[Turbohead]

Originally Posted by speedmiester

Another day and another startup bites the dust after scamming the investors.

Kalaari Capital, Stride Ventures backed health-tech startup PhableCare recorded fake transactions, users to show growth, exaggerated doctors on the platform to fool investors and scammed employees.

how-health-tech-startup-phablecare-scammed-everyone

More synonymous than Satyam can ever be - their promises and services were truly a fable.

Originally Posted by Malyaj

Next time you apply that coupon code on an online purchase, please ask your conscience if you sent a company to the gallows

How else can they sell their unsustainable services/products?

[ashis89]

Originally Posted by Malyaj

I think deep discounts are a great way to share investor wealth with the general public. Next time you apply that coupon code on an online purchase, please ask your conscience if you sent a company to the gallows

Attachment 2471067

I wonder if some of these start ups even do a study to measure the market demand for their products and services. Without this info, they're even more likely to offer discounts.


The other day, I saw some 1+1 offer code on GPay for coffee powders. I went on to check them to find blueberry muffin, strawberry cheesecake, mint flavored coffee. I still have that small bottle of hazelnut flavored coffee and might need another year to finish it off!

[Samurai]

Originally Posted by Malyaj

Next time you apply that coupon code on an online purchase, please ask your conscience if you sent a company to the gallows

Naah, it is a victimless crime. In fact, these companies are perpetrators of the crime of destroying all financial discipline and economic sense in the startup scene.

I will continue to order from such companies if they benefit me.

[Malyaj]

Originally Posted by ashis89

I wonder if some of these start ups even do a study to measure the market demand for their products and services. Without this info, they're even more likely to offer discounts.

Hey, when everything you are doing is so 'disruptive', there ain't no data for it yet! I read somewhere long back - if you need a rear view mirror, you aren't driving fast enough.

Originally Posted by Samurai

Naah, it is a victimless crime. In fact, these companies are perpetrators of the crime of destroying all financial discipline and economic sense in the startup scene.

I will continue to order from such companies if they benefit me.

Yes, like I said, it's the only way some of that investor wealth will trickle down to us mortals. I have no guilt feeling about such purchases

[ashis89]

Originally Posted by Malyaj

Hey, when everything you are doing is so 'disruptive', there ain't no data for it yet! I read somewhere long back - if you need a rear view mirror, you aren't driving fast enough.

Fair point
But shouldn't there be some prudence while pricing their services and not the intention of burning investor money from day 1 while showing revenue growth only? While driving fast, I would look at the fuel gauge and also my wallet.

Recently, we availed the services of a start-up to get our clothes ironed. They charge 30% less than the neighborhood iron-wallah (who quit), come on their bikes to collect clothes from our doorsteps in their bags and return them in nicely packaged parcels. They charge 12% less than what even the iron wallah in tier 3 city charges (have to self-drop and pickup from his shop). On top this, we got to use some discount coupons too.

[Malyaj]

Originally Posted by ashis89

Fair point
But shouldn't there be some prudence while pricing their services and not the intention of burning investor money from day 1 while showing revenue growth only? While driving fast, I would look at the fuel gauge and also my wallet.

Startup founders are confident that their product has takers. That's why they got into the business in the first place. Established companies will usually pass it through analysts, then the CFO, and so on. Individuals are unlikely to have either market analysts or CFOs in the beginning. What they see is that someone else is selling at a certain price, and that person must have done the analysis, so what I need to do is do it slightly better, preferably at lower price. There is a lot 'Trust me bro' logic that is floating around.

Originally Posted by ashis89

Recently, we avail the services of a start-up to get our clothes ironed. They charge 30% less than the neighborhood iron-wallah (who quit), come on bikes to collect clothes from our doorsteps in their bags and return them in nicely packaged parcels. They charge 12% less than what the iron wallah in tier 3 city charges (have to self-drop and pickup from his shop). On top this, we got to use some discount coupons too.

Did the iron wallah quit after the aggregators came in or before? For all you know, he is now working for the same aggregators

[ashis89]

Originally Posted by Malyaj

Startup founders are confident that their product has takers. That's why they got into the business in the first place.

I feel this is where some of them falter - gauging the current demand for a product and the existing supply available in the market. If the supply is high already, the new players jump in to acquire customers who were not there in the first place.



Edit: Does anyone know the business model and finances of Unibic biscuits? I see them at the discount table across the nearby supermarkets, round the year.

Did the iron wallah quit after the aggregators came in or before? For all you know, he is now working for the same aggregators

They had quit much before. They were doing this as a side gig and felt it not worth the effort/hassle. I doubt they would work for the startup unless it pays them more (and not 30% less)!

[DetectiveMiles]

Govt orders inspection of byju's account books

The embattled edtech major has already been reeling from the exits of three board members and its auditor

India’s government has ordered an inspection into the account books of education-technology titan Byju’s, which has been rocked by the resignation of its auditor and three board members last month, according to people familiar with the matter.

The inspection follows an internal assessment of the company’s state of affairs and — based on findings of the inspection — the government will decide if the matter needs to be escalated to the Serious Fraud Investigation Office. The inspection would be a new headache for Byju’s, valued at $22 billion in the last funding round, as it restarts negotiations to restructure its $1.2 billion term loan after breaching certain terms of its debt agreement.

https://economictimes.indiatimes.com...5.cms?from=mdr

[d.w.w.]

Originally Posted by ashis89

Edit: Does anyone know the business model and finances of Unibic biscuits? I see them at the discount table across the nearby supermarkets, round the year.

When Unibic was new in the market, I saw the products displayed in a nearby super market with Buy One Get One Offer. Each packet was priced at 30INR, so for 30rs, you get 2 packs. Months went by and when this offer ended, new product packs came in priced at 15INR instead of 30INR. The initial BOGO offer was just a trick to attract customers. I'm sure they have something similar now also.

[SedateGuy]

Originally Posted by d.w.w.

When Unibic was new in the market, I saw the products displayed in a nearby super market with Buy One Get One Offer. Each packet was priced at 30INR, so for 30rs, you get 2 packs. Months went by and when this offer ended, new product packs came in priced at 15INR instead of 30INR. The initial BOGO offer was just a trick to attract customers. I'm sure they have something similar now also.

Don't know about their business model, but I found some of their biscuits to be pretty good

[ashis89]

Originally Posted by SedateGuy

Don't know about their business model, but I found some of their biscuits to be pretty good

I tried a couple of Unibic biscuits and found them to be too sweet. And since I got BOGO, I was saddled with biscuits which I didn't like. Which ones did you like? The offers run throughout the year so I want to avoid the mistake I made earlier

[SedateGuy]

Originally Posted by ashis89

I tried a couple of Unibic biscuits and found them to be too sweet. And since I got BOGO, I was saddled with biscuits which I didn't like. Which ones did you like? The offers run throughout the year so I want to avoid the mistake I made earlier

it's been a while since I purchased ANY biscuits at all (due to a concious eat healthy decision in my house). But IIRC one of them was choco chips and the other can't remember except that it was plain.

[DigitalOne]

Originally Posted by ashis89

I tried a couple of Unibic biscuits and found them to be too sweet. And since I got BOGO, I was saddled with biscuits which I didn't like. Which ones did you like? The offers run throughout the year so I want to avoid the mistake I made earlier

They have a couple of sugar free variants also which I buy if they have the BOGO offer.

[Samurai]

Last week I tried to send a package by Dunzo to a 10kms away destination. I have used Dunzo numerous times for this destination. This time however, I was told to pick a nearby destination. Apparently, they have reduced their delivery areas. I quickly switched to Swiggy app and got it couriered via Swiggy genie.

Then I wondered if Dunzo is done for... and I was not wrong.

Things appear to be going from bad to worse for Dunzo. On July 20, reports emerged that the Bengaluru-based startup had been served with legal notices by Facebook, Google, and software consultancy firm Nilenso for non-payment of dues running into crores of rupees. Google, incidentally, is also Dunzo’s second-largest backer.

https://the-captable.com/2023/07/dun...commerce-plans

[esteemer]

Hi everyone,

Two sides to each coin and I'm here to share the viewpoint of a VC (bonus is I fit the infamous archetype haha: young; IIT --> consultant --> investment professional).

Crash-and-burn stories:
1) As someone that had a chance to look at a lot of such edtech deals (the likes of Byju’s, which grew on the back of India’s desperate clutch on education as the only path to socio-economic uplift, selling dreams while loading customers with loans), I agree that there is no world in which predatory selling tactics are fair. But how is this any different from offline coaching behemoths selling dreams and inviting thousands of kids each year to the dingy confines of a small town in the western part of the country? Knowing that only the top few batches would see maybe an upper limit of 50% success, while the bottom 70% of the batches would see <10% success?
2) I happened to have spent time on one of the healthcare companies (that faked numbers) referenced in this thread at some point. I (with my close-to-nil experience in the real business world) couldn’t reconcile basic math on customer acquisition costs against the monthly P&L sheet. Additionally, there was too much of a gap between fair value and the ask on share price - one which there was no data on operating metrics to use to make a case for. For the above 2 reasons, I passed on the opportunity. Did 99% of 10 investors who looked at the company do the same? Yes. Did the 1% who ended up investing mess up? Yes, and more on the ‘why’ later.

Originally Posted by v1p3r

The other issue is that most Indian VCs have very little actual P/L experience. Most of them come from some sort of consulting background, or were mid-managers in the 2000s. They're armed with the right IIx / NRI credentials, and not much else. Asking someone who has never run a business in their life to judge people running businesses, is like asking me to rate the pain of menstrual cramps vs pregnancy.

Here's a take on what a board at any company should have – the founders who’ve got an understanding of the problem at hand and how they wish to solve for it, and in addition, people added for benefits beyond that – capital, operational expertise, network, etc. Would you not agree that the ideal investor is one that sees the opportunity as the founder does, lets them do what they do best in the day-to-day and does their job as a sounding board and chief criticizer to ensure that shareholder value is maximized? Venture is a business of selection much more than stewardship and investors are significantly happier to just stay out of day-to-day business, while consistently keeping an eye out for risks, market feedback and other viewpoints that the founders in the thick of things might miss.

Do investors that have run P&Ls prior have significant ability to understand risks to call out and help founders in navigating them? Yes

Do investors without such P&L experience have a similar ability? Yes, in a lot of cases. I’ve heard arguments and seen in experience that a non-operator investor has the ability to zoom out of the day-to-day and be ruthless with what the numbers are saying (which is what the next-stage investor or a public markets investor would look at and hence is a direct driver of shareholder value growth).

Coming back to the topic of the 1% of investors who did mess up, referenced above - Why did the frequency of such events in the startup ecosystem go up drastically in the last 2 years?

I’d urge you to think of the venture industry as a separate ecosystem outside of the startups that they invest in. Capital injection the US economy (the largest source of capital for the Indian private spheres) saw historic highs in 2021, 2021. Supply and demand characteristics of the private markets went for a toss - more capital chasing startups --> founders with higher bargaining power --> competition among investors to invest in the same cos (rather than the investor choosing the asset, the asset started choosing the investor here). Process discipline (diligence, fair pricing) went for a toss and as a result, 2 things happened –
i) the turbo spooled on the natural selection process (death by lack of value creation). There were far higher # of companies folding as substandard business plans had been funded.
ii) Bad actors, under pressure of delivering, resorted to unethical practices

When a bank loosens its underwriting criteria and disburses loans to riskier borrowers, they're making an informed decision hoping that the growth in interest revenue outweighs the increase in NPAs. This is no different to a VC firm loosening its purse strings in an upward cycle, that 1 company missed out on because you were too slow in making an investment offer due to diligence is a far bigger loss than 5 other substandard / soon-to-be-fraudulent companies that you lost money.

This happened globally, but localizing it to the India situation – this harms the health of the ecosystem. We are lucky to hopefully ride this out on account of having tailwinds in the form of money that was erstwhile going to China coming to India. But this has to serve as a lesson for all stakeholders – if this happens in the next upward cycle (one where India’s exit maturity – ability to actually create liquid exists – would finally come under full question), we are doomed.

Capital and businesses are going to remain involved in this natural supply-demand ebbs and flows, but what the ecosystem needs to take from this is recognition of the nature of this sector in terms of its risk profile. Working at a startup needs to be thought of very differently from working at an MNC / traditional organization. The risk-return profile here is different (it’s in fact very different at different stages of a startup too) – and we need to talk about this far and wide. When you’re joining an early stage startup, you’re signing up for significantly higher risk in return for a hopeful payout if things go right (statistics are against you here as only a very small % of new startups raise the next round). Similarly, at a growth stage startup (think one that has raised >$10M), there is lower risk but it's there and it’s significantly higher than a lot of other jobs. Investors know that 80% of their investments are going to go bust, the ecosystem needs to factor that in too while choosing which places to work at.

Happy to hear feedback or counter arguments, because there's really no right answer here and no one brush to paint it all with.