Indian entrepreneurs are following the crowd to make money
The success of international crowd funding companies such as Kickstarter and Indiegogo has prompted new initiatives in India to follow the same business module and help support many a startup, finds Rinky Kumar
Till a few years ago, aspiring entrepreneurs across varied genres who wanted financial aid to kick-start their respective projects would make the rounds of various studios or financial institutions to realise their dreams.
Soon, they started resorting to crowd funding requesting their friends, family, acquaintances and even strangers to contribute and support their cause, usually via the Internet. Abroad crowd funding companies such as Kickstarter and Indiegogo have given flight to many a dream by following a business module. Back home, their success has motivated three similar initiatives in the last one year.
Bring out the artist in you
Described as India’s first unique industry-backed and most rewarded crowd funding platform for movies, music and performing arts, Catapooolt is the brainchild of Satish Kataria and Yogesh Karikurve. Set up in April this year, it was the official crowd funding platform at the Hong Kong International Film Festival wherein they selected three movies -- two from Phillipines and one from Indonesia -- for crowd funding. This month, they will take a Bengali movie, Hanuman.com, starring superstar Prosenjit to the Cannes Film Festival.
Kataria, managing director and founder, Catapooolt, says, “While other companies stop at funding, we are the second generation of crowd funding.” He elaborates, “Our minimum contributions start from R500. We have a three-tier reward plan for contributors because we understand that rewards motivate people to contribute. So people can avail of project rewards wherein they see their names in the end credits of a movie that they are supporting or are invited to a movie premiere. The second tier enables them to avail of vouchers from Cafe Coffee Day, Shoppers Stop, Dominos, basically 100 brands that we have tied up with. The third tier helps them avail of our merchandise. We also have a loyalty points programme ‘Pichur Paisa’ wherein if people manage to rope in more contributors to Catapooolt, then they win reward points.”
The creators (people looking out for contributions) have to fill up an automated form on Catapooolt.com to avail the contributions. The team approves or disapproves the project within a span of 48 hours. Karikurve, associate director, Catapooolt, says, “While giving our nod, we essentially look at the size of the project and its ability to build communities. For instance, right now we are crowd funding for filmmaker Sarthak Dasgupta’s movie Cut Throat that looks at the ensuing competition, jealousy, rejection after placements in B-schools. This kind of film has the ability to connect with a community, in this case, B-school graduates.”
This is how they do it
The Catapooolt team allots four months to the creator to raise funds for his project. During this span, they guide him about the kind of online and offline activities they can undertake to ensure that there’s enough buzz about his project and contributions pour in. “We understand that crowd funding won’t work in India if we clone Kickstarter here. Here, we have to also focus on offline activities,” says Kataria. In case, any project fails to get 80 per cent of its funding target, then the contributor’s money comes back to him. “This in a way reassures the contributors that their money is being used for the right purpose,” says Karikurve. Once, the creator is able to meet his target, the Catapooolt team earns its profit by taking a 15 per cent cut from the total contributions but ensures that the creative rights lie with the creator.
Though Kataria and Karikurve have worked with crowd funding earlier, they had to face umpteen challenges. Kataria, who has headed Vistaar Religare Film Fund, a capital fund investing in films and media properties, says, “The biggest challenge was to create awareness about crowd funding both amongst creators as well as contributors Creators feel that if their projects are crowd funded then studios will not look at them. But crowd funding is the best way to not just access funds and resources but also to build huge awareness about their projects and create a pre-release demand. Every contributor thinks that he will get a Return on Investment (ROI) but crowd funding gives him value for money while fulfilling his passion of supporting a project to take off.”
Karikurve, who headed the international distribution of Big Pictures before co-founding Catapooolt, says they want to cater to global audiences and enable them to contribute and promote Asian creative projects. He explains, “By focusing on such projects, we will connect with the diaspora back home. We also want to support regional cinema and will organise a Marathi film festival in the US in August.” The duo feels that regional cinema has more scope for crowd funding than Bollywood as they not only have good content and low budgets but also have more loyal fans who are willing to contribute. “In the long run, we want to tie up with studios and make the crowd funding process more structured, legal and transparent,” signs off Karikurve.
Hail the youth power
Launched in July last year, PikAVenture is an Indian crowd-funding platform that was started in Silicon Valley by Dr Ruchi Dana, an MBA from Stanford University, and a group of IIT students. It aims to empower entrepreneurship and creativity especially for the youth of India. Dana got the idea of setting it up from her own personal experience. She says, “As a medical student in India, I developed five low-cost medical devices and decided to commercialise them. But I did not know how to raise funds for my business, so I gave up. Today, I am well versed with the knowledge of venture capital and seed funding, so I decided to give back to society by helping student entrepreneurs raise funds to convert their aspirations into reality. With PikAVenture, I want to bring the Silicon Valley culture of entrepreneurship to India.”
Dana maintains that PikAVenture vets the projects carefully. She claims, “As we also provide mentorship, consulting and legal advice to startups, these processes help us assess the startups thoroughly.”
This is how they do it
Aspiring entrepreneurs can log on to www.pikaventure.com and send in their business ideas. Last December, the team went through all the applications and invited 30 startups for interviews, out of which they selected 12 startups. Right now the PikAVenture team is mentoring these startups to refine their pitch and iterate on their concepts. “We help mentor student entrepreneurs, validate their hypotheses and business ideas and also get them funding for their startups. Currently we are investing our own funds, raised from our friends and family and we intend to scale it up in the coming years,” explains Dana.
Like the others, Dana reiterates that crowd funding in India is at a very nascent stage. “Equity crowd funding is still not legal in India and so the way our platform works is that people would either pay in advance for goods and merchandise or donate money for entrepreneurial projects. Also a huge risk about crowd funding is that often projects might not be successful or the entrepreneur might have miscalculated the amount required for the project, which may be a potential risk for the backers. So we have to convince the contributors that their money will be used for the right purpose.”
Dana asserts that in the near future India could potentially be a big market for crowd funding. She explains, “Crowd funding is a mechanism by which even middle class individuals can play a role in fostering innovation and entrepreneurship. By helping funding various projects on PikAVenture, they can assist student entrepreneurs to succeed and this will boost the economic growth of the country. We want to enable students to crowd fund for their college education, research projects and sponsor their higher education.” She also maintains that in up town centres such as metros or IT hubs like Bangalore/Hyderabad, entrepreneurship is flourishing but the mid-tier or low-tier cities where there are volumes of youngsters still don’t have that insight in entrepreneurship and consider it way too risky to attempt. “With PikAVenture, we want to make entrepreneurship a viable career option.”
The business of entrepreneurship
Set up in April last year, Ignite Intent is India’s first website to initiate crowd funding for college and entrepreneurial projects. Rinkesh Shah, an MBA graduate from Narsee Monjee Institute of Management Studies, started the venture. Shah got the idea after one of his friends told him that he would give a certain amount of money to support whatever venture he comes up with. The idea struck a chord with Shah and after conducting an initial research, he came across the organised reward structure-based concept of crowd funding. Explaining what prompted him to set it up, he says, “India has a population of over a 100 crore which invites large number of challenges and larger number of solutions to resolve them. Funds are not an issue with our country but to channelise these funds to people who need it is a challenge and that’s where we come in.”
People looking for funding create an online pitch of their projects on igniteintent.com. The team reviews it within a span of four days and give their nod. Shah explains, “We look at the project’s life cycle, its practical usefulness and acceptance, the concerned person’s dedication and strength towards the project, how much effort he or she has taken to work on the project and also the actual demand and the amount of funds they have requested should match.”
This is how they do it
After the project is chosen for crowd funding, the Ignite Intent team guides the intent owners from planning their project, strategising their ventures in terms of setting up, marketing, distribution till designing sales strategy for them. Since its inception, Ignite Intent has funded four engineering students’ multiprocessor multitalented robot project with various sensors and Punexpress, an online grocery store in Pune. Right now Ignite Intent has funded 81 per cent of the Indian Institute of Technology (IIT) Mumbai’s electric racing car and is working on Adhora (The Obscure), a Bengali movie wherein people can contribute as little as R10 to support the film. Ask Shah about Ignite Intent’s profits and he says, “Monetisation is on the basis of the funds generated. Our fees depends on whether the project is fully funded or not. If an intent owner is working hard they get fully funded and thus have to pay less. So it’s a win-win situation for them.” After a project receives funding, contributors get rewards wherein they can brainstorm with the intent owners and the Ignite Intent team, have Skype interactions with the owner and get memorabilia such as T-shirts etc.
Shah says the biggest challenge has been striving to change the mindset of people. “They doubt the credibility of the Intent owner. We have to address questions such as will they be rewarded in time, what if the Intent Owner runs away with their money, what if we abscond with their money.” To address this issue, initially Ignite Intent took projects that had some credibility. Shah says, “It becomes easier for people to trust. But on a larger level, people out of the creator’s network start contributing after seeing certain progress on the project.”
According to Shah, crowd funding is not a new concept in India. “For ages, donations have been taken to build temples, cash covers are taken at marriages, religious festivals are celebrated through contributions. But doing it in an organised way is different.”
He asserts that Internet penetration and e-commerce success paves the way for crowd funding. “In India Internet usage among people who can contribute funds is still less. Students and young employees use the Internet more. So an e-commerce platform can run successfully but to make a crowd funding platform we have to think beyond and we are working in that direction,” he signs off.