galatime.com - Kaushik Gala

Note: The views & opinions expressed in these essays are strictly my own, and not those of any entity I may be associated with as an employee, consultant, promoter, investor, etc.

ARCHIVES

 

Pune

Technology Venture Investors in Pune

 

Technology Entrepreneurship in India - Teams

Entrepreneurial traits

Picking cofounders

 

Technology Entrepreneurship in India - Generating Revenue

Is your business model well-defined?

Your industry's value chain

What is your value proposition?

Which distribution channels will you use?

Who will drive business development?

 

Technology Entrepreneurship in India - Raising Capital

Venture capital & venture capitalists (VCs)

Corporate venture capital

Angels & angel networks in India

Government support for Indian startups

Proof-of-concept funding

Do you need a business plan?

How much money should you raise?

Startup valuation

Pitching to investors

Figure out the term sheet

Negotiating with investors

Due diligence - A necessary evil

Time to sign the investment agreements

 

Equities, ETFs, F&O

› Oct 2011: Equity Risk Premium for India

› Jun 2011: Investing in Indian equities

 

Technology Enterprises in India

› Nov 2010: Technology investment in India - WATER

› Aug 2010: Technology enterprises in India - 3 avatars

 

Risk Capital for MSMEs

› Mar 2010: Risk mitigation for investors in MSMEs

› Mar 2010: Why don't (Indian) MSMEs get risk capital?

› Feb 2010: Angel investing - Will it work for Indian MSMEs?

› Feb 2010: What's so special about innovative MSMEs?

› Feb 2010: Where do Indian/NRI (V)HNIs invest?

› Feb 2010: Funding options for innovative MSMEs in India

› Jan 2010: Innovative MSMEs in India

Which distribution channels will you use?

(Last revised Apr-2012, Send comments to galatime@gmail.com)

Distribution channels are the means by which (technology) products/services get sold. While designing their business model, entrepreneurs need to analyze:

  • the various offline & online channel options available,
  • the economics of each option, and
  • the benefits and challenges of each option, and possibilities of conflict

Early-stage ventures must try out multiple types of channels (e.g. direct sales, big-company partner, distributor) to understand the trade-offs between sales volumes, channel margins, sales cycle-time, etc. Using a check-list of critical success factors for your product/service will help zero-in on the most suitable channel(s).

As a supplier with relatively less leverage, your pricing power & profit margins will greatly depend upon the 'shapes' of distribution channels:

Channel shapeNumber of suppliersNumber of distributorsNumber of customers
Hour-glassManyFewMany
FunnelManyModerateFew
PyramidFewModerateMany

 

In India, technology ventures have to face more hurdles in distribution, e.g.:

  • Impact of unequal state / local taxes (e.g. octroi, VAT)
  • Counterfeiting & grey market
  • Expectations of kick-backs (especially in B2B & B2G contexts)
  • Skewed costs of reaching consumers (e.g. bottom-of-pyramid rural markets)
  • Multiple layers of (outsourced) distribution, resulting in an unreliable, inefficient channel with greater costs and delays

Tools

Perspectives