Barefoot College was on my radar for 9 years but it took a 3-day working weekend to finally understand what makes this organization so special. After seeing this documentary, a diehard “text, not video” guy like me can honestly admit the medium does great justice to this narrative.

Reproducing the organization blurb directly from skoll.org:

Barefoot College is a ‘not for profit’, hybrid Social Enterprise, providing development solutions to the challenges facing rural poor communities for more than 45 years, with the objective of making them self-sufficient and sustainable; valuing and respecting the knowledge and wisdom the rural poor already possess. One of few Indian-based nonprofits’ whose programs have been expanded and exported throughout the developing world, today Barefoot College operates in 93 countries & 15 states in India. 
 
These ‘Barefoot solutions’ are broadly categorized into delivery by and through rural women of Access to Renewable Energy, Education, Women’s Economic & Digital Participation, Women’s Wellness, and Water Management. Barefoot College is committed to empowering women as change agents, entrepreneurs, environmental stewards and leaders in their communities. The organization believes that placing women at the heart of the development and design process is the most reliable and effective way to pass on the wisdom, knowledge, and skills that all rural poor communities already possess, and which are so often undervalued and under-utilized. 
 
Barefoot College engages in building confidence and competence in individuals and entire communities through a partnership model, bringing about large-scale shifts in values and sustainable quality of life enhancement. The college is known for its ability to bring about systems change and policy change through innovative partnerships with governments, private sector & philanthropy.

A few times a year, I Google a few variants of “social enterprise news” with the hope of uncovering new kids on the block or some new social impact report. Measuring social impact is hard. For philanthropic organizations that do things other than direct investing (or give out grants) this is even harder.

Today my Google searches took me to Schwab Foundation for Social Entrepreneurship’s Two Decades of Impact report (Jan 2020). The foundation is a 22 year old organization with the World Economic Forum as a key partner. Practically all Indian media outlets that covered this report went with the headline India topmost country for presence of social entrepreneurs and provided just a few top-level factoids. The rest of this blog post is my attempt to summarize their 55-page PDF report with an India-specific lens.

The foundation supports 400 late-stage social innovators operating in 190+ countries. They support their awardees / member organizations by:

• Raising awareness of their work, giving them significant media exposure
• Gives them access to global networks, world leaders & partners via WEF
• Executive education at the Harvard Kennedy School
• Leadership coaching & mentoring

Top-level factoids

• 10 countries in which social entrepreneurs are most active (in descending order): India, USA, Kenya, Brazil, Uganda, South Africa, Mexico, Ethiopia, Nigeria, Tanzania
• Top 5 issues: Education, Economic opportunity & development, Entrepreneurship & enterprise development, Health & healthcare, Environment, climate & circular economy
• 622 million people impacted directly
  • Impressive number no doubt but it begs the question “to what degree” (the devil would be in the details of member org reports)
• 17 organizations achieving measurable progress across all SDGs

Impact Snapshots from member orgs

• Room to Read [India + 6 SEA countries + South Africa, Zambia, Tanzania] has changed the trajectories of 16 million children in 16 countries through its literacy program and its Girls Education program
• Mothers2Mothers [South Africa] has reached 11 million women and children with HIV treatment services, also created over 10,000 jobs for women living with HIV
• d.light [70 countries] has reached 100 million people with solar products, created employment for 1000 people
• VisionSpring: affordable eyeglasses to 7 million people
• Homeless World Cup: has lifted 1.2 million out of homelessness and established 74 worldwide partner orgs
• Organizations that attributed scaling partnerships to Schwab Foundation: Tech Matters (Benetech), Marine Stewardship Council, PlanetRead, Nisaa FM
• Refunite has registered 1.3 million refugees, reunited 45,000 family members and trained 26,000 workers in Uganda
• Dimagi has digitized health workforces across 2,000 projects in 80 countries. In India, 500,000 health workers use Dimagi tech solutions
• Organizations that attribute fundraising success to Schwab Foundation: Dimagi, Nuru Energy, and Rags2Riches

Karuna Trust (A personal favorite since I know the founder Dr. Sudarshan)

Since its inception in 1986, Karuna Trust has grown to manage 71 Public Health Centers reaching 1.5 million people. Infant Mortality Rate (IMR) has reduced from 70 to 5 (per 1,000) and Maternal Mortality Rate from 280 to 50 (per 100,000 live births), in Karnataka, achieving 99.9% institutional delivery rate across the state. The Trust addresses 5 SDGs.

Report Methodology

• 20-question online survey by Foundation members, completed by 133 members (healthy 33% response rate) +
• impact reports of member organizations +
  • Indian organizations that contributed to report include Aajevika Bureau, Aravind Eyecare, Barefoot College, Daily Dump, Goonj, Indus Tree Crafts, Karuna Trust, Mann Deshi Foundation, Nidan, Namati, Operation Asha, Planetread
• in-depth interviews with 14 social entrepreneurs (Indian subset includes PlanetRead’s Brij Kothari & Barefoot College’s Meagan Fallone)

[Source for this blog post: Two Decades of Impact PDF]

Lest we forget the numerous mountains still to be climbed in India, this Firstpost photo essay reminds us.

You go down Tavarekere Main Road or as Bangalorean direction-givers are apt to say “straaaaaaaaiiiiiitu” until you almost reach, what looks like a dead-end but upon closer examination, is a fork in the road. Just after crossing the perpetually non-dry naala zone gingerly (it takes some careful walking to avoid getting splashed), you’ll see Manjunath Condiments on your left, the cycle repair shop will be bang opposite.

I reached Raghu’s shop around 11am on Sunday. This was a reconnaissance trip so I hadn’t taken the cycle with me. Explained to him that I had a gear cycle, needed to get a tune-up (many problems to fix) so I’d drop it off. He had 5 customers around him (at various levels of cyclical distress). He impatiently muttered something about Monday which I interpreted to mean “Drop it off, it’ll be ready by tomorrow”.

I reappear at his shop 30 min later and he snaps at me “Didn’t I tell you to come tomorrow? Sundays are just impossible like this!” (gesticulating at the people milling around his shop).

I didn’t budge.

He relented with “Ok. Park your cycle.. wait a while.. let’s see.”

Meanwhile, he was replacing the brake pads on a geared cycle, a job he finished in 15 minutes, for which he charged Rs. 150. He then proceeded to replace the chain of a kid’s cycle (took him about 3 minutes) before getting to my cycle.

I didn’t have to tell him anything – he just got to work.

• Step 1: inflated both tires and within 2 minutes diagnosed that front tire was perfectly ok and back one needed a tube replacement
• Step 2: Proceeded to replace the tube (another 3 minutes)
• Step 3: lubed the rusty chain, tested and tweaked the brake settings (5 minutes)
• Step 4: debugged that the gear shifter wasn’t working
  • Either the gear cable would need to be replaced (Rs. 120), or
  • Gear shifter would need to be replaced (Rs. 400)

Step 4 fixing was deferred to a later weekday evening and he set the chain in the middle-setting. He charged me Rs. 200 for his <15 min of super-efficient time & materials.

I returned a few evenings later. The gear cable was replaced in 10 minutes and I was on my way home on a smoothly running cycle. Time would tell whether I’d need to come back for the gear shifter.

Based on my experience with previous cycle repair guys, I would have easily parted with Rs. 500 (on a ‘fix everything’ cover) but Raghu stood out.

There’s honesty and there’s work ethic. When you see a perfect blend of the two, it’s so heartening.

If you believe in karma, you’d want people like Raghu to thrive.

I reckon a chat conversation with Raghu would be a logical next step.

This 2012 piece where I catalogued Bangalore’s social enterprises (30 of them) continues to be a popular destination for Google searchers. This is a redux post – essentially a 2020 update just by looking at their websites and media mentions.

1. Artoo: Disburse a loan. In 40 minutes. With a single visit. At the doorstep. Bringing with us the experience of 2,000 crores in MSME lending. Partnering with Ujjivan, Grameen Koota, RBL Bank, Muthoot. KYC verification, eKYC, eSign, eNACH.
2. Ayurvaid Hospitals: India’s 1st NABH Accredited Ayurveda Hospital, now expanded to Cochin, NCR and Uttarakhand. Over 1,00,000 patients served.
3. Babajob: In Jun 2017, Babajob (with presence in 20 cities) acquired by Quikr.
4. Desicrew: Appears to have undergone a significant pivot towards Super 10 – Presenting, the Super10 Package, a complete project delivery model to ensure optimum performance and on-time results. 10 select individuals who will work 24/7 for 10 days encompassing 100 hours to ensure 100% delivery. All this efficiency at the price of $2999.
5. DESI Power: Website continues to be underwhelming.
6. Embrace: Continues to chug away although their founder/CEO (Rahul Panicker) and head of Sales moved to Wadhwani Institute for AI. Website claims 300,000 babies reached across 22 countries.
7. Envirofit: Office listings in Bangalore show up in Google searches but global website only shows only the Pune location.
8. Head Held High: The list of formidable partners has grown.
9. Intuit Fasal [new URL]: Most recent blog post from Mar 2018 on Fasal Impact Stories – Grover Zampa vineyards and more.
10. Janalakshmi (Jana Small Bank): From 66 branches in 44 cities & 11 states (2012) they now have a whopping 202 branches across 20 states.
11. Kinara Capital: Seems to have gone gang busters in the past 7 years. $5 million round in Jul 2018 followed by a $14 million round in May 2019. Cumulative loans disbursed to date: Rs. 1,160 crores. Loan ticket sizes seem to have increased — now in the 2-20 lakh INR range.
12. LabourNet: enables sustainable livelihoods in urban and rural areas by bridging the gaps in Education, Employment & Entrepreneurship. Their traction numbers are quite impressive with presence in: 10 lakh livelihood centers, 800+ schools, partnerships with 2000+ organizations and over 12,000 pin codes covered.
13. Logistimo: continues marching on with its mission to improve lives and businesses by strengthening supply chains to connect remote communities with access to essential products, services and opportunities. Last time when I spoke to their CTO, they were testing the waters in Africa. Their international footprint now spans Senegal, Angola, DRC, Zambia, Uganda, Somalia, Myanmar, and Indonesia. Product portfolio includes supply chain management, transportation and logistics. Their sweet spot is vaccines delivery.
14. mDhil: With their Founder (Nandu Madhava) moving on in Sep 2015, safe to conclude mDhil has had some kind of exit.
15. Maya Organic: Still around but unable to assess growth in past 7 years.
16. Micrograam: Website numbers suggest modest traction: 30 crores disbursed, 17,256 borrowers, and 3,598 lenders. LinkedIn search shows low single-digit current employees.
17. Milaap: Per Crunchbase, they have acquired several new investors so their core crowdfunding model must have demonstrated traction. This is also reflected as sizeable number of employees on their LinkedIn page.
18. Industree Crafts: The evolution of Industree is captured here. Bragworthy numbers from their website: 30,000 women entrepreneurs trained, two producer companies Bangalore Greencraft and Ektha incubated and hit profitability; 2000 producers across their value chain.
19. Pro Nature Organic Foods: Alive and kicking.. though unable to discern their traction in past decade.
20. Orb Energy: On the back of an A-list leadership team, a roster of blue chip investors (Shell, FMO Capita & others) and apparently solid execution, Orb Energy has these bragworthy stats on their website: 160,000 systems, 75 Megawatts, 20 million liters per day, and 211,000+ tonnes carbon emissions offset.
21. Water Literacy Foundation [previously Rainwater Concepts]:  Ashoka Fellow Ayyappa Masagi continues to inspire and execute. His story most recently covered by TheBetterIndia in 2016 – here.
22. Rangde: Rangde.org is dead, long live RangDe.in. Their metamorphosis is best described by cofounder Smitha Ram – the making of RangDe 2.0
23. Rural Shores: Per LinkedIn company page, over 400 current or ex employees which appears to be a healthy number. Website locations page doesn’t load. Per Wikipedia, they have 19 delivery centers in 8 states (which sounds dated). Lok Capital sold their stake in 2014 to an unnamed investor.
24. Samhita Academy: School#2 started at Coimbatore. 57% of their Grade 10 students and 32% of Grade 12 students (2018-19) scored over 90%.
25. Selco Solar: Founded in 1994 by Harish Hande, to date Selco has sold, serviced, and financed 135,000+ solar home lighting systems. The growth in the past 7 years seems to be greatest in the Selco ecosystem.
26. Simpa Networks: Simpa pioneered the pay-as-you-go pricing model for rooftop solar with its patented IoT enabled SmartPanel technology. Clean energy access to over 250,000 people and is live on 50,000+ rural rooftops in over 5,000 villages across 21 districts and three Indian states. In Nov 2018, ENGIE acquired a controlling stake in Simpa. Simpa HQ changed from Koramangala to Noida.
27. Jana Care: low-cost, diagnostic tests with proven lifestyle management coaching, all delivered through a mobile phone to deliver actionable information to patients and health care providers. Primary care focus areas: diabetes and congestive heart failure. Nearly $10 million in funding and 50+ employees on LinkedIn and a very impressive array of technologies listed on their website, Jana Care (Bangalore + Boston) seems to have arrived for the long haul.
28. Sustaintech India: Headquartered in Madurai so either they relocated from Bangalore or I had it wrong An Apr 2016 Inc article profiles the Savita Bhogale and Sustaintech.
29. Ujjivan is now a Bank: Founded by Samik Ghosh, Ujjivan Bank now boasts following stats: 24 states/UTs, 233 districts, 43 lakh+ active borrowers, 49 lakh+ customers, 552 banking touchpoints, 16,000+ employees.
30. Vaatsalya Healthcare: India’s first hospital network across Tier 2/3 towns. Their founder/CEO exited in 2015 and Aavishkar (their 1st investor) took majority stake in 2018.

That’s the tag line for GiveDirectly, a 10-year old US-based non-profit making waves in 9 African countries. “Cash” for unconditional cash transfers and “you’ve got mail” for the m-Pesa notification for lucky recipients.

In a recently shared annual non-report, this visual caught my attention:

The $2.4 million grant from Google.org (2012) and a subsequent $25 million from Good Ventures (of Dustin Moskowitz fame) are not included which makes the ramp-up even more impressive.

GiveDirectly operating model spans across 4 steps:

1. Target: first locate extremely poor communities using publicly available data then send field staff door-to-door to digitally collect data on poverty and enroll recipients.
2. Audit: use a set of independent checks to verify that recipients are eligible and did not pay bribes, such as physical back-checks, image verification, and data consistency checks.
3. Transfer: transfer recipient households roughly $1,000, or around one year’s budget for a typical household; use electronic payment systems; typically, recipients receive an SMS alert and then collect cash from a mobile money agent in their village or nearest town.
4. Monitor: call each recipient to verify receipt of funds, flag issues; also staff a hotline for inbound calls and in some cases staff follow up in person.

The GiveDirectly FAQ does a very good job outlining their unique value proposition. Pasting the most evocative subset below:

How do you decide to whom to give cash transfers?

We aim to find the poorest possible recipients while using criteria that are simple, fair, cost-effective, and difficult to game. Currently, our default is to locate extremely poor villages using poverty data from national surveys, and then enroll all households in the village. In the past we have also selected the poorer households within villages using simple criteria, e.g. enrolling families living in homes with thatched roofs and not those with metal roofs, and also experimented with a wide range of other targeting approaches including community-based methods, points-based systems such as the Progress out of Poverty Index (PPI) and the Multidimensional Poverty Index (MPI); subjective assessments; and various blends of these approaches.

How much do recipients get?

For one-time transfers, we typically send each recipient household roughly US$1,000, which is around one year’s expenditure for the average household and around US$200 per family member for the average family of 5. There is nothing magical about this amount, but it reflects a few factors. First, it is fair in the sense that US$1,000 is the amount the average recipient household would need to invest in order to raise its income to the level of its ineligible neighbors. Second, it reflects existing evidence, in the sense that US$1,000 is in the ballpark of the total amounts delivered by other programs that have been studied extensively (with the main difference that these programs transfer money over longer time periods). To put US$1,000 in context, in a typical setting where we work this would buy you 5.5 years of secondary schooling, 5.2 years of basic food requirements for one adult, 1.2 acres of land, or metal roofs for 4 houses.

How do recipients use the transfers?

By design, cash transfers let recipients use money for whatever is most important to them. Innovations for Poverty Action’s evaluation of our transfers in Kenya found increases in expenditure across all categories measured, including food, medical and education expenses, durables, home improvement, and social events. It also found large increases in income and in asset holdings, in particular livestock, furniture, and iron roofs. In addition to this research on GiveDirectly’s transfers, there is a large body of research from around the world documenting the impacts of cash transfers on low-income households. See GDLive for a good idea of how cash is being spent in real time.

Is giving cash sustainable?

Usually when the word “sustainable” is applied to charity, it means that a gift “keeps on giving” and that donors need not continue to make gifts to the same recipient. Since many GiveDirectly grant recipients use some or all of the money to invest in small enterprises, many of GiveDirectly’s grants are “sustainable.” Indeed, one study of unconditional cash transfers in Mexico found that household incomes increased by between 1.5 and 2.6 times the amount of the transfers due to the returns from increased investment (Sadoulet, Elisabeth and Alain de Janvry, and Benjamin Davis. “Cash Transfer Programs with Income Multipliers: PROCAMPO in Mexico.” World Development 29(6) pp. 1043-1056, 2001), suggesting that cash transfers are more than sustainable. Beyond short-run income changes, investments in adequate food, proper clothing, better health, or more education for children may be “sustainable” in the long run; even though it will require charity until that child is done with school, he or she will grow up much better off and in need of much less assistance than his or her parents.

Not all recipients will invest the money, however, and it will be gone once it is spent. Donors who prefer to give a gift that is guaranteed to be sustainable in the sense that it will provide a steady income stream to the poor can do so. One easy option is for the donor to invest a gift themselves and donate the annual interest, effectively creating an endowment.

Why not put conditions on what people have to do to get transfers?

We choose to provide unconditional, rather than conditional, cash transfers for two reasons. First, empowering the poor to make their own decisions advances our core value of respect. Second, imposing conditions requires costly monitoring and enforcement structures be put in place. One detailed estimate put the administrative costs of a conditional cash transfer scheme as high as 63% of the transfers made over the first three years of the program (Caldes, Natalia, and John Maluccio. “The Costs of Conditional Cash Transfers.” Journal of International Development 17 pp. 151-168, 2005). Our read of the existing experimental evidence comparing the impact of conditional to unconditional transfers is that there is little evidence to suggest these added costs produce commensurate benefits.

In all my readings on their website, the only thing that surprised me is that their financial efficiency (how much of a donated dollar gets in recipients’ hands) is only 85%.

Is it a coincidence that I invoke Dr. Trilochan Sastry in yesterday’s post and today there’s a message from him in my Inbox? Either that or I have psychic powers.

Dear Sir/ Ma’am,

To give you a bit of a background, India Farm Foods (IFF) with brand name Farmveda (www.farmveda.in) was founded in 2016 to raise farmer incomes substantially on a large scale. All profits of Farmveda go back to farmers. At the back end, Farmveda is supported by Farmer Producer Companies. There are over 30,000 farmers already in them based on field work done since 2004. The number is growing each year. 

The goal of this work is to make farmers of India prosperous. The inspiration comes from AMUL and other dairy cooperatives that raised 1.5 crore families out of poverty and made India the world’s largest producer of milk.

Seven years ago, this farmer cooperative in Anantpur had a little less than 1000 members. Membership has now swelled past 30,000 and they’ve moved beyond the humble chikki to.. ready-to-cook snacks, chocolates, peanut butter.. and they are probably just getting started.

This wouldn’t have happened if one Dr. Sastry had just remained an academic. Instead, he channeled his inner social activist and social entrepreneur and decided to do something. That something has the makings of something powerful and Dr. Verghese Kurien is surely smiling proudly from up there.

Farmveda is sending out attractive and healthy gift hampers @ Rs. 250 . I don’t know about you.. but I am buying up their Combo 2 (millet dosa mix, chutney podi, roasted peanut chocolate, choconuts) or maybe it will be Combo 3 (lemon poha mix, upma mix) or.. what-the-heck I’m going to order both of them.

Since I first read about unconditional transfers (in Banerjee and Duflo’s Poverty Economics book), I’ve been fascinated about this seemingly this-cant-possibly-work approach to foreign aid. Later I discovered GiveDirectly, a nonprofit organization operating in East Africa that helps families living in extreme poverty by making unconditional cash transfers to them via mobile phone.

Last week heralded the completion of (possibly) the most ambitious and expensive RCT in the field of unconditional transfers. Researchers spent 5 years and $10 million in Kenya to answer the following questions:

What happens to one of the world’s poorest places if you randomly pick more than 10,000 poor families out of an eligible pool and give them $1,000 each, no strings attached?

Furthermore, what’s the impact on their neighbors?

Does that do you any good at all? Or is your neighbor’s luck your misfortune, because local prices jump, say, leaving you worse off than before? Setting aside the direct recipients, what do cash transfers do to local economies?

And what did they find?

Cash transfers benefited the entire local economy, not just direct recipients.

I’m reminded of a talk by Dr. Trilochan Sastry where he exhorted a young group of social entrepreneurs this “To start with, just don’t make the situation worse for the impoverished segment whose lives you are attempting to improve.” This might sound jaded but it’s really a cautionary advice based on many misadventures caused by “well meaning” folks.

Against that cautionary backdrop, it was such a relief to learn that:

They could find little in the way of adverse effects from the experiment, either in villages that got the cash or in those that didn’t. Spending on temptation goods — such as cigarettes, alcohol and gambling — did not increase. People didn’t work less. Rates of domestic violence didn’t change, nor did more children drop out of school. Local income inequality levels did not change. And contrary to a common fear, the program had minimal effect on prices: Inflation increased less than 1 percent over and above Kenya’s overall rate.

The positive impact of this intervention was massive.

What made the study really path-breaking, though, is that it was huge: The money handed out amounted to more than 15 percent of the GDP in the treatment area, reaching 10,500 of the 65,385 households there. Dump that much cash into a local economy, and you would certainly expect it to grow. But by how much?

Every $100 given directly to the poorest households was generating between $250 and $270 in GDP. That’s a fiscal multiplier in the range of 2.5 to 2.7 18 months after the money was spent — a huge (fiscal multiplier) number by global standards. [PDF link]

How come? Because the very poor spend their money locally, and the shops they spend it at, in turn, spend it locally again, a chain effect that stimulates demand and lifts revenue for the tiny businesses throughout the area. The research found some evidence — though not conclusive — that local wages had risen, perhaps more strongly in villages that directly received cash than in their neighbors.

This week’s great reportage brought to you by Francisco Toro in this WaPo article.

Two other amazing related WaPo articles that you must read:

• Miracle treatment for world poverty
• Foreign aid as a cash-only transaction? It’s worth a try

What is it about startup life that makes it seem way longer than it was? My recent mGaadi journey lasted 3 yrs 8 months but it felt like 5 years. My previous journey (Graspr) lasted an intense 13 months but felt like 2 years.

In my first stint as entrepreneur (2007-08), I had a healthy respect for VC’s. When it came to pedigreed angels, the respect was tinged with awe. Against this backdrop, perhaps it’s not surprising that I can recall a few positive investor interactions. I’ve cherry-picked three insights from meetings with angels/entrepreneurs during the Graspr fundraising process.

1. Mike Maples: We first met him for a pre-pitch exploratory meeting at a diner in Palo Alto followed by a formal meeting at his office a few weeks later. He said many things but the story of startup X (that he presumably invested in) left an impression. X was a premium services play (at a time when that breed was quite rare). Maples described the disciplined stewardship of X by its founder like this “First we spread the word among our network and got our initial sales… Once we exhausted that channel, we started spending on Google AdWords. Once we mastered that channel, we started looking for partnerships.”
2. Aydin Senkut: An early Google employee who started Felicis Ventures, what was then a boutique seed fund and would eventually become a wildly successful fund. The story he shared was that of 5min. We were quite familiar with 5min as they were a competitor with a headstart. They were also in the news because their seed funding cap table was leaked (capricious angels who had gobbled a lot more equity than they should have.. if my memory serves me right and I’m NOT going to Google!) What Senkut found beautiful about 5min was their “5 minute constraint” – all their how-to videos HAD to be no more than 5 minutes long. Some 6 months later my pal and colleague from Yahoo (David Beach) would espouse a similar love as he talked about his creation – 12seconds.tv (video shares under 12 seconds).
3. Max Levchin: I’ll skip the intro since who doesn’t know Max? We were hoping to get his raw unfiltered feedback (seasoned serial entrepreneur to rookie entrepreneurs). And we sure hit pay dirt. My partner (T) walked him through our here-now to 18-months-later story. He had very useful advice on a range of issues but he delivered the punchline at the end: “We are a 60-person startup with 10’s of millions of monthly active users and are ‘nearly legit’ but I still don’t know what we will be doing 6 months from now and you are telling me your 18-month plan?” He continued, on a sober note, “We’ve got really talented engineers, we’ve cracked images but we are not touching video. Video is hard.”

Perhaps I cherry-picked these stories because it’s the short version of why Graspr failed? Our product was not anchored on a constraint. We didn’t have a monetization model. We were doing video. And we didn’t have a video czar on our team.

But yeah.. it’s the short version.  

The term sheet was in our inbox and we had the customary 2-3 days to respond.

We had much to be happy about. After all, the term sheet was from one of the blue-chip VC firms with two celebrity partners. Since we had passed ‘their’ test, the outcome seemed to validate our endeavor that extra bit more.

Alas the terms. We were looking for $4-5 million and the offer was at the midway mark. This was the high order bit damper. The rest of the terms (liquidation preferences, tag-along rights, etc.) were bad but they were the ‘normal’ Silicon Valley bad, i.e. everyone except the super-hot startups had no choice but to accept them.

Fundraising, my friend and mentor Anurag had explained earlier, had to be run with the quantitative discipline of a sales funnel. If a lead turned cold, a prospect MUST be convert into a lead.. if a warm lead had cooled off, someone else HAD to be turned into warm and so on.

A sales manager/director couldn’t miss his quarterly number and the startup CEO couldn’t miss her fundraising target. This is where the similarity ends. In most cases, the startup CEO would end up choosing one from the plethora (or paucity) of term sheet options.

Whether we failed in our quantitative discipline or the market disgreed with our optimism (circa 2007 Q1?) we had just that ONE term sheet. No warm waiting-on-the-wings VCs whom we could tempt.

It was take-it-or-leave-it.

On the ‘leave’ side there were a few angels ready to partially bankroll us (partial meaning 6-8 months runway).

One of my partner’s advisors struck a cautionary note “It’s not a great deal but there are many startups that refused their first Series A term sheet and went on to NOT raise any money in future.”

Anurag was more blunt. “If you don’t believe in your idea, take the money,” he said.

He didn’t need to elaborate. I knew what he meant.

If we truly believed in our company, we would have had the conviction that a few (or several) months later we WOULD find other investors at our terms.

It didn’t help that we had run out of money from the seed round.

We blinked.