Entrepreneurship is clearly the "cool" thing to do in India these days. The sheer number of entrepreneur focussed events and forums one hears about and the large and passionate audience at most of these events is ample testimony to this. However, the first hurdle a budding entrepreneur needs to cross is "funding" to give wings to his/her dreams.
A slightly tongue in cheek look at Rules for fundraising:
1. The team - This is probably the most important factor in the ability of a company to raise funds. If the team has "star" power, meaning previous entrepreurial or corporate fame (or notoriety) then the company is almost certainly guaranteed funding. If the team comprises lesser mortals, then the founding team better be a really smart bunch to get a look in.
2. Stage - There is very little seed capital in India and almost no concept stage funding. You need to build something and have some proof of concept before you can approach Seed Fund or Indian Angel Network (the exception to this caveat is the "star" power mentioned in point 1). If you want money to build your proof of concept, self-funding, family and friends in that order is the best way to go.
3. Sector - This is critical; Instead of coming up with bright ideas in sectors in which you have experience and spot a potential opportunity, it may be wiser to analyse which sectors VC's are funding and then come up with an idea. In the current scenario, if you are consumer internet or to a certain extent mobile VAS company, you can raise early stage VC money before generating revenue. However, if you're selling to enterprises, you better be atleast $ 2 million in revenue before you can think of VC funding. Sector and stage are closely tied together in India.
4. Valuation - DO NOT believe the funding amount and valuation numbers you read in the press. Most press releases report inflated numbers. Be realistic about valuation, if you are an early stage company it would be rare not to dilute 25-30% in your Series A round.
5. Time and effort - It takes a helluva lot of time and effort to raise funds, whether it is 50K or 5 million. Do not expect fundraising to be easy. If you dont have the heart for it, stick to family money or better still, stick to your cushy corporate job.
Friday, November 23, 2007
Wednesday, March 21, 2007
A note on mobile social networking
An introduction
Mobile social networking, as defined by Wikipedia, is “one or more individuals, with similar interests or commonalities, conversing and connecting with one another using the mobile phone”
Broadly speaking, mobile social networks can be classified into 3 categories:
-Mobile extensions of existing internet social networks
-Mobile centric social networks with a web component for registration and user profile management.
-Mobile-only social networks with no web interface
The media buzz around mobile social networking has been more about online social networks such as MySpace and Facebook building mobile extensions to their online communities, rather than social networks that are mobile centric or exist purely on the mobile side. A social network that exists purely on the mobile side may have many limitations around usability and features. It is fairly obvious that mobile is a perfectly complimentary angle to internet social networks, but whether mobile social networks can exist as a stand alone model without any web component is debatable.
It can be argued that the success of sites like Youtube is more to do with the 'metadata' than the content. Be it Saddam Husseins' hanging or a Brazilian model cavorting the beaches of Rio, it's easy for users to tag it, post comments, send the link to friends and find other clips of public hangings or Brazilian models. The big question is how does one manage this with the screen size and usability limitations of a mobile phone? As Charles Golvin, Principal analyst at Forrester Research says, the model of building an online social network and extending that to mobile is far more likely to succeed than building a mobile-only social network.
Even social networks that are centered on the mobile phone, such as Playtxt and Dodgeball, use a web interface for registration and profile management and are not mobile-only in that sense . A few purely mobile-only social network services do exist, such as the SeeMeTV service on 3 in the UK or mobile blogging services on many operators around the world. However, it can be argued that these are not so much ‘social networks’ as channels for user generated content. The social interactivity elements for these services come from users rating video clips or tagging them.
Success factors
For any stakeholder or potential stakeholder in a mobile social networking service, it is important to have some background of social networking theory. The same 'sociality' theories that apply to the real world or online world extend to the mobile world. This knowledge of social networking theory will certainly help VC’s and entrepreneurs decide whether a particular idea will succeed or not.
The older theory of social networks simply looks at social networks as a map of relationships between individuals. This 'Social network' theory is good at representing links between people but it doesn’t explain what connects those particular people and not others. A number of existing online and mobile social networks are based on the “friends of friends” model that is derived from this.
However, a more recent theory called Object Centric social networking believes that people don’t just connect to each other, they connect through a shared object. Sociologists such as Karin Knorr-Cetina and Jyri Engestrom advocate this theory and believe that 'social networking' makes little sense if we leave out the objects that mediate the ties between people. Objects are the reason why people affiliate with each specific other and not just anyone. For instance, if the object is a job, it will connect the user to one set of people whereas a date will link to a radically different group. These sociologists believe that this is common sense but unfortunately it's not included in the image of the network diagram that most people imagine when they hear the term 'social network.' The fallacy is to think that social networks are just made up of people. They're not; social networks consist of people who are connected by a shared object.
The older 'social just means people' model provides a format for representing people and links, but no way to represent the objects that connect people together. The social networking services that really work are the ones that are built around objects. An object can be a place, date, job, or even content like videos (YouTube), photos (Flickr), URL’s in the book marking network del.icio.us and events in the event publishing network SEraja (www.seraja.com).
The object-centered sociality theory can be used to identify new objects that are potentially suitable for social networking services. An example is the use of ‘place’ as an object. With the advent of mobile technology, services such as dodgeball or Plazes which provide cheap and reliable ways of capturing “place” have a good chance of succeeding.
In conclusion, evidence strongly suggests that passive social-networking services that merely aggregate our friends, and their friends, eventually lose their luster. Statistics show that a majority of users who register for sites such as Linkedin or Orkut become inactive after 3 months.
Revenue models
Monetizing the network may actually be less of an issue for mobile social networks than it is for online social networks. One obvious source of revenue for mobile social networks in the data charges that all operators levy. Increased usage of mobile social networking services will mean that people sign up for higher data plans or pay for increased SMS usage. However, as with all mobile Value Added Services’ the operators are the ones who will benefit the most from this. What percentage of these revenues can social networking service providers get is the question?
The answer may lie in a hybrid of Premium SMS and phone based application. For example, users send PSMS to get some information for free (there are 3 women who match your profile in the vicinity) but has to pay a small fee to find out who they are and get contact details.
However, business models in the mobile social networking world are far from clear and may eventualy see the emergence of a advertising based models in the near future.
Disclaimer : I have read several articles and white papers on social networking for this blog, and have used theories originated by other authors. I do not claim originality for the theories mentioned in this article.
Mobile social networking, as defined by Wikipedia, is “one or more individuals, with similar interests or commonalities, conversing and connecting with one another using the mobile phone”
Broadly speaking, mobile social networks can be classified into 3 categories:
-Mobile extensions of existing internet social networks
-Mobile centric social networks with a web component for registration and user profile management.
-Mobile-only social networks with no web interface
The media buzz around mobile social networking has been more about online social networks such as MySpace and Facebook building mobile extensions to their online communities, rather than social networks that are mobile centric or exist purely on the mobile side. A social network that exists purely on the mobile side may have many limitations around usability and features. It is fairly obvious that mobile is a perfectly complimentary angle to internet social networks, but whether mobile social networks can exist as a stand alone model without any web component is debatable.
It can be argued that the success of sites like Youtube is more to do with the 'metadata' than the content. Be it Saddam Husseins' hanging or a Brazilian model cavorting the beaches of Rio, it's easy for users to tag it, post comments, send the link to friends and find other clips of public hangings or Brazilian models. The big question is how does one manage this with the screen size and usability limitations of a mobile phone? As Charles Golvin, Principal analyst at Forrester Research says, the model of building an online social network and extending that to mobile is far more likely to succeed than building a mobile-only social network.
Even social networks that are centered on the mobile phone, such as Playtxt and Dodgeball, use a web interface for registration and profile management and are not mobile-only in that sense . A few purely mobile-only social network services do exist, such as the SeeMeTV service on 3 in the UK or mobile blogging services on many operators around the world. However, it can be argued that these are not so much ‘social networks’ as channels for user generated content. The social interactivity elements for these services come from users rating video clips or tagging them.
Success factors
For any stakeholder or potential stakeholder in a mobile social networking service, it is important to have some background of social networking theory. The same 'sociality' theories that apply to the real world or online world extend to the mobile world. This knowledge of social networking theory will certainly help VC’s and entrepreneurs decide whether a particular idea will succeed or not.
The older theory of social networks simply looks at social networks as a map of relationships between individuals. This 'Social network' theory is good at representing links between people but it doesn’t explain what connects those particular people and not others. A number of existing online and mobile social networks are based on the “friends of friends” model that is derived from this.
However, a more recent theory called Object Centric social networking believes that people don’t just connect to each other, they connect through a shared object. Sociologists such as Karin Knorr-Cetina and Jyri Engestrom advocate this theory and believe that 'social networking' makes little sense if we leave out the objects that mediate the ties between people. Objects are the reason why people affiliate with each specific other and not just anyone. For instance, if the object is a job, it will connect the user to one set of people whereas a date will link to a radically different group. These sociologists believe that this is common sense but unfortunately it's not included in the image of the network diagram that most people imagine when they hear the term 'social network.' The fallacy is to think that social networks are just made up of people. They're not; social networks consist of people who are connected by a shared object.
The older 'social just means people' model provides a format for representing people and links, but no way to represent the objects that connect people together. The social networking services that really work are the ones that are built around objects. An object can be a place, date, job, or even content like videos (YouTube), photos (Flickr), URL’s in the book marking network del.icio.us and events in the event publishing network SEraja (www.seraja.com).
The object-centered sociality theory can be used to identify new objects that are potentially suitable for social networking services. An example is the use of ‘place’ as an object. With the advent of mobile technology, services such as dodgeball or Plazes which provide cheap and reliable ways of capturing “place” have a good chance of succeeding.
In conclusion, evidence strongly suggests that passive social-networking services that merely aggregate our friends, and their friends, eventually lose their luster. Statistics show that a majority of users who register for sites such as Linkedin or Orkut become inactive after 3 months.
Revenue models
Monetizing the network may actually be less of an issue for mobile social networks than it is for online social networks. One obvious source of revenue for mobile social networks in the data charges that all operators levy. Increased usage of mobile social networking services will mean that people sign up for higher data plans or pay for increased SMS usage. However, as with all mobile Value Added Services’ the operators are the ones who will benefit the most from this. What percentage of these revenues can social networking service providers get is the question?
The answer may lie in a hybrid of Premium SMS and phone based application. For example, users send PSMS to get some information for free (there are 3 women who match your profile in the vicinity) but has to pay a small fee to find out who they are and get contact details.
However, business models in the mobile social networking world are far from clear and may eventualy see the emergence of a advertising based models in the near future.
Disclaimer : I have read several articles and white papers on social networking for this blog, and have used theories originated by other authors. I do not claim originality for the theories mentioned in this article.
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