Previously on the John Keells X Open Innovation Challenge 3.0, we saw a series of workshops and Tuesday meetups. At these events, we learned a lot about what startups should and shouldn’t do. But that was only the opening act. The pre-accelerator stage saw many more workshops and Tuesday meetups during the month of May. Here’s what we learned at these learning experiences during the John Keells X 3.0 Pre-Accelerator Stage.
Going about your valuations, the right way
The month of May started off with the Corporate Finance workshop delivered by Nabiel and Eneeshya form the JKH Corporate Finance Team. In addition to equity splits, sweat equity, tracking performance and KPI’s, the workshop largely focused on valuation methodologies and how each of the startups can utilize them to do their own valuation. There are primarily 3 methodologies that could be utilized.
The first is the market approach. This is where a valuation is derived based on what’s already available in the market. The second is an asset-based approach. This approach requires you to place a value on all the assets on a company’s balance sheet and add them up. The third is the venture capital method. As the name implies, this stands from the viewpoint of the investor.
“An entrepreneur to me starts off with the simple question of ‘is he a problem solver?” said Dimuth Fernando, Chairman of Asia Security Holdings, as the first John Keells X Tuesday meetup of May kicked off. Throughout Dumith’s talk, he shared his experience on valuations and investments. He also talked about his learnings from mentoring startups over the years. Followed by a brief Q&A session, the day’s events came to an end.
The basics of social media marketing
The next John Keells X workshop in May was focused on Growth Hacking and utilizing YouTube. Kicking things off, we saw Indulekha Nanayakkara – Social Media Consultant & Trainer. She opened the workshop by sharing the basics of social media marketing. At its core, it isn’t too different from marketing in general.
You raise awareness from your product or service and then get customers to buy it. The only difference is that with social media, there’s a cycle to it. The first step is to raise awareness of your brand among your target customers. The second step is to engage with them and have conversations. Only after that should you go for the final step, which is making the sale.
These three steps are achieved by first drafting a strategy. This strategy should consist of a series of specific goals that can be measured. To ensure this strategy is effective, Indulekha encouraged the startups to create a customer persona. In a nutshell, a customer persona is a description of the target customers of the business. Finally, it’s all about drafting a content plan with a mix of images, videos, blog posts, etc. and executing it towards achieving the goals originally set out in the strategy.
Understanding growth hacking
Having explained the basics of social media marketing, Indulekha moved onto growth hacking. She introduced this concept as any marketing tactic that has three unique characteristics. Firstly, it doesn’t always have to involve technical effort. Secondly, it exploits a psychological feeling. Thirdly, it’s either free or costs very little. An example of growth hacking she shared was the Facebook story.
Back when it first started, the company sought to get students in smaller colleges in the US as users. The larger ones already had their own social networks. But the user base of all the smaller colleges was massive. So students in the larger colleges also joined the network without wanting to miss out on anything.
Utilizing video effectively
Later, we saw Pradeepa Jeeva – Head of Content Strategy at Snake Nation address the startups at the workshop. She opened by highlighting how different startups have to create different types of content to connect with their customers. Hence, there’s no one size fit’s all strategy available when it comes to marketing for any business.
Pradeepa Jeeva speaking at the John Keells X workshop on utilizing YouTube effectively
Yet, Pradeepa stated that it was essential for businesses to put out content. This was especially true for the first 90 days following the launch. She also encouraged the startups to explore a multi-platform strategy to promote themselves. As they do so, Pradeepa emphasized the importance of understanding the differences of each platform. For example, you can put a 5-minute video on YouTube, but not on Instagram or Facebook.
Later, we saw Janeeth Rodrigo – Head of Digital at Derana and General Manager at Ideahell, share his thoughts at the workshop. He encouraged the startups to release three types of videos if they would run a YouTube channel. The first would be regular videos that resonate with your audience to ensure there’s always fresh content.
The second would be viral videos, which are challenging to make, but a place to start would be to look at Google Trends and make a video based on what people are talking about. The third would be tutorials or how-to videos, which never go out of style. He then concluded by sharing a few general tips on how anyone could create good videos and create a community on YouTube.
What an investor wants from an entrepreneur
“The monetary goal is not the starting point. Building a world-class sustainable business is,” said Ajit Gunawardene – Founder & CEO of Bluestone Capital Private Limited kicking off a long-awaited John Keells X Tuesday Meetup. He then went on to emphasize that such businesses are built when entrepreneurs offer what the market needs. He also reminded the startups, “Nothing goes from zero to a billion overnight. There has to be a step by step approach.”
This step by step approach is something that investors will need to know. Ajit explained this by stating that, “Startups are cash hungry by nature.” As such, an entrepreneur should seek investors willing to fund them multiple times. The first cheque helps them achieve a certain goal. After achieving this goal, the entrepreneur goes back to the investor to get the second cheque to achieve another goal. Likewise, the cycle continues to ensure the business grows.
However, Ajit warned that the path of an entrepreneur is not an easy one. “It will strain every relationship you have,” he said. Entrepreneurs should never underestimate the stress of trying to build a sustainable business. Hence, they need to be crazy and obsessed about it 24/7 if they ever wish to succeed.
Ajit added that it is this obsession that investors really invest in when it comes to startups. He added that startups should always seek investors willing to lose their money. Such investors expect 9 out of 10 startups they invest in to fail. But the one that succeeds would cover their losses. But that doesn’t mean these investors would allow the entrepreneurs that got their money to relax. Having shared these basic tips, Ajit spoke of the journey of PickMe and other lessons he’s learned from the ecosystem.
Diving into the legal essentials of a startup
The next workshop dealt with the legal aspects of launching and running a startup, delivered by Anushka Corray and Ramesh Perera from the JKH Legal Team. Anushka gave the teams a walkthrough on how to register a company and the forms and documentation needed to do so. She also spoke about the duties of a Director of a company. These are derived from the Article of Association. She explained that the primary responsibility of a Director is to the company and then the shareholders. “You are responsible to ensure that the company is running well and debt-free”, Anushka added.
Anushka then spoke about methods of keeping a company safe. One such method is to have a contract in anything you do. “It’s important to get everything in writing”, she added. This includes the period of employment, rights and responsibilities of both employers and employees, employment conditions, transfer of IP (work for hire) and most importantly, confidentiality. Employees should understand the importance of maintaining the confidentiality of sensitive employee information such as performance reviews and pay levels.
Ramesh Perera then spoke about carrying out business transactions with suppliers and customers. He emphasized that an agreement should list down all obligations, rights and payment clauses as agreed upon during negotiations. Once a contract has been drafted and confirmed by everyone, it can be executed. The contract must be signed by parties authorized. Contracts might also require the presence of a notary public.
Once the contract is executed, it must be correctly administered in a timely manner. There should also be a periodic renewal of contracts before or upon registry. You should also ensure that your team or employees are aware of the obligations under such conditions. Ramesh then spoke about the SPA Share Sale/Subscription and Purchase Agreement. This is an agreement that sets out the terms and conditions based on which the shares of a company would be sold or purchased. The seller is required to make full disclosure of information material to the company.
Ramesh also spoke about methods of protecting intellectual property. These include Patents, Trademarks, Copyrights, and Industrial Designs. Ramesh proceeded to explain each method and provided examples as well. With a Q&A session following Ramesh’s presentation, the Legal Workshop came to an end.
The importance of finances and branding
Last but not least, was the financial accounting workshop delivered by Sanjeewa Gurusignhe and Samadhi Hondamuni from the JKH Group Finance Team and Kasun Perera from the JKH Group Tax Division. Here, the primary focus was on the 3 main financial statements, the cash flow statement, income statement, and the Statement Of Financial Position (SOFP). The workshop touched on some of the more important aspects in this regard such as Plant Property & Equipment entries on the SOFP, operating expenses on the Income Statement, depreciation, etc.
Afterward, the 15 teams walked through a sample case study as an exercise. Following this, the workshop went on to talk about the different types of taxes. The discussion focused on taxes such as income tax, VAT, NBT Tax, and how these affect the everyday business process.
Ramesh Shanmuganathan – CTO of John Keells Group speaking at the final John Keells X Tuesday Meetup
After the workshop, we saw Ramesh Shanmuganathan – Group CIO of John Keells Holdings, take the spotlight. He started his session by touching on the importance of personal branding and the important role it plays in enhancing the brand of your company. He talked about the importance of building your own ‘ecosystem’ and the synergies that come with it. Ramesh went on to share his own experiences, being a part of John Keells for over 13 years.
He also took the startups through a series of elevator pitches and stressed on the important facts that should be included in such a pitch. Here, each team got the chance to pitch their startup and receive feedback prior to Demo Day.
Heading into the John Keells X demo day
With that, marks the end of the workshops and the meetups for John Keells X 3.0. The next item on the agenda of the pre-accelerator stage is the grand demo day. On this demo day, the startups will take the stage and show how they’ve grown over the past 3 months. The best of the best will walk away with Rs. 2.5 million in seed funding and be officially accepted into the John Keells X accelerator.
Alongside this seed funding, they would also obtain the connections of the massive conglomerate, further training, and workshops, free office space, and other resources, mentorship, access to JKH corporate services and the chance of obtaining up to Rs. 50 million in funding in the future. So which startups will get accepted? We’ll find out soon enough.