Hay Group India: Determined to create successful startup stories
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Global management consulting firm Hay Group’s NextBig100 program aims to enable 100 startups into the NextBig 100 Companies of India. Selected startups will have access to experts, who would advise and support them on all their talent and growth challenges. Entrepreneur catches up with Debabrat Mishra, Director, Hay Group India, to gain more insight on the recently launched incubation program and how it will handhold startups to evolve into a full grown organization, with best-in-class people, systems and processes.
How many startups have you selected till date?
Out of 400 applications, we have selected 65 startups like SunVest, The Upcycle Project, DeBox and Online Yogi amongst others. We have divided startups across East, West, North and South region and the response has been pretty well. Around 65 per cent startups with us are in bootstrap stage and another 35 per cent are looking for funding or already have funding in place. According to me, if it’s a bootstrapped startup, with six months worth of finances in place, then it should be able to take its minimum viable product to the marketplace and test out the commercial viability. So, a startup should have bootstrap funding of about 6-9 months.
What criteria Hay Group applies to select startups?
For us, startups could be from any space. We are not doing this to make money like the VCs, so we are open to any startups as long as we can make them successful. Most important thing we look in startups is the right mindset, their focus on generating revenue and customer acquisitions, and building sustainable organization. We don’t select startups that are interested in valuation, but are interested in making their venture successful in the long run. Founders, who want to solve something big and want to be there for the long run, are the ones we focus upon.
What other resources or support do you to provide to startups?
We are helping them with the people management systems, processors, HR and tool kits along with helping them connecting to the larger network of our clients. There are startups which can start selling to almost all our industrial clients because they have solution for the industrial space. There are startups which can benefit from connecting with clients because they have access to a wider platform/retail space. We are going to help them with all these dimensions, and the mentors will provide them guidance on every single aspect. We have a team of 60 odd consultants, who are working on tool kits in regions like Mumbai and Gurgaon among others.
How Hay Group stands to benefit from this?
We don’t acquire any kind of stake in selected startups, but focus on making them successful. We don’t charge them for our services. In case these startups would like to continue with us, then they will be treated like any of our clients, but till they are going to the Series A stage, they will not be charged anything.
For us, the benefit will come after two years from now. Out of the 400 startups registered with us, even if 2 startups become big companies, we are very much happy about playing our part of making them successful. Hopefully, they will seek Hay Group’s services to help them solve future complex problems, and then we will charge them.
What’s the duration of the incubation program?
Till the startups become successful, we are not planning to abandon them. We are focusing on helping them scale-up and make them revenue positive. We are committed to help them till Series A. When they hit Series B, they have to grow on their own. Specifically, the period could range from six months to a year and a half. We are not calling ourselves as incubator, we are somewhere between an incubator and accelerator, as we are working with startups of all stages.
Will Hay Group also invest in these startups or assist them in fund raising?
We will not be providing them funding, but will help them connect to the people, where they could get funding. Or we could show them how they could raise funds in a bootstrapped mode. We don’t believe in Angels and VCs because they are more interested in buying a stake and exit. We have partnered with companies like Microsoft, which wants to build an ecosystem for startups to become successful.
Which are the focus areas for Hay Group?
We are looking for startups operating in areas like Internet, Fashion, Health and Wellness, Sports, Data Analytics, Parenting, Internet of Things and marketplaces. We are not taking any sectoral bets, but are bullish upon the founders and not necessarily on the sectors they belong to.
Which is the one area in 2016 that you are bullish upon and why?
Internet of Things (IoT) is the next big area, and anything which enhances retail experience is the next big space to look out for. But what I am concerned about is that in India, herd mentality is very strong. Once Zomato became successful, then every other startup started venturing into discovery app space. Similarly, once Naukry.com became successful, many startups came up with ideas of job portals. Hence, the tendency is of making money and really not solving any problems.
With Inputs from Sunil Pol