Welcome to Eoindia startupstories| Market Finance

Entrepreneur Name: Sawan ShahBusiness Name: Market Finance

Each week we will ask an Indian entrepreneur 11 questions so that we can all be inspired by their stories.

Every business, especially new businesses, need access to finance in order to grow and be successful.

Today we meet a #startup who is in the business of helping other businesses get access to that much-needed cash. MarketFinance India is a platform specifically catered to help small businesses get improved access to loans, offering a wide range of collateral free loans for businesses including invoice discounting, dynamic discounting, working capital and term loans.

Although small businesses make up 45 percent of India’s industrial output, their access to capital hinders their ability to grow significantly. Established by two INSEAD Business School students who shared the same desire to help businesses grow, MarketFinance was built to enable small businesses in India get the capital they need to succeed.

@marketfinance.india makes it easier and cheaper for business owners to apply for business loans in India. The business has formed partnerships with 16 banks and NBFCs licensed by the Reserve Bank of India. Additionally, with Invoice Discounting, MarketFinance has created a mechanism to allow individual retail investors and institutions with liquidity to purchase invoices issued by small businesses to larger clients.

We chat to the co-founder Sawan Shah and find out more about his exciting #fintech venture – Market Finance.

Welcome to EO India, Sawan, we are excited to hear how this venture came to be…

1. How did you get your idea for this business?

I have been working in finance for 13 years, most recently having established a lending company in my home country, Kenya. Small businesses in Kenya suffer from a lack of working capital, and I saw an opportunity to establish a niche where the banks were operating in a slow and inefficient manner. When I decided to go to INSEAD business school to complete my MBA, I met my cofounder Ashwin, who, following a long stint at Goldman Sachs in London, had embarked upon an entrepreneurial journey of his own by helping set up one of India’s most critically acclaimed film production companies. He made me realise that working capital issues are prevalent for Indian businesses too, which is how the idea was formed to create a lending platform to help facilitate loans for small businesses.

2. Why is "now" a good time for this idea to exist?

Working capital financing has always been an issue for Indian small businesses. Previously, lenders were hesitant to lend to these businesses because the operational cost of due diligence was the same for a small business loan as it was for a large corporate loan, with the pay off in terms of deployment of funds being much higher with a corporate loan. But with advances in technology, it has been much easier to bring down the cost of due diligence. At MarketFinance, our platform accepts digital documents, and an algorithm processes the loan application before any human intervention is required. In addition, the process of credit administration has become that much easier, with documentation being digitised as well. Once documents are signed off, loans can be disbursed in seconds. We have found that borrowers and investors alike enjoy the use of technology to facilitate transactions in a quicker manner than ever seen before.

3. What was the reaction from your family when you first decided to become an entrepreneur?

I come from a family of entrepreneurs. In this sense, I have been very lucky to be given the freedom to pursue my entrepreneurial dream.

4. What was your biggest failure in business and what did you learn from it?

I remember my first ever business venture was after I came back holidaying from Malawi. I had seen locals eating packets of soya chunks which they would cook with tomatoes and onions, and I thought this would be a really cheap protein alternative for people in my home country of Kenya.

I proceeded to have discussions with the manufacturer and then ordered a container of the stuff to test the market.

Mistake Number 1)

Testing the market means examining the feasibility of the market to have a demand for your product in the cheapest way possible. I should have taken samples and run tests all around Nairobi and the surrounding areas, rather than spending $20,000 on a container load (yes, that’s right).

I brought the products into the market, only to realise that they had not got a certificate from the Kenya Bureau of Standards, meaning they could not be sold until inspection

Mistake Number 2)

Never fall foul of regulations – They will come back to haunt you. The shelf life of the product was 9 months, and I had to warehouse the goods for 3 months before the inspection was done and the goods cleared for sale.

I approached supermarkets to ask for my product to be trialed, and spent the next month going from door to door, begging for anyone to showcase my product.

Mistake Number 3)

An effective logistics and distribution arm for your product is always necessary. You need to spend time and energy laying it out, and developing relationships. I had too much pressure to flog my product because of the limited shelf life, and so was too eager to get things moving fast. In hindsight, this meant I probably developed relationships with the wrong retailers, in the wrong areas.

Finally, I started running taste trials with my product in the supermarkets. I noticed that the days I ran trials were great for demand, people would often buy 3 or 4 packets at a go. Unfortunately, I was a one man band, and did not know of other ways to market my product.

Mistake Number 4)

It is OK not to have a ready marketing plan, but you must have several ways of hitting the market, and be prepared to test the ways, and either expand on the ones which work (by hiring more staff to replicate your efforts across more locations), or pivot or drop the ones which don’t. Be prepared to test on multiple fronts, especially in the age of social media, you have to take advantage of these tools, whether B2B or B2C. And once things start working, do not be afraid to push the method further and expand on it.

Mistake Number 5)

Do not go about doing everything on your own. It is a tremendously lonely road, and also, you have no one to support you on your weaknesses. Find some co-founders, or hire if necessary.

About a month before the products expired, I became very distraught that my venture had failed. I sold the remaining stock to an animal feeds manufacturer at a severely discounted price, and gave up the venture entirely.

Mistake Number 6)

I gave up. The worst mistake possible. The idea was absolutely fine, but the execution and strategy needed to be improved. You need to give yourself the time and energy to make something work, and learn to be patient. On top of this, you shouldn’t take setback so personally. I learned this the hard way, when 6 months later, the product started being sold by another distributor, who executed the strategy in a much better way than I ever thought of.

This was in 2011, and I still make many, many mistakes on my I have learned that this is alright however, as long as you continue to learn and figure things out as you go along. If you have the stomach for this, then entrepreneurship is the most fulfilling thing you will ever do.

I GAVE UP. THE WORST MISTAKE POSSIBLE. THE IDEA WAS ABSOLUTELY FINE, BUT THE EXECUTION AND STRATEGY NEEDED TO BE IMPROVED.

5. What is your biggest obstacle in the next 12 months and how will you overcome it?

We have found that traditional lenders continue to be hamstrung by slow and conservative lending policies, especially in the field of working capital. We are overcoming this through the introduction of our invoice discounting product, which bypasses banks and NBFCs, and allows retail and institutional investors looking to make a high rate of return do so with credit worthy borrowers in a relatively safe manner.

6. What habits contribute to your success?

Being able to recognise failure quickly, and learn from it

7. If you had the opportunity to start this business again what would you do differently?

It would be listening to my gut a lot more, and running with our previous idea, rather than testing the market. Having said that, the learnings we have gained from this past year have truly been invaluable.

8. What is your favourite inspirational quote?

I don’t have a favourite, however, I just read "Shoe Dog’, by Phil Knight, and the most inspiring quote I have from him is "Every runner understands this. Front runners always work the hardest, and risk the most."

9. Where do you find inspiration?

My father was a classic entrepreneur, in every sense of the word. Gifted with amazing thoughts, and a natural charm and charisma, he also lived life to his own strict moral code. I feel he left this world not having fulfilled his potential in so many things. He made me realise that we live on borrowed time, and despite the gifts we have, we need to execute them to our fullest because we never will know when our time will come to an end

10. What is your favourite book?

• One flew over the Cuckoo’s Nest’ by Ken Kesey

11. What advice would you give to someone starting out?

Take your time, and forgive yourself for your shortcomings, so long as you learn from failures. Most importantly, remember that there will be huge highs and lows in business, and you need to be able to deal with these fluctuations, and not let your business life affect your personal life.

As usual a big thank you to Sawan for the interview. We know that this story and your business will be very popular with our audience.

Access to finance is key to the success of every business, so the startup world in India needs innovative solutions, such as Market Finance. We also love your detailed answer to question 4. Many of us we learn a lot from this. Thank you for reminding us that the biggest mistake is to GIVE UP #nevergiveup

If you want access to finance please check out their website or Facebook page and get in touch with them.

Don’t forget to check out the recommended books below. Until next week… happy reading.

Suhail is from Kerala, India. He is an enthusiastic writer and his core areas include web content writing, journalism, reviews and fiction. He currently works with Entrepreneurs of India.