17-Dec Developing Strategic Partnerships for B2B SaaS PlaybookRT

How is developing partnerships different from selling to customers? What are the Dos & Dont’s? What can you expect on this journey? Get inspired by direct insights from CloudCherry’s experience on building partnerships with companies like Microsoft, Cisco, Nielsen, Salesforce and more. Interact with founders on this critical aspect of building partnerships for growth & scale. The partnerships playbook will help clarify these and other deeper questions on building Deep Strategic Partnerships.

We are building a new cohort of 20 startups for our Potential Strategic Partnerships program. If you are interested to be part of the cohort this playbookRT is a requirement.

Click to Register for the Strategic Partnerships Playbooks Track. (limited invites)

Our Maven

 

Vinod Muthukrishnan

Founder CloudCherry

 

 

This is a product startup founder/CXO (+1) invite-only events. Venue details will be sent along with the confirmation of your registration.

RoundTables are facilitated by an iSPIRT maven who is an accomplished practitioner of that Round-Table theme. All iSPIRT playbooks are Pro-bono, Closed room, Founder (+1), invite-only sessions. The only thing we require is a strong commitment to attend the sessions completely and to come prepared, to be open to learning & unlearning, and to share your context within a trusted environment. All key learnings are public goods & the sessions are governed by the Chatham House Rule.

24-Nov Deep Strategic Partnerships PlaybookRT In Bangalore

Strategic Partnerships is one of the 3 shifts for SaaS, and Vijay Rayapati provided very grounded insights on partnership building at SaaSx5. One of the takeaways was that pitching to a strategic partner is very different than pitching to an investor or even to a customer.

The partnership mindset is different from sales, says Abhishek. Come, join us to learn ‘How do you change your perspective from acquiring customers to cultivating partners? Why partnerships are critical? What are the tangible and intangible outcomes?’ The partnerships playbook will help clarify these and other deeper questions on building Deep Strategic Partnerships.

We are building a new cohort of 20 startups for our Potential Strategic Partnerships program. If you are interested to be part of the cohort this playbookRT is a requirement.

Click to Register for the Strategic Partnerships Playbooks Track. (limited invites)

Our Maven

 

Abhishek Kumar

Founder ToneTag

 

 

This is a product startup founder/CXO (+1) invite-only events. Venue details will be sent along with the confirmation of your registration.

RoundTables are facilitated by an iSPIRT maven who is an accomplished practitioner of that Round-Table theme. All iSPIRT playbooks are pro-bono, closed room, founder-level (+1), invite-only sessions. The only thing we require is a strong commitment to attend the sessions completely and to come prepared, to be open to learning & unlearning, and to share your context within a trusted environment. All key learnings are public goods & the sessions are governed by the Chatham House Rule.

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M&A Roundtable: Indian startups are breaking through

M&A activity in the Indian startup ecosystem has, for a long time, remained fairly nascent. Relatively small exits, averaging $10-15M, are commonplace in India. But things are changing, and with India being the third largest startup ecosystem in the world, Silicon Valley giants are beginning to pay more heed to the entrepreneurs and IP emerging from India.

On January 23, 2015, the iSPIRT M&A Connect Program hosted a Corp. Dev. and M&A Roundtable in Palo Alto. Attendees included corporate development, M&A and senior business unit folks from several key companies including Google, Yahoo, Twitter, Cisco, Intel, Box, LinkedIn, Intuit, etc. the event was coordinated by Sanat Rao (Partner, iSPIRT) and Roxna Irani (Associate, iSPIRT).

Neeraj Arora (VP, Corporate Development – Whatsapp) was the keynote speaker, talking about his experience with the Facebook acquisition, key learnings and challenges he faced while closing the $22B deal with the tech giant. He repeatedly highlighted the importance of trust that the Facebook team built out with the Whatsapp team over the course of multiple years before the acquisition that eventually led to an extremely seamless process. He also emphasized the element of trust that a startup must establish with a potential acquirer, because nothing is more appealing to an acquirer than a startup’s commitment to their specific relationship. (So there’s monogamy in M&A too!)

M&AConnectAfter an interactive session with Neeraj, we had a candid discussion with the Corporate Development attendees about their experiences acquiring Indian startups. The Yahoo and Twitter corp dev folks shared the key learnings from their recent M&As in India. Here are some takeaways for us in the Indian software product industry and for the next acquirers of Indian startups:

  • Visible benefits when the target is a US entity. Given legal complexities, the difference in time and effort to close a deal with a US acquirer can vary substantially based on the legal domicile of the company. Recurring piece of advice of new startups is to register as a Delaware C-Corp.
  • Acquisitions in India take time. Beyond geographic complexities, there are a couple of other reasons responsible. For one, communication can sometimes be ‘lost-in-translation’, so legal agreements with an Indian and a US counsel, with different laws and legal terminology, can often demand more fine-tuning than normal. Other times, key stakeholders may require more engagement and disclosure that demands resources. Whatever the reason, the general idea is to expect, and actively manage, longer cycles.
  • Acquirer confidence in the core leadership of a startup is crucial. Acquirers often expect a strong management team to hire equally strong employees, so they see high quality leadership as a validation of high quality team and product. This is especially true in the case of Indian startups.
  • Acquirers are looking for guidance on how to traverse the Indian ecosystem. India is a new market for a lot of overseas acquirers. A recurring request was for a “playbook” that would highlight the process and differences of doing an acquisition in India. This would include items as simple as list of top colleges in India to give acquirers context of pedigree, to employee attitude towards compensation (cash vs. equity breakdown), to examples of standardized termsheet terms and details.

M&A onnect - Roxna Irani
The iSPIRT M&A RoundTable started 2015 with a bang. The year will be a pivotal one for tech startups in India and the iSPIRT M&A Connect Program is excited to accelerate the pace of change. With all the “Virtual Mandates” received from the Silicon Valley companies, we will make carefully targeted introductions to the Business Exchange Associates. And with a higher quality of interactions, we hope to make much a larger impact to corporates and startups alike..

Exciting times ahead… stay tuned!

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M & A – The most preferred option to grow in uncertain times

It is a typical Monday 9 AM! Ready to kick-start another challenging week! Fine day in Chennai !! Not so hot like a typical Chennai climate. But, for first generation entrepreneurs it is an ordeal to pass thru weekly pressures of Cash flow, Attrition, New business and opportunities etc. etc. This experience is collectively described as “Monday Morning Blues”.

The growth dilemma

There has always been a great dilemma for entrepreneurs during fund raising exercise especially when it comes to taking the company to the next level of growth. The dilemma does not stop by simply raising the money for growth, but it goes on till such time one is able to strike a balance between how much stakes to dilute and the tangible benefits that the venture will get.Then comes the business and revenue models. The previous eras have brought countless innovations in the theory and practice of running businesses. Many are now staples of contemporary management, but others were ephemeral distractions that led companies down the wrong roads. Too often, leaders have sought the appearance of success rather than its reality – size for the sake of size, book-keeping profits as opposed to intrinsic value, earnings growth manipulated to please the stock markets. This era’s changes are already redefining management theory and practice. Raising competitiveness intensity forces a return to basic again. Going down to basics today means first and foremost focusing on how you can create intrinsic or fundamental value for your business. Your ability to create fundamental value rests on how good you are at finding the right balance between your external and internal realities and your financial aspirations; in other words, how skilfully you develop and use your business model. The major reason to focus on the fundamentals is that growth won’t come easily. Organic growth will not often produce the double-digit gains that were routine and even obligatory in the last era.

Leaders who hope to grow their way to success through mergers and acquisitions in the present market scenario are left with umpteen no of options. Needless to mention that M & As promises to increase economies of scale and yield efficiencies from synergy – or at least show the kind of revenue growth that looks like progress. And some players thrive by picking up battlefield causalities on the chips and hammering them to shape. Many people viewed General Electric’s acquisitions in the late 1980s of troubled RCA as a misconceived diversifications ploy. But after selling off RCA’s consumer electronics and aerospace businesses, GE wound up with NBC for a song, turned it around and went on to build it into a network powerhouse. NBC generated significant profits year in and year out, and with the addition of Vivendi Universal’s entertainment assets which greatly helped GE’s future growth.

The courage to change

Many first generation entrepreneurs lack with the intelligence to recognize that they have reached a crossroad but don’t follow through and head down the new path. Their inner core isn’t tough enough to allow them to acknowledge and deal with an unpleasant reality, whether it is closing a loss making division or taking realistic look at the business model and tweaking to market expectations. Many would like to continue in their comfort zone of their familiar managerial routines and protecting their pay checks. They may be afraid: change means taking risks and taking risks raises the possibility of failure. The fear failure occupies most of entrepreneur’s growth dilemma of raising money, divesting their stakes and working under a different management culture.

These entrepreneurs often don’t recognize that failing to make a shift can be riskier than making none. The entrepreneurs who have the appetite for tough actions have the inner strength. They are willing to look at clearly at the business model that has been highly successful and is no longer relevant.

To raise funds for growth or get merged is a difficulty and at times too difficult to get consensus from founder/ promoters. This leaves the emerging organizations with fewer options such as the following:

  1. Tag along with a bigger player and pitch for bigger contracts – on a case-to-case basis
  2. Dilute promoters’ stake heavily and raise money from PEs or VCs at the cost of losing control of the company in your eyes and also not knowing the business outcome after fund infusion
  3. Be a captive IT Partner for a big group and get acquired by them eventually once a decent value is built. The flip-side to this approach is that one does not know the time it will take to realise decent value

The current era of business offers promising option than the usual organic growth for entrepreneurs.

M & A – The most preferred option to grow in uncertain times

While an acquisition may have higher risk of failure than any other expansion strategy, it also provides a much superior return profile in comparison to organic growth strategy. M & As is intrinsically risky and predicting the aftermath of any acquisition is almost impossible. The fact remains that predicting the aftermath of any business plan execution is also an impossible task. But there are learnings from the past that can mitigate the risk of failure. Most M& A s fail due to inadequate articulation of two key enablers of a deal: transaction management, which is all about paying the right value, conducting a thorough due diligence and appointing the right transaction adviser; and integration management, which is about devising a detailed integration strategy ahead of the buy decision to keep the rationale of the acquisition intact. The fact of the matter,however is that any corporate strategy can go bad despite putting safeguards against any possible fallout in future. And so can simple business decisions related to marketing and research and development will lead to unpredictable business outcome.

If there are precedents where shareholders’ wealth has been written off as fallout of ill-planned M & A, there are more than a handful of cases in history through well executed M & A strategy that delivered immense value to share-holders:

  1. IBM’s market value of USD 227 Billion has been created virtually through acquisitions. It has acquired 187 companies since 200 for about USD 200 billion
  2. SAP has made 5 major acquisitions since 2001 for a whopping sum of USD 20 billion to reach its current position of Euro 17 Billion
  3. Cisco built the current sales turnover of USD 47 billion from USD 4 billion in 1996. Cisco has acquired more than 450 companies since its inception. Cisco’s fundamental growth strategy has been M & A
  1. GE has acquired more than 18 companies since 1952 ranging from Aerospace, Process Industry, Financial Services , Healthcare for whopping sum of USD 14 billion to reach its current revenue of USD 150 billion
  2. Exxon Mobile, It is what today on the back of a merger between two energy giants which clearly didn’t happen without the risk of failure in 1999. Exxon Mobile has surpassed Apple’s market cap and reached the USD 385 billion in April 2013.
  3. Maersk has acquired P & O Nedlloyd in 2005 to create one of the largest shipping lines in the world.
  4. P & O and Nedlloyd were merged together in 1996 which was yet another record in the history of shipping lines.

It is all about convincing the company’s management on the risks associated with a strategy like M & A on the back of statistics of successful transactions.

The entrepreneurs who are looking at raising money must do the following reality check and decide whether M & A is an option.

  1. Research and evaluate your competition
  2. Measure share-holders value year-on-year and see whether it is increasing
  3. Your ability to raise funds and offer significant returns within a short period of time e.g. 3 years to 5 years
  4. Ability to devote time on innovation and offer more customer value

The IT/ ITeS industry are moving towards consolidation and better economies of scale and efficiencies.The market is swamped by competition and the technological advancements are determining new way of delivering customer value. Therefore, IT services companies have to seriously consider M & A as their growth strategy to protect investor’s wealth, IP, customers, business.

Guest Post Contributed by Rangarajan Sriraman. The views expressed in this article are personal. The author is a serial entrepreneur, mentor and strategic advisor to start-ups in IT and ITeS segment based in Chennai and has been involved in 2 start-ups so far from the concept to execution stage and later on successfully exiting.

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Action Plan for increasing M&A opportunities for Indian product startups

Indian product companies punch below their weight. Despite huge innovation and rising entrepreneurship, most Indian product companies are invisible on the global map. The reasons are many, but a big one is the lack of meaningful exits for companies that actually create value in their product markets. This paper focuses on a plan to address this gap.

The iSPIRT position paper of March 2013 identified several issues that need to be addressed to improve M&A activity in the US-India corridor. While discussions with the Product Nation community members strengthened the propositions made, we needed to get a buyer’s perspective before formulating an action plan. This led to an Executive Brainstorming Session with several prolific technology leaders and acquirers from Silicon Valley.

The brainstorming session at Palo Alto, CA on May 21, 2013 had broad participation from across the tech industry and was attended by M&A professionals and senior executives from Autodesk, Cadence, IBM, Intel, NTT Docomo, Facebook, Paypal/Ebay, VMware, and Walmart Labs. The iSPIRT team also had a private meeting with the head of M&A at Oracle. Representatives from Cisco and BMC could not be present due to last-minute issues.

On May 22, the iSPIRT team met with the CEOs of about 20 Indian startups, most with some presence in Silicon Valley to gain better access to their markets and customers. This meeting further stressed the need for improving M&A exits for startups, particularly for those that lack strong US VC backing. There was unanimous agreement within this CEO group that improving company readiness, visibility and access to potential acquirers would go a long way in planning successful exits. Inputs from this meeting have been included below.

iSPIRT M&A Connect Action Plan 2013 Version 2

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M&A is critical for the Product Startup ecosystem in India

Small $20-30m M&A transactions are the lifeblood of Silicon Valley. Over 400 such transactions happened last year. Israeli companies accounted for over 20% of these transactions. India had only a couple of transactions to speak of. This has to change of Indian has to become a Product Nation. 

iSPIRT is focusing on this issue through its soon-to-be-announced M&A Connect Program. The M&A Connect Program team – led by Jay Pullur and Sanjay Shah – was in Silicon Valley last week for listening meetings with various stakeholders. As a part of this exercise they hosted a long brainstorming session with more than a dozen M&A heads of serial acquirers ranging from Facebook to Vmware.

One other listening meeting was with about 20 Indian product entrepreneurs camped in the Valley. I was privileged to attend this meeting. It was a delightful 3.5 hours discussion. There were three set of issues that were discussed. One set of issues related to improving discovery of Indian startups. It turns out that addressing this is not as simple as doing a SV delegation or getting TechCrunch coverage. More than that is needed. The second set of issues related to the regulatory friction of doing small M&A deals in India. The third set of issues were about improving the readiness and preparedness of product entrepreneurs.

There was active participation by all the attendees. These included:

  • Indus Kaitan,Bitzer Mobile
  • Suresh Sambandam,OrangeScape
  • Manjunath M Gowda, i7 Networks
  • Asif Ali, Reduce Data
  • Vamshi Mokshagund, Credii
  • Rohit Nadhani, Cloud Magic
  • Madhur Khandelwal, ShoppingWish –
  • Kumar Rangarajan & Satyam Kundula, LittleEye Labs
  • Deobrat Singh, Gazemetrix
  • Rajan Arora, SchoolAdmissions
  • Bharath Mundiapudi, Orzota
  • Annkur P Agarwal, PriceBaba
  • Srikanth N, Arktan
  • Jay Pullur and Vijay Sundaram, Pramati (they hosted the meeting) 

 

I was most impressed by the dedication and passion of the iSPIRT team driving this effort. Their selfless commitment to making a difference was heartwarming. I could sense that most of us attendees felt the same way. The self-help community that iSPIRT is creating is truly inclusive and impactful. 

If you are product startup interested in exploring a possible M&A exit in the future do watch for more details about the M&A Connect Program. Try and become part of this. Given what I heard in the meeting, I’m sure that this new Program be game changing for the ecosystem.