Archive for August, 2009

Raising Venture Capital? Seeking Angel Investors?

August 3rd, 2009 No comments helps companies learn how to raise capital and a valuable resource for entrepreneurs seeking capital to start up a new business.

Venture capital firms usually require a high rate of return on their investment (20%+ per annum) and finance provided to the business is typically in the range of $500,000 to many millions of dollars.

An angel investor generally wants less control of your company and a slower return on investment, however the criteria for investment are likely to be similar. Angel investor groups are great sources of private capital and frequently invest angel money into new companies.

It follows that both venture capitalists and angel investors are looking for capital growth and revenue increases and evidence that your business can deliver continued growth over time, to provide a return on investment.

The current venture capital market is rebounding nicely, from the past setbacks of the “dot com bubble” and “real estate bubble.” Venture capital remains a viable source of funding for startups, which are able to deliver the necessary growth that investors are looking for. Past events should certainly not discourage entrepreneurs who have genuine winning ideas and business plans from looking for funds.

Startup Spotlight: An Interview with Kashyap Dalal, Co-Founder and CEO of Inkfruit

August 3rd, 2009 No comments
After walking into a movie theatre and seeing someone else wearing the exact same t-shirt, Kashyap Dalal came up with the idea for what ultimately has become Inkfruit (, a company he co-founded and which he is now the CEO of.  Inkfruit which might be likened to an Indian Threadless is an online marketplace where artists and t-shirt lovers can design, buy, and vote for new and innovative tees. Inkfruit has a simple, yet according to Kashyap, highly effective model; designers upload their creations and join monthly design competitions while users vote on their favorite designs. The best designs then go into print and are sold for a limited time only!

Seeing the need to provide India’s talented design artists with a venue to showcase their work, as well as a place for users to purchase high-quality clothing, Kashyap teamed up with Navneet Rai, a classmate from IIT-Mumbai, to found Inkfruit.  I  recently sat down with Kashyap to talk about Inkfruit, it’s ambitious growth plans and the challenges of succeeding in an increasingly competitive personalization market in India.



Briefly, please tell us a bit about yourself. Specifically, what gave you the motivation and conviction to leave the safety of your previous job to start Inkfruit?

After I graduated from IIM-Lucknow, I went to work for Hindustan Unilever (one of India’s largest Consumer Goods companies). The whole idea for Inkfruit started in a really light way, actually. A couple of friends of mine and I were at a movie when I saw someone else with the exact same t-shirt as me. At that point, we realized that there’s really quite a dearth of creative brands in India, and we wanted to do something about it. We played around with the idea of launching a business in the merchandise space, and tossed over quite a few models amongst ourselves. More important than anything was that we needed to create a brand with a competitive advantage – one that would never grow out of popularity. Conventional brands have 5-10 designers and after a while, the same types of material are going in and out. But, we thought of giving individual designers a platform to showcase their own designs, and have a mechanism to ensure turnover of new designs month to month. Inkfruit is powered by User-Generated-Content, and we have monthly contests in which users submit and vote on the best designs. This way, we always have something unpredictable and new. Once we got initial confirmation from both local design students and consumers that this idea was appealing, we became infatuated with the thought of a site run by the people itself!

What is the Market Opportunity in the personalization space as you’ve defined it?

Actually, we don’t see ourselves as a player in the personalization market. (Personalization, among other things, grants a user the ability to design an upload their own artwork, and get it printed on a medium of their choice.) We don’t allow people to take single prints of their own designs. Rather, we work on a different model. We’ve generated a huge designer pool and a huge number of t-shirt lovers, and we really see ourselves as a company given to the population. Once we provide the tools, and platform for users to carry out their artistic needs, we sit back, and let things unfold.

As we know, Internet penetration in India is not as significant as in the U.S. How has Inkfruit dealt with this?

Right. When we started in the Indian context, we positioned ourselves to be a purely online brand, but two issues came up. First, internet penetration is much lower in India than in the US for instance (where similar companies like have been taking off) and thus the Internet cannot be the only source of customers. Second, there is still a general mistrust among consumers with enacting credit card payments online. This may take quite some time to overcome with the Indian consumer, so in order to grab market share early, we had to shift our operations offline as well.

Could you talk a little bit about the decision to go offline and the strategy for how you did so?

We wanted our product experience to remain largely online but in order to make our products available to customers who may not have found us online yet, or are not comfortable making online purchases, we pursued tie-ups with local retail vendors to sell our shirts. We’re based out of Goregaon, Mumbai, and so far we have over 250 stop points all over India now.

While the Indian market is getting acclimated to E-Commerce, what are your offline expansion plans for the next few years?

We’re looking to expand offline in three major ways. First, we looking to increase our tie-ups with retail outlets. In the next two or three years, we hope to have around 400-500 outlets selling our t-shirts. Second, we’re looking to expand our product range. Increasing our entire inventory bandwidth is something we’re keenly pursuing; though we’ve been selling t-shirts as of late, we want to start selling sweatshirts, hoodies, and some completely unrelated items such as wallpaper, canvases, and bedsheets – all of which are designer run. Thirdly, we’re also looking to set up exclusive Inkfruit outlets as well.

How far down the line will the first Inkfruit outlet be up and running? What part will the exclusive outlets play in promoting brand awareness and reach?

We’re actually expecting the first outlet to be up and running by the end of this year. The outlets serve as physical places that set the imagery for what we believe Inkfruit is. People can come and actually feel and see what Inkfruit is. It’s a great way to introduce Inkfruit to those who haven’t come across us on the web.

Furthermore, we plan on self-funding and promoting about 5-10 outlets ourselves. Our eventual goal is to give entrepreneurs the opportunity to take on an Inkfruit outlet themselves. Using the franchisee model, we hope to have about 100 outlets in total in about 5 years.

There are quite a few players in the Personalization market in India. To run down the list, you have Myntra, DilSeBol, Pringoo and on the photos side, there’s Itasveer and ZoomIn. It’s safe to say:  the markets fairly saturated; how has Inkfruit dealt with such competition and how do you differentiate yourself?

There are a couple ways in which we differentiate ourselves which we think are extremely critical. First, we invest very heavily into our designer base. We strongly believe that having a strong, talented and motivated designer base is critical to attracting people to the designs and making purchases. As such, one thing we do is run designer workshops and we have tied with up Adobe and created a contest where the winning designers were given free high-quality software from Adobe. Also, with the kind of scale we have, with over 250 retail outlets, we provide a very attractive and immediate way for designers to get their art immediately public and available to the masses. Finally, we believe that we are the strongest player in Asia in this market. The US has companies such as Threadless and Europe has it’s own players, but in Asia, we believe that we are the leading player, and therefore offer a global platform for our designers to be recognized.

Where is Inkfruit presently? More specifically, how many designers do you have registered on the site, and how many t-shirts are you selling monthly?

Currently, we are selling about 15,000 to 20,000 t-shirts on a monthly basis (T-Shirts go for about Rs. 350/each) only within the Indian geography. We have about 10,000 designers who are active and contributing on the site.

Like a content-based sites values Unique Visitors as it’s most important metric, what does Inkfruit keep track of?

Right now we have a strong designer community of 10,000 but even more than that we keep track of how many people are registered on our site, but may not be actively creating creating and submitting designs. There are about 100,000 of those people and we hope to increase that amount in the future considerably.

Here’s an off-beat question. If you knew that you wouldn’t be able to raise more capital, how would you fund your ambitious growth plans?

In the initial stages of our growth, that would’ve been quite a bottleneck. We first raised money from family and friends and once we had some success, we raised further money from two of our seniors at IIT-Mumbai. Now, however, we feel we’ve reached a size where, if that were the case, we’d be able to deal with it. Obviously, we could always take up debt, but even more than that, there would be other ways of raising capital. First, as mentioned before, we have over 250 retail outlets, who are our partners. It would be mutually beneficial for our vendors to invest in us because we drive significant portions the sales at their outlets as well.

What have been a few challenges you’ve faced as an up-and-coming start-up?

I think there were two phases of challenge for us as a company. In the first phase, where we were rapidly expanding and trying to increase our human resources to keep up, we found that it was a challenge to keep the same energy and passion that we had when it was just the founders, myself and Navneet. The energy and passion is quite a strong backdrop on which to build, so when expanding a team, it was hard to ensure that we could keep that backdrop.

The second phase dealt with more consumer-facing challenges. As we scale and continue to expand, we want to ensure the same level of personal service that we’ve had in our early stages. Crafting that delicate balance between scaling up while seeming small will prove to be quite challenging to us in the future.

As we’ve mentioned a few times before, Internet penetration is still budding in India. But, what is your prediction for when it will really pick up and become the primary driver of Inkfruit’s revenues?

I think it will take about 3 to 5 years until it really starts growing exponentially, and I think it will reach the kind of scale it has in the US about 5 years later.

By the time Internet penetration becomes a significant revenue source, your offline plans will have also materialized. Do you foresee any issues with already having well-developed offline establishments when people start shifting their point of purchase?

I’m not sure that online traffic will ever really become the primary driver of our revenues. I’m not sure of the exact statistic, but something like only 25% of retail sales are made online even in the US. More importantly, we believe that our offline outlets will be sustaining us and our e-commerce business will be primarily supplementing us even in the future. For now, people are still not entirely comfortable with making online purchases, which is why we are aggressively developing a hybrid model.

There are many talented entrepreneurs in India who have great ideas and the ability to develop high-quality websites.  But as you’ve mentioned, initially grabbing market share through offline channels may be the key to future success. What allowed Inkfruit to venture into such areas where other budding entrepreneurs may be uncomfortable entering?

The offline expansion has really been a barrier to entry for many, and there are a few things that allowed us to do this. First, Navneet has experience with the garments business. He has spent time working there in the past, so when we started out, he really knew how to handle that aspect. Second, having worked for Hindustan Linkfruitever for some time, I have experience with scaling and distribution models, having understood the networks that need to be in place for promoting a product and the systems to develop them. Our previous experiences combined gave us the required competency we needed to push forth.

This is a guest blog post by Arjun Bhimavarapu,  a Wharton School of Business student currently working in India.  He will be interviewing promising young venture-backed startups in India over the next several weeks.

15 States Without Venture Capital Activity in Q2 ‘09

August 3rd, 2009 No comments
15 States that Saw No Venture Capital Activity in Q2 ‘09

As we reported in our Q2 ‘09 Venture Capital activity report, the US saw a 61% jump in VC activity over the prior quarter.  In the quarter, 35 states saw companies resident in their borders receive venture money.  The top five as we showed in the post detailing the VC results were many of the usual suspects including California, Massachusetts, Washington, New York and Colorado.

And then we got an interesting inquiry from a few folks.  Which 15 states didn’t see any venture capital money in Q2 2009.  The list is below.  It is worth noting, however, that we did see investment activity in many of these states, but the money didn’t come from venture capitalists and instead came from the likes of angel investors, incubators, state grants and other public-private partnerships which the states have created.


But for the purposes of our Q2 ‘09 Venture Capital report, only VC investments were considered and on that basis, here is the list of states without any venture capital activity in the prior quarter.

  • Alaska
  • Arkansas
  • Hawaii
  • Idaho
  • Iowa
  • Maine
  • Mississippi
  • Montana
  • Nebraska
  • Nevada
  • New Mexico
  • North Dakota
  • South Dakota
  • West Virginia
Categories: VC News, Venture Capital Activity Tags: