What do unicorn startups have in common Twitter, Medium, Dollar Shave Club, AffirmAnd the Aircall? They were all built in “startup factories”, along with many other projects that were moved from just an idea to a VC-backed startup.
a startup factoryalso known as a startup studio or Venture LabNot a new concept. Indeed, the IdeaLab created by Bill Gross was one of the first and most successful laboratories, before the advent of accelerators and incubators, and later – adventure building platforms.
Although they seem synonymous and are often used interchangeably, there are certain differences in how they work, what they offer, the level of involvement in the project, and the stage they choose to stay a part of a startup’s journey.
India is home to a string of incubators, accelerators, startup programs, and startup studios. but understandable Venture Builder (VB) or a adventure building platform He didn’t have the opportunity to fully unleash compared to his momentum outside.
Among the very few,It is one of the local VBs in India that identifies, develops, launches and scales startups by providing a central mix of services, including capital, in exchange for property rights. It starts right from idea validation, business modeling, and product building to deploying product returns and investments.
The platform is crashing after an average “project build” period of 15 months as the startup continues to raise subsequent capital rounds.
Founded by a serial entrepreneur Pranav Chaturvedi, Nichai Pradhan, And the Harchett Joshi, Favcy was established in 2015. Delhi-based VB is home to up to 26 startups, Active management Assets under management (AUM) is approximately Rs 50 crore.
Having worked in finance for over five years, Pranav embarked on his entrepreneurial journey in 2008 with International Institute of Financial Markets (IIFM) and Startup Preparatory Test pratam (Co-founded with Ankit Kapoor and Satinder Sood).
Since 2014, Pranav has stepped back and taken a passive role in the startup, but he remains active in board meetings and has his stake in the company.
During his time at Pratham, the co-founder donned his investor hat, as the startup was looking for deals in education technology.
With a paranoid look, Pranav faced a strange problem where many founders were burning angel investors’ money due to their inability to understand the nuances of the ecosystem and the subsequent failure to reach the market.
“The problem is more prevalent among founders with a non-technical background who build their first digital ventures while struggling to understand digital paradigms. They are generally founders with a service-based mindset and unable to adapt to the product-first mindset that digital businesses require. Ultimately, angels end up facing The biggest burden,” he says.
The problem called for a dedicated organization setting up a standard format or assembly line to build a project to help digital startups get from stage zero to stage one, and more.
Having already gained traction in the West, Pranav decided to launch the concept of building projects on the ground in India with the launch of Favcy in 2015. The co-founding trio was later joined by three other partners –Yamika Mehra, Ashish Ajmani and Milapsinh Jadeja.
How does Favcy work?
Includes the first part of the process Evaluation and selection. The pre-semester paper stage can be anywhere from 25 days to 60 days, during which founders have to go through an in-house development cycle, while their business idea/product is validated and validated by the team of analysts at Favcy.
The startup uses its own equity Idea validation tool. Call drake It uses inputs from the founders to survey the market and check the differentiation and relevance of a particular idea.
“The tool helps us find ideas that are timely and have less competition. The level of accuracy continues to increase as more data is entered into it,” says Pranav.
Once the basic checks are done, it is shown to the founders Terms Sheet It was officially included.
Then the process of sticking to the hand begins. first come Idea validation And the business modeling The team works with experts to come up with the most suitable business model. The investment and compliance team validates the assumptions made in the model.
then comes Product assembly Where the customer life cycle (CLC) of the product is determined, and based on this, the technical team selects Related apps To assemble the product and integrate it with the front end. These applications are provided by the internal Favcy platform, Wafskycombined with a common technology platform, Favseus, which enables fast digital playback. The founders have the option to bring in their developers as well.
The team measures the traction force beside that production He assists in engineering and team building. VB also gives the founders office space (via Partners), along with other support resources.
“We have our own checkpoints and have built a great team of partners who look at different aspects of a project creator independently,” says Pranav, adding that VB does not take an active governance role on a startup until it is requested, but does help with scouting founders.
The average life of a company is a “built project” of at least 15 months before that stay away from favesi and “leaves the nest”. Startups are helped in the transition in terms of office space, servers, etc.
Favcy claims about 15% of the equity of the start-up company Right at the start of her journey. When angel investment comes, it clear Part of the equity (usually 2-5 percent) is retained and the remainder.
This is like any other typical project construction company that gets a portion of its subscribed share from a group of angels for providing these expensive but structured services. Also, the owners are invested through safe securities (a simple agreement for future capital).
Favcy has its own investment network –first examination, headed by one of its partners and a Director of Revenue (CRO), Yamika Mehra.
The team claims to run a network of around 3000 individual angel investorsIncluding Sumit Ghosh (Founder of Chingari), Akshay Sarma (CFO, Capital Float), Sajaya Ali (Co-founder, Shop Up), Sumit Mehta (MD, Arrow Capital), Hrishikesh Thai (Partner, 10Club) Rohit Talwalkar (MD, Everstone Capital).
Furthermore, VB has partnerships with many independent funds such as OpenBook VC, which actively invests in Favcy portfolio companies.
Business plans and attractiveness
Favci remains sector-neutral. It is important to note here that for the first few years (2015-18), Favcy did not operate as a full-fledged VB platform, but did offer an assembly line (FavcyX) and a shared technology platform (FavcyOS) as an asset to help companies digitize their existing businesses.
The offer was borrowed IPL teams Such as KKR, Pune City, Kerala Blasters and media groups, Including Hindustan Times, Dainik Bhaskar and Network18.
In 2019, Favcy launched the complete project building platform and started operations. It also continues to provide its common services.
Of the total 26 startups joined so far, three have died, eight have managed to raise angel rounds from VCs, and six are experiencing organic revenue growth. The rest is either in the testing phase or between operations. The team’s platform of 50 experts claims to receive up to 300 incoming founder requests per month.
Some of its main startups are PalateMkt, OfExperiences, SkillsKonnect, UrjaBolt, GoodGood Piggy, Majig Capital, LeagueUno, CallXP, CompassTot and Qthrill.
“The biggest challenge of all is defining the unique assembly line of each startup along with evaluating the founders,” says Pranav.
Not an incubator or accelerator
While the idea and genesis behind incubators, accelerators, and startup studios or VBs are quite similar, they are very different in their approaches and stages.
While incubators (mostly public institutions) guide early-stage startups by providing guidance, recommendations, shared resources (including space) and network without any capital or execution, accelerators work with more mature startups and invest a small amount for a small amount of capital.
Thirdly comes startup studios, which is somewhat similar to how VBs work.
until Venture Capital Companies Such as Sequoia Dash, 100X.VC, or antler They work as “quasi-project builders”. However, venture capital firms continue to follow a capital-driven model compared to VB’s operator-driven capital model, Pranav explains.
Of all the support organizations in the world, VB usually takes the most practical approach and provides the most support out of all the groups mentioned, he adds. At the same time, VB companies also tend to get the most equity from their group of companies.
Some of the world famous names include Internet Rocket, which holds up to 90 percent of the capital and operates as a semi-private equity firm. The most common local noun in space is –growth story Which has been a huge success with the likes ofAnd the And the And the . platforms like ant farm And the smile group Also follow somewhat similar models.
“The concept of building a project has been around for quite some time, but it hasn’t really taken off in India. There are startup studios, but they charge a service fee. This kind of model needs to be run through stock and we are very fortunate that our network of owners trust us and are involved by Buying startup stock from us “It allows us to do our best and keeps us cash positive,” says Pranav.
consciousness It is another major challenge to be faced, which according to Pranav, will eventually be bridged as strong startups exit VBs and see long-term growth.