Get All Access for $5/mo

Seasoned Indian VC Says that Startups Today are Becoming Capital Efficient Entrepreneur India spoke to Karthik Prabhakar, Director of Fund Raising at IDG Ventures India, on how startups are approaching capital usage these days.

By Sneha Banerjee

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Shutterstock

Lavish expenditure on marketing and hiring expensive talent in herds are old industry trends! With investors becoming more cautious about their bets, startups have started calibrating marketing and other expenses more strategically today.

Entrepreneur India spoke to Karthik Prabhakar, Director of Fund Raising at IDG Ventures India, on how startups are approaching capital usage these days.

At the World Startup Expo, conducted by Cocoon Ventures, Karthik said, "The biggest emphasis should be on where the expenditure happens. So far the focus has always been on top-line growth – month-on-month growth. While your revenue is growing 15 percent is your cost growing 20 percent? That does not make sense!" he said

" What we are seeing in companies today is that while there will be capital available they still need to be capital efficient. Hence people are getting more capital efficient today," Karthik, who also co-leads marketing at IDG, added.

According to Karthik, who is also an IIM Bangalore graduate, what's really happening at companies today is that the top guys are delegating to the next level of executives saying that you have to grow the top lines but you should also focus on cost efficiencies. If I am spending $10 on something, I have somebody to cut that $10 to $9, he said.

"Clearly what comes across very evidently is the ad and marketing budgets. In the initial days you always spend X amount you will get some sort of customer base, but at Series B stage and beyond people are doing a lot more analytics. For example, in some cities radio ads work and some cities it's not that important, just digital marketing works," he added.

Managing people costs

Karthik also emphasized that it is also important not recruit in herds, which also happens sometimes as startups are worried that they might not get the best talent. "We are also seeing people calibrating a lot on that. Startups CEOs are now saying that "I will hire people but will also have a clear career path for the guys so as to utilize them efficiently," he adds.

IDG's investments include companies like Myntra, PlaySimple, Bizongo, LensKart, FirstCry and more.

Sneha Banerjee

Entrepreneur Staff

Former Staff, Entrepreneur India

She used to write for Entrepreneur India from Bangalore and other cities in South India. 

News and Trends

Tech Burner's Anarc Smartwatch Achieves INR 3 Cr Sales with USD 1 Mn Investment

Anarc features a patented octagonal design by Thought Over Design and Seymourpowell, with a medical-grade stainless steel body. It includes advanced technology like a Hisilicon chipset, AMOLED display, and seven-day battery life.

Starting a Business

He Started a Business That Surpassed $100 Million in Under 3 Years: 'Consistent Revenue Right Out of the Gate'

Ryan Close, founder and CEO of Bartesian, had run a few small businesses on the side — but none of them excited him as much as the idea for a home cocktail machine.

Diversity

5 Ways You Can Create a More Inclusive Workplace Immediately -- and Why You Should

The more diversity you bring to your team, the greater your chances of finding groundbreaking insights and solutions.

Marketing

4 Neuromarketing Hacks to Reach More People and Maximize Results

You don't need to be a neuroscientist or have a big budget to start upping your conversions immediately.

News and Trends

Insurtech Player Zopper Raises $25M in Series D Funding

With 40 insurance companies and 2500+ ecosystem players, Zopper will utilize the fresh capital to ramp up digital infrastructure, by strengthening its Insurance Distribution platform

Business News

'Do You Sell Cars?': Tesla CEO Elon Musk Trolls Jaguar Rebrand on X

The team running Jaguar's X account was working hard on social media this week.