Can You Build My Business Model For Me Please?

Was at proto.in - 2009 in Bangalore - a startup event. Inevitably at an event like this, there were questions on funding and the challenge of raising funds during a downturn.

Based on interactions with VCs and angels, I would argue that it is possible to raise money during this downturn. An investor's view at a time like this would be 1) Only really passionate individuals start a company in a downturn 2) Valuations are realistic or very attractive 3) Will invest in interesting business models.

Raising money is possible, even in difficult times provided there is a compelling business plan/business model. This is an area where some startups require assistance. For instance, the winners of the "shotgun startup" competition at proto.in (make your product prototype in 48 hours) were two guys who designed a lego-style lamp. While there were other competitors who had written software through the night for their software products, what was appealing about the lego-style lamp was that it addressed some universal problems we face with using fixed lamps in rooms. By extension, the business model is interesting because of the product's universal appeal. (lamp here refers to the kind that emits light, not LAMP as in the software industry).

While passion drives entepreuners to create products, cold reason helps in creating a workable business model. For instance, creating Google search was all about passion but adding the Ads to Google search was cold reason. Interestingly, there are companies now that assist startups with precisely this aspect of business. These companies, by virtue of being "external" to a startup are able to dispassionately evaluate a product and help in building a business plan around it. There are several investment banks that offer venture consulting services but do not work with small startups. Some companies who work with small startups in building a business model and raising funds are Verdure Consulting (http://www.verdure.in/ disclosure: my wife runs Verdure) and VentureBean (http://www.venturebean.com/).

So if you are working on building a business model for your product, you may want to speak to them.