Dr. Girish Saraph is an academician turned entrepreneur and the founder and CEO of Vegayan Systems. Two years ago Vegayan was one of the winners of the first TiE-Canaan business plan, which is when I first met Girish. Vegayan is a funded startup based in Mumbai.

In this interview Garish shares his experience on what it takes to run a start-up in India, and about the ever changing business plan, and if there is such a thing as “a good time” to start your business.

KB: What does Vegayan do?

GS: Vegayan Systems Private Limited is a premiere supplier of advanced networking products and integrated solutions that enhances the functionality, performance and management of core IP/MPLS networks. It provides software overlay solutions, which encompass network operations, traffic engineering, analysis, planning and service provisioning. Vegayan offers solutions for both service provider and enterprise networks.

KB: How difficult or easy was it for you to go from being a teacher to an entrepreneur?

GS: It is a transition that took several months (or more) of concerted effort to acquire new mindset, business perspective, and skills. As a teacher or technologist you may start with good technical understanding and innovative ideas however, converting innovative technology into a marketable product is a big step. You need to get market perspective and understand industry dynamics to enable you to define the product and its positioning. Once the product idea gets mature you start worrying about other aspects of the business. You need to develop skills in project execution, finance, sales, negotiations, HR and people management, etc. thus, the list is too long. If you have people with diverse backgrounds in the core team then it could be easier.

KB: What were some of the challenges of starting a business in India? What took you most by surprise?

GS: On every front the challenges for starting up in India are different from a typical valley scenario, here are a few factors:

Finance: Very little early-stage funding is available and more so for hi-tech products companies. You have to work with shoe-string budgets and keep moving ahead. However, that puts constraints on the team front.

Team building: Rather than getting team with pre-existing domain knowledge and experience, you have to build a team that can ramp-up on the required knowledge and skill-sets without loosing excess time. Another factor, the ESOPs are not perceived as very attractive since very few success stories exist so, it is not a good substitute for salary.

Market: With the booming economy the Indian market is looking attractive and that should be the first step before going global. However, Indian companies are not used to working with startups or new product initiatives. They have traditionally followed the West in deploying hi-tech products and technologies. Thus, it is difficult to get their help in product definition, development stages, testing, and deployment.

Overall, the startup eco-system is yet to evolve fully and needs more success stories to make it attractive to all stake-holders. What took me most by surprise is the difficulty level at every stage and on every front and there are no quick easy breaks. You need enormous persistence, hard-work, good planning/strategizing, and lots of luck or blessings to make it. It is an ongoing up-hill task till you reach certain business milestones that bring financial and market visibility.

KB: Having lived and worked in the US and now having relocated to India…what do you think are the challenges for entrepreneurs in India? Is it money, mentoring or what?

GS: The challenges in India are unique (or may be more in-tune with other emerging markets) and so are the growth opportunities. Money is certainly one of the challenges but the whole eco-system needs to evolve as mentioned earlier. We have benefited enormously by our association with two organizations; first, IIT Bombay, its incubation facilities, and brand-equity and second, TiE and its support network. That has helped in overcoming some of the challenges identified earlier.

Relocation to India after a 13-14 year stint in the US has been great and no regrets on that account. At the same time, the US stay was great fun and good learning experience. Where my extensive US experience helped me was in shaping my mindset about startup, getting global perspective, and building professional contacts.

KB: Has your business plan changed since you wrote the first one? Who helped you write your first business plan?

GS: The business plan is not a static document and keeps on evolving. As you get better clarity about the market conditions and financial realities, you improve your assumptions, product positioning, business model, team ramp-up and strategic plan. It has to be your own persistent effort to cover all bases in a business plan and still a knowledgeable person may poke holes in your story. As you keep addressing the issues raised by experts or advisors the plan evolves into something more solid.

KB: If somebody is starting a business in India what business or suggestions would you offer to them?

GS: I can only tell you about the journey and it is certainly very challenging and exciting! That is true irrespective of whether there is a pot-of-gold at the end of the rainbow or not. We are still very far from achieving our business goals so I cannot give any suggestions or business advice.

KB: When do you think a startup should look to raise money? Is there any such thing as “good time?”

GS: We have always lagged behind in raising money and learnt to survive on shoe-string budgets. If one has funding options then, it is better to reduce the risk and get resources for ramping up. More importantly, it saves your time and effort that is wasted in the fund-raising activity so that you can apply it for furthering the business activity.

KB: Do you have any tips for those who are looking to raise money? Should they go the angel route or VC route? What are some things entrepreneurs need to be aware when they are raising money?

GS: I think it depends on the stage of the business and possible valuation range, let me break it down into 3 categories:

1) If it is just starting or idea-stage (at valuation of say less than $500k) then most likely you would have to raise money from your family, friends, or the only FOOL (yourself). Some government support in project mode or customer contract may be an option.

2) If it has progressed beyond the starting line to a prototype level or something more tangible (at valuation of say $1-3M) then you could expect angel or external seed funding of $100-500k.

3) If the commercial aspects of the business are validated and look attractive (bringing valuation to say $8-10M or more) then you could raise series-A round from VCs.

Again I am no expert but, according to me the most important tip in money raising is not to look for it and concentrate on the customer instead. Just like real-estate prices depend on three factors “Location, Location, & Location” the startup prospects depend on “Customer, Customer, & Customer”. If you get that right then the other parts of the puzzle get simplified.

KB: You were one of the winners of the first TiE-Cannan Biz Plan competition. What did you learn from that experience? Looking back what did you do right?

GS: Vegayan won two mega-events that we participated in, the TiE-Canaan Entrepreneurial Challenge (in Dec, 2006) and before that TiE-DFJ India Venture Challenge (Feb, 2006). Those were big morale boosters for me and our team and that too, in the first year of our operation. It was a validation from the experts that we are embarking on a correct path. Entrepreneur may be an eternal optimist on his/her business prospects but you need some reality check and this it.

You have over hundred business plans and multiple rounds of elimination, with each round requiring different level of detailing viz. executive summary, detailed business plan document, presentation, and Q&A. It forces you to address all aspects of the business and express them crisply which helps you to get better clarity. The feedback, comments or probing questions help in pointing gaps or holes in your plan or let you see aspects that you have overlooked. There are no better advisors than the expert members of the panel who have done it before with great success and seen multiple business scenarios play out.

KB: What are the benefits of participating in such event and winning it?

GS: The Tie-Canaan Challenge is a tremendous learning opportunity. It is a great forum to get your business plan whetted, learn about its short-comings and how to address them. You do not easily get business experts pouring over details of your business plan. It is also nice opportunity to gain visibility for your business, establish credibility in the investment circles, and build professional contacts.

Winning such prestigious event gave Vegayan good publicity including the CNBC show “Entrepreneur” and news media coverage. This visibility helps in all external communication to your potential customers, investors, and team-recruits. It also helps in your internal communication by giving confidence to your team members in the business prospects, strategy, and leadership.

Since you can derive so many benefits from the Entrepreneurial Challenge, I suggest to the participating entrepreneurs to take this seriously, make sincere efforts in addressing different issues and detailing them.

Disclosure: The Kamla Show is an associate partner of the TiE-Canaan Challenge 2008.

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