Silicon Valley based Spinta Global Accelerator that launched operations last month, is spreading its wings to India, Singapore and Bangkok, its founder Prashant Parekh, said in an interaction. Spinta will see its Bangalore launch on August 26, in partnership with India’s IT industry body NASSCOM, followed by its entry into Bangkok on September 4, while the Singapore launch is scheduled a further three days down the line.
Entering a crowded space of accelerators and incubators, Parekh claimed that Spinta with its global board of mentors, unstructured approach, 400-member technology team in India, along with its Minimum Viable Product concept, would offer clear differentiators from existing players in the market. The model’s key aspect is to look at each startup’s needs in an all-inclusive and distinguished way and provide them with 360° assistance to create a proper ‘product fit’ as well as develop and pilot-test their Minimal Viable Product (MVP) in a lean start-up model with real world customers.
Its venture arm – Spinta Ventures, that is a syndicate, invests up to $100,000 into startups that are part of the accelerator in a selective fashion, said Parekh, adding that firms that use full array of the accelerator’s services would have to part with as much as 9 per cent equity in their respective firms. Edited Excerpts.
Spinta Global Accelerator launched officially in July in the US. You are entering a very crowded space, be it accelerators, incubators to hybrid models of the same. So what is your differentiator?
There has been no better time than now to be an entrepreneur. All the digital market places and the networked platforms are allowing entrepreneurs to disrupt the old way of doing business. Look at Uber and AirBnB. However we all know that north of 90 per cent startups fail. So, they need guidance, mentoring and help with technology development. That is the reason there are so many incubators/accelerators. We found various gaps in the current business model used by the accelerators. Our business model helps to plug-in those gaps while providing further value additions.
First, their approach is very structured. All of them select companies and then run a classroom like batch for three months, wherein they require the founders to be in the same city as accelerators for those three months. Goal at the end of this period is to have founders fine-tune their business plan and get their pitch deck ready for the presentation to the investors on the demo day. They get mentorship during those three months from in-house mentors. Every two weeks or so, a dinner or lunch is held where all the companies from the batch undergoing acceleration are lectured by industry experts.
We believe that this structured approach is not suited for entrepreneurship, which is in itself an unstructured phenomenon. Entrepreneurship can’t be taught by putting people into a classroom for three months. Also, each startup has a unique need and hence needs one on one mentorship as well as a different mentor at different phases of their life cycle, sometimes some one who is a marketing expert and sometime who is a product management expert or sometimes who is an expert in particular technology.
Based on this we have embarked on creating a global board of mentors who are who’s who in their field of expertise and who have created companies, sold companies or taken companies public. We provide access to these mentors to our startups for one-on-one mentorship as and when they are needed. That way each startup gets their unique need satisfied.
The biggest value proposition that we bring to the table is to provide creation of Minimum Viable Product (MVP). Accelerated creation of MVP is critical for minimizing risks for any startup and contributes tremendously towards a path to success. It is a non-trivial task. Also there is a shortage of technical resources with product creation mindset/skill and we fill that gap by creating MVP. We have a 400 people technology team in India with expertise in Mobility, Analytics, as well as backend databases and portals, and cloud computing. We can provide product management help as well as program and project management. This is a crucial need for many startups and no accelerator that we know of provides this help.
Spinta claims to have a presence in US, India, Thailand, and Singapore. Is this a physical presence? If it is virtual, how can you add value to startups say in Singapore, which have at least 15 other accelerators/incubators here to choose from?
We do have physical presence in each of these countries, in the sense that we have our representatives as well as mentors present in each one of these countries. We provide access to other global advisors and mentors over video conferencing. In India, our two major development centers are in Pune and Nagpur with total of 400 employees. In Thailand our partners are Thammarsat University and we do have resources available from them.
We are an accelerator with a different business model. We are Silicon Valley headquartered, global accelerator. We give access to Silicon Valley startup ecosystem to our startups. We provide help in creation of a MVP, which is not provided by any other accelerators that we know of. We have a global board of mentors, which provide one on one mentorship. Being global with locations in multiple countries plus having mentors spread out globally, we can provide help to startups in spreading presence to global markets.
If your USP is enabling companies in India, Singapore or Bangkok to reach Silicon Valley, or to help South East Asian startups target a market like India, again several accelerators/ incubators are already doing the same – what difference do you bring to the table?
As established earlier, our USP is multi fold and not just enabling companies in reaching Silicon Valley or target markets like India. We are of course better equipped and suited to do that compared to most accelerators who don’t have global presence like us. Plus the creation of MVP and having global board of mentors sets us apart.
Big picture, how do you see the startup ecosystem in Singapore? What are the challenges going forward?
Singapore is a very structured society and innovation and entrepreneurial culture has not been intrinsic part of Singapore to date. However, there is a lot of effort on part of the government to cultivate this culture in Singapore and there is a lot of help provided by the government to startups. Also, there is a huge influx of companies and entrepreneurs from other countries (India, Australia, etc.) into Singapore, and that would definitely help create this culture. This is where companies like Spinta can help as well. They can bring in Silicon Valley model and culture into Singapore by not only mentoring entrepreneurs but also bringing in people from the valley on speaking assignments and bringing entrepreneurs to Silicon Valley to visit and see for them selves as to how things work there.
Again, what are your observations on the startup scene in India? Where does India stand in comparison with a China or Singapore?
Fifty per cent of India’s population today is below the age of 25 years. There are huge number of engineering and management institutions. Culturally and because of necessities in India, people are generally very entrepreneurial. India also is a huge market. There is also an emergence of good ecosystem of angel investment groups as well as venture capitalists; there are organizations such as NASSCOM and TiE (Both of which are partners of Spinta), who have taken it as a mandate to create thousands of startups in India. Given all these facts, I believe, India is a very fertile ground for good crop of startups. It definitely stands way ahead of Singapore or China. However, I believe, if we can combine discipline, ease of doing business, and fantastic infrastructure of Singapore with the entrepreneurs from India, we can create a dynamite and unbeatable combination.
Why Bangkok? Is to have an early mover advantage in the startup scene in Thailand? Overall, what is your take on the Thai startup ecosystem?
Thai startup ecosystem is in early stage at the moment. However, there is creativity in Thai system and given guidance we believe that we can find some very good startups from Thailand. Of course, going in now, we want to establish ourselves early and have that early movers advantage. We are approaching the market by partnering with one of the top universities in Thailand, Thammarsat University. Already, they have recommended many entrepreneurs with some very good ideas to us, and we are evaluating them.
You say that Spinta can help startups with expertise, resources and technological prowess. What is the expertise that you bring on board? What is the funding range that you provide to startups, or it is just ‘expertise, technological prowess’ against equity?
Spinta is creating a global board of mentors and advisors, with varied background. They bring in with them expertise in marketing and PR, sales, product development, product marketing, program management as well as deep technical expertise in areas such as architecting digital market places, IOT, predictive analytics etc. Spinta has a venture arm called Spinta Ventures, which is not a fund but a syndicate that invests up to $100,000 in to Spinta startups in a selective fashion. Spinta also connects all its startups to the angel investors network globally for the seed funding and to the VCs for the series A funding.
Traditionally, what is the equity that you will pick, and what are the ticket sizes for funding? Singapore-based accelerators like JDFI, Muru-D and the one run by Life.Sreda in Singapore, as well as global examples like 500 Startups have fixed range for both funding they give and the equity they take from the companies that are part of their program?
Spinta provides its services through a process called ‘Katalyst’. Katalyst is made up of three stages – Kindle, Speedup and Breakthrough.
In the kindle phase we take the idea and fine tune it while helping entrepreneurs create a proper business plan and a pitch deck as well as get them ready for the seed funding. For those who want to be part of a shared workspace, we provide it to them free of charge in Silicon Valley at the Spinta Center and at a nominal charge at other places through our partners. We also provide legal advice and help in setting up their companies and structure, thorough our legal partners – currently in India and USA, we are working on relationships in Singapore as well). In the Speedup phase, we connect our startups to Angel Investors as well as Spinta Ventures and help them get funding. This is the stage at which we assign a technical team as well as project management team – depending upon the needs of a startup – and create a minimum viable product (“MVP”). We follow a Lean Startup methodology and run a feedback cycle to fine tune the MVP through initial customer/s and get the startups ready for breaking through.In the Breakthrough stage, we help and mentor startups with go-to-market plans to acquire early customers, we also provide mentoring on Sales cycle, Offer Structures, Licensing/Pricing, Proof Of Concepts. We get the startups ready for Series-A funding and connect them to Series-A investors. We also provide mentoring on Scaling – for significant jump in number of customers, revenue streams, and operations.If a startup opts for all three stages of the Katalyst process we charge them 9% dilutable equity. If the startup decides that they have technical expertise and a team to develop their MVP and as a result or for any other reasons opts for only two stages, we charge them 6% equity and if a startup opts for help only in Kindle or a Breakthrough stage, we charge 4% equity. Please note that all these equities are dilutable, so that when any funding event happens and if more stocks are issued, Spinta’s share dilutes proportionately. Also note that in the second stage when we create a MVP for the startup, we charge them $15/hour for the development work. This is highly subsidized rate, compared to standard rate of $50/hour, which indirectly results in a subsidy of about 200,000 USD (based on 6,000 man hours of development.
Accelerators/incubators today have evolved where they have specializations. Which areas do you focus on when it comes to identifying and admitting startups to your program?
We currently have startups, which are in the online education space, in big data and predictive space, in digital market space, in what we call Uberization of things (UOT) space, and in retail space. On technology side we have deep down expertise on Mobility, Analytics, backend Databases as well as portals and Cloud. So, we are capable on creating pretty much any MVP which is sitting above the Operating Systems level. On the functional side, we have and are adding mentors with expertise on many different specializations. So, we can help startups varied specializations. However, before we select a startup we make sure that we are going to add value to them.
Singapore has been trying to project itself as one of the leading startup capitals in Asia. But off late, there have been lot of concerns of the city-state out pricing itself, as the cost of running business here is high when compared to neighboring countries. There is also a lot of valid concerns on the talent crunch here. Will costs and talent crunch derail the startup scene here?
We also need to look at lot of things, which Singapore provides, much better than most other places in this world. Singapore provides fantastic infrastructure, Very little if any red-tape in starting and running a company, Ease of flying in an going out of the country, many initiatives on part of the government to help startups with space, funding etc. and some very good universities. Yes, it is relatively and expensive place and the talent crunch is everywhere. However, while expense is more than offset by all the other positives of the country, talent crunch is where Spinta model can definitely help. I don’t believe costs and talent crunch derail the startup scene in Singapore.
Can controlled societies like Singapore innovate? Singapore story has been more about execution.
As I have mentioned before, culturally (controlled society) Singapore is not an Innovation oriented society. However, as mentioned before, Singapore has been open in bringing in outside talents and entrepreneurs from India, Australia etc. These entrepreneurs, when they mix with local Singaporeans spread the innovative thinking. Then Singapore’s story of excellence in execution only makes that mix even more dynamite.
You have India born CEO at the helm in Google and Microsoft. Big picture, not just these two executives – what had made Indians excel in the valley? Why Indian managers are succeeding in tech’s C-Suite?
A lot has been written in the last few weeks about why Indians succeed and excel in the Valley. I think one of the biggest reasons for this success is the “role-models” some early successful people have created for the new Indian entrepreneurs. Indian entrepreneurs have a very strong support system in place though many different mentoring organizations. Indian mentors have helped break the stereotype that Indians only make great engineers but are not capable of being managers.
Tremendous success of the first generation of successful entrepreneurs and managers has instilled confidence in new entrants to start companies or become managers. They have also been source of seed capital to new startups. Indian executives because of their background from India are inclined toward participative management and they build non hierarchical and meaningful relationships with their subordinates, which creates strong loyalty.
Additionally, I believe that when you grow up in India, you are made to go through such a grind and always required to produce more with less, that you are ready to take on the world. Also, if you look at the makeup of India, you are always working with diversity as India is like “many countries in one country”. You are working or growing up with people originating from different parts of India, who speak different languages, dress differently, eat different types of food, have different religion and people who may even look different. This prepares you well for Silicon Valley where you are working with diverse people from all over the world.
In the next three or four years, smartphones will replace cellphones, and a billion Indians will become connected on the Internet. What are the opportunities that this transformation will bring about in commerce, education, government, and infrastructure management?
What we are seeing today is just tip of an iceberg. We can expect tremendous changes in all aspects of life because of the connected devices in the reach of almost every Indian. In commerce, old business models will be disrupted. Market places and connected platforms will act as major dis-intermediates. It will bring efficiencies and increased profitability with new business models. People will be able to provide their services and goods to those who they were not able to before. Education content and delivery, all over the world is going through a major change. Access to education will become very easy to any one and anywhere.
PeerBuds, one of the startups Spinta is accelerating will enable one to get tutored online from any one in their peer system or from the best teacher in the world, any time any where, regardless of ones location. E-governance will make things more efficient for people and allow people to access government service right from their mobile devices, hassle free. It will also make government more transparent and less corrupt.
A good majority of startups in Asia – be in India, China or Singapore – have copied models from the Valley. Is this because, technically we in Asia are not able to produce very complex marketable ideas? Also, many of these solutions may not be relevant yet in Asia, as US-based or Valley startups are trying to solve a problems that impact their societies. Yet, investors look at success stories in the West and are ready to fund clones here in Asia. When do you see the wave of local startups emerging to address problems that are uniquely Indian or Asian? We have some now, but when do you see this being the main theme for startups here?
Traditionally, the education system in Asia makes us problem solvers and not thinkers. So, we tend to solve immediate problems and that too with a quick fix. However, with the advent of lots of new style international schools the teaching methodology has already started changing towards making students think more creatively. Investors are funding Asian clones of Western successes because many of them do solve problems that are relevant to Asia as well. As a matter of fact look at the successes of Indian matrimonial sites, which are clones of dating and match making sites in the West, look at the success of Flipkart, which is a clone of Amazon, or look at the success of MakeMyTrip.com, which is similar to Travelocity or other travel sites in the west.
Already, I have met with many entrepreneurs in India who are creating products that are very relevant to the Indian market or are taking the base idea from the Western success and are then modifying it and customizing it to fit the needs of the Indian market. I don’t have a crystal ball but I believe in next two to three years we will see the evolution and a flurry of startups working on products and services which are not clones for the West but are designed for Indian, Asian or global problem.
Can Asia Create the Next Silicon Valley?
That is an eternal question. Silicon Valley is a perfect combination of great education institutes, great role models, fantastic availability and access to venture capitalists and angels who are willing to bet on new ideas and of course availability of fantastic talent from all over the world. It has its own so to say, unique personality which is very difficult to copy. I am not sure if anyone can compete with Silicon Valley, but sure, I think with a strong resolve and collaboration between multiple countries Asia can definitely create an environment, which can compete with Silicon Valley. Rather than creating another Silicon Valley, I think the idea should be to bring the best practices of Silicon Valley to the world and learn from the success of the Valley to make every place as good as the Valley in terms of bringing out innovation. This is again what Spinta model is trying to do.
Several cities including Singapore are trying to clone Silicon Valley’s success. These cities are trying to create lot of VCs, research universities that transfer skills and other relevant infrastructure. I was reading a recent report which had said that ‘entrepreneurial cities have distinct personalities’ and ‘truly entrepreneurial places like Silicon Valley have a distinct personality— a place that tolerates oddness —that is central to their economic success’. Which cities in Asia have got this mix right?
As Tom Freidman has said, “World is Flat.” Internet has been a democratizing factor and a catalyst for change in people’s attitudes. I think that people are beginning to embrace the idea disruptive change and a more relaxed attitude towards things that are different. Similar change occurred during the BPO revolution in India and this is the second wave of more disruptive change.
On a relative scale cities like Mumabi or Bangalore in India or Singapore as well are the cities that come to mind when I think of who has go this mix right.