Niraj Bora, Founder & MD, Surmount Business Advisors Pvt Ltd.

Niraj Bora has brought his excellent credentials and professional accomplishments with private equity funds and big corporates to the world of startups, with Surmount Business Advisors Private Limited, a company he set up in 2013. Over the last seven years, he has invested in several interesting startups, from tech-and non-tech startups including Tribe stays (myturf hospitality), which runs premium student accommodation; Frido (Arcatron Mobility) which is focused on ergonomic products for consumers, among others. Bora, who has worked in BDO & EY in the past hails from a VC/PE background. He has previously worked with Reliance Group, M&M, Axis Bank, Piramal Group, Essel Group and HCL on deals up to $2bn.


With the tech meltdown across the globe, most of us are aware of the slowdown in the tech business. However, that’s not entirely true in all aspects since one can read that even now, startups are raising funds almost every day. So, what’s the difference between the slowdown and others raising funds. Let’s break it down here.

Meltdown is mainly for companies who have not yet shown positive unit economics or have not proven net profits (after all expenses) even after years of operations in the core business. There are few companies say Zomato, who haven’t proven profitability with their core business model. Now that they are far away from it, and have not given any clear indication of the profitability after years in their core business, they are bound to take a valuation hit. It’s common sense more than the dcf valuations. Further, making non-profitable acquisitions will just add to the burn. 

I personally believe public markets are more rational than private markets, because of the wide participation in public markets. People often get confuse private valuations with public ones. Listing should be avoided unless a company is profitable or has a clear path to profits. Else, you are bound to converge to the public / rational valuations and take significant valuations hit on listing.

There are many companies who have figured out their path to profits or are already making profits, and for these kinds of companies, the markets are always open and any kind of slowdown won’t stop these companies.

Focus back on profits: In this time of slowdown, companies should rather have a core focus on profits and how to enable them. I personally believe good ideas and great companies are made in recessions since they don’t try to solve a problem by throwing money. I once told a founder “your dependence on funding has to be only for growth and not for survival”. Once you are in this position and grow organically sustainably, the investor would find and fund you rather than you going around for months to raise money. If you are heavily dependent on funding only, then you are ready to shut down id funding isn’t received within time. 

Instead of only chasing growth, companies should optimise for profits, or reduce burn to sail through this winter. Optimised growth is the new funda rather than only growth. And whoever is doing this would always find money flowing to them.

In many cases, the extreme things seen in the market is also investor pulling out on term sheets/ next tranches during recessions or major slowdowns. 

Achieve product-market fit: Many companies have understood product-market fit the wrong way. There is a thin line between customer acquisitions via a pure discount model vs achieving real PMF. I would ask everyone to invest more time in working towards PMF at this time. Evaluate how your customer acquisition and retention trends when you reduce discounts. Mind it, I am talking about discounts and not marketing. Companies who have undifferentiated products will realise their conversion/sales were purely discount-driven and not loyalty. Trying to read various ways to move towards differentiating products, offerings, ways to deliver them, and solving real customer problems would help you understand real PMF. I do believe if you are really solving a customer problem, you will be paid for it.

Good insights into your customer base/ecosystem: The insights required for that also enables the right way of pitching for funding. Solving problems for which no one is ready to pay anything would not help you in creating any business out of it, and you will need to do continuous pivots till you achieve this.

Expansion: New projects, new products and offerings are better delayed in such a scenario unless it is from profits or funds are in place. No point in adding to the existing burn unless a clear cash flow is certain from it. Non-core activities also need to stop to reduce further burn.

Founders also need to be flexible on the valuations and dilutions in case of down rounds. No point in shutting down with the entire equity. Investors also get cautious on the valuations side and hence bull market valuations need corrections in most cases when the market slows down. 

Overall, the ship needs to be tightened in recessions and funding winters overall, and focus has to be established with clear milestone-based burn/marketing, etc. Basically, instead of looking at a 2-5 year time horizon, the focus has to be narrowed to new few quarters/ months and get the path cleared for profits. Once these things are sorted, I think the situation would improve a lot and founder’s time can be better utilised than thinking about the runway and valuations 

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