’s uber driver on her way back from work.

On a day when Inc42 published a piece analysing the ‘Steep Drop’ in the late stage funding of startups in India, this expression of ambition by a driver far removed from the world of startups sounded both hopeful as well as a touch gloomy.

Add to this what Sumit Chakraberty of TechInAsia wrote a week ago in his piece ‘VCs can’t eat paper profits’, presenting a thorough and comprehensive summary on the lower exits for VC/PE investors through M&A activities in Indian startups (2x) as compared to US startups (10x).

Do enough number of startup founders building tech startups in India realize that its imperative that they set ambitions to build a big business?

Now the mixed reaction to what the uber driver said about building a big business was merely my mind connecting the dots and informing me in rather loud and clear terms: “Startup founders in India have to bring to life ideas that have the potential to become scalable enterprises!”

How else can you explain this very high concentration of sub $5 Mi exits? And the average exit value within this range of exits was a mere $400,000?

And this argument is further strengthened with data pointing that startups in the Consumer sector (with obviously the greater potential for scale) are yielding much lower average exits than startups in the Enterprise sector (with relatively lesser potential for scale).

Startup Founders — unlike small business owners or entrepreneurs building conventional enterprises, should focus more importantly on building an enterprise that can sustain, grow, impact, and endure!

Startup Founders — unlike small business owners or entrepreneurs building conventional enterprises, should focus more importantly on building a scalable enterprise, an enterprise that has the potential for growth, impact and profits. Doing so requires that they look to exploit tech to solve serious problems at scale, with a business model that is profitably scalable.

While most startup founders execute reasonably well towards achieving product-market fit (even if more number of startups can achieve this milestone much much faster and at lower cash burn), the most critical role of envisioning a bigger business potential followed by designing the business model and scaling operations to achieve this potential is seldom witnessed.

Our concerted effort in Forge has been focused on offering to startup founders this most essential and yet most missing link in the incubation or acceleration of early-stage startups — the consulting and advisory needed to help startup founders unlock the potential for scalability in their business models.

A Startup Founder has to build proof for BIG BUSINESS potential; proof for solving A BIG PROBLEM at scale, with a business model that is profitably scalable!

Building this proof is a process of validation:

validation of the claim to solve the problem worth solving for a very large number of customers (Proof-of-Value);

validation of the viability of the operating model and revenue model by achieving consistent and predictable revenues moving along a predictable path towards profitability (Proof-of-Business);

validation of the readiness of the business model to scale profitably thereby becoming attractive for venture funding (Proof-of-Scale);

We call this proof every startup’s Minimum Viable Business (MVB) milestone, proving viability not of a small profitable business but of a profitably scalable business.