Working out of their picturesque villa office right by Candolim beach in Goa, entrepreneurs Varun Chawla, Alakshi Tomar and Abhimanyu Rathi are building something special.
What they are building is a one-of-a-kind integrated and innovative community that supports the development of startups that positively impact the mind, body and earth. Going beyond the contours of the conventional startup ecosystem, it’s a future “where minimalism, sustainability, wellness, personal development, self-reliance, wealth distribution, and community living are the norm”.
To achieve this, Varun, Alakshi and Abhimanyu have established build3, a startup studio that helps ESG (Environment Social And Governance)-aligned startups grow.
“A startup studio is a hybrid between different models of incubators, accelerators and venture capitalists (VCs). It is a collection of experienced founders who come together to build startups from scratch. We are deeply involved with them daily and support them with resources like trusted vendors, business frameworks, mentors, etc. Just like a Sherpa in the mountains, build3 guides and helps founders of early-stage impact startups navigate their entrepreneurial journey,” says Varun, co-founder of build3, speaking to The Better India.
“New founders get a team of seasoned experts who have built their own startups or who have been part of founding teams of other start-ups. Startups get access to resources beyond the build3 team to help grow their businesses,” says Alakshi.
“We invest up to Rs 1 crore ($133k) in technology and services startups and up to Rs 3.75 crore ($500k) in manufacturing and engineering startups. Additionally, build3 has a robust network of value-aligned investors who may be approached in case they need more funds and a trusted list of vendors that help you sort out the nitty-gritty of the business like running your social media handles, proofreading legal documents, building your website, etc.,” she adds.
The company works with founders hands-on for 12 months. During this period, the objective is to ensure that the startups in their roster have gained “a large degree of financial and operational independence”. “Having said that, our engagement with our startups is for life and we continue to support our startups even after the building period,” says Varun.
Ryan Prazeres, CEO and co-founder of OneBoard, a travel tech startup which provides a digital platform for experience-curators in Goa to increase their earnings, says, “build3 is very purpose driven. They generally focus on startups which have a social impact. As a startup studio, they even fund and mentor startups that are in the pre-seed stage. At this stage, startups have no structure. When we began our engagement with them, we hadn’t achieved product-market fit.”
The build3 team and members of the OneBoard startup
The brains behind build3
Varun is the co-founder of 91springboard, which ranks among the largest coworking communities in India, supporting over 3,000 businesses. Besides 91springboard, he has founded multiple startups in the field of real estate, data, and finance. One of his startups, MyGuestHouse (a budget accommodation aggregator) was acquired by MakeMyTrip. Before entrepreneurship, he worked with Goldman Sachs for more than five years in the US and India.
Alakshi Tomar, meanwhile, is the co-founder of TruCup and a ‘venture builder’ at build3. Working closely at the intersection of impact, business, operations, education, and sexual and reproductive health, she is a certified trainer in business leadership and menstruation.
Besides the private sector, she has also worked closely with Mumbai slum communities as a Gandhi Fellow and at Piramal Foundation, to improve learning and health outcomes.
Finally, Abhimanyu Rathi is the co-founder of Sustainable Livelihood Initiative India (SLII), which focuses on fostering United Nations-Sustainable Development (UN-SDG) Goals through data-backed research and innovations.
Among other things, he invented ‘Vardan’, a sustainable and affordable water purifier that runs without membranes or external energy and will last for 10 years without any maintenance. He also worked on creating technologies that convert e-waste into solar panels, and synthesise graphene through organic routes and small-scale biogas plants.
Speaking about the motivation behind the company, Varun recalls two pivotal moments that led him to this stage. “Towards the end of my stint at Goldman Sachs, I realised that I was just helping rich people get richer by moving money from one place to another while making some in the process. It wasn’t fulfilling anymore,” he says.
The second moment arrived during the pandemic. With great introspection came the realisation that he wanted to work towards building businesses that would have a positive impact on the world we inhabit, making it more livable and healthier. “The thing I could do well helped build companies that had this positive outlook towards the future and created impact,” he adds.
Birds of a feather eventually flocked together. Varun had already initiated the construction of build3 and Alakshi and Abhimanyu came together with a shared vision to support founders and “build impact startups creatively, conscientiously and through the power of communities”.
build3 workspace on the first floor
The fault in our startups
Addressing the question of why Indian startups fail, the trio believe that founders often jump to building the product without establishing a valid customer problem. This leads to false starts. Secondly, in many cases, it has been seen that despite having the perfect solution to a given problem, the solution is not linked to what the market wants. Here, either the learning curve is too steep, the price points are not quite right or the product is way ahead of its time.
“The next trouble that founders commonly face is being unable to get the right team onboard. Due to human bandwidth limitations, it’s always difficult to build a startup for a solo founder. Also, not having the right team mix with complementary skills makes scaling the venture difficult. We help founders ideate the problem thoroughly and move forward only when all aspects of the problem and the solution match, post which we help build world-class teams,” says Abhimanyu.
Founders typically face problems with their business model. “Questions around a solid path to profitability are unfortunately avoided. Founders struggle to sense the market conditions and pivot business models when necessary, often leading to the failure of startups. At build3, the very first step in our engagement process is defining goals, a long-term vision and discovering an appropriate business model. We realise, pivots will happen, but it’s always best to downsize risks,” he says.
Another problem is ineffective fiscal management and ineffective marketing. Often with startups, costs exceed income and the deficit is not matched by raising funds. Not using the right marketing strategies leads to fewer customers, thereby further reducing income.
“At build3, we keep a tab of startup’s finance and customers acquired through a ‘scorecard mechanism’, where founders log in the key financial and operational and impact metrics periodically and build3 helps figure out blindspots soon,” notes Abhimanyu.
For example, Ryan’s startup OneBoard, which build3 has been incubating since December 2021, keeps going back to this ‘scorecard’ because it helps them “focus on the right things”.
In the case of startups working in the manufacturing and engineering sector, there are additional struggles like operating in an ecosystem where not just technical know-how but an understanding of market fit and legal frameworks is a prerequisite. This is also a sector where getting to the MVP (minimum viable product) takes longer and capital requirements are higher.
Success in resource-driven sectors is difficult. “This is where build3 is working with corporate partners. We are working with companies like Pennar Industries who bring in the technical know-how to bridge the mentioned gaps,” he says.
And there is the inability to raise funds. “So, we not only invest capital ourselves but also assist startups with follow-on capital through our network of angel investors,” says Varun.
build3 startup studio team with members of startups including Ruby’s Coffee, OneBoard and NomadGao
How build3 supports startups
“Our doors are always open to working with all startups. However, our goal to balance profit and purpose is primary. We analyse our goal through our selection process, which is broken down into three major stages that span over six to eight weeks,” explains Varun.
“Through each stage, we’ll work together to answer questions around vision and values, product-market fit strategies, business plans and financial models. See, different founders can be at different stages of their startup lifecycle. That’s why we commit to adjusting to their pace,” he adds.
Another fundamental criteria for selection to the build3 incubation ecosystem is the founder. During the process, their criteria for identifying the ‘perfect founder’ who wants to create a purposeful and sustainable impact through business, is led by four factors:
Capability: Is the founder/founding team right to build this business, do they have all the skills required? Commitment: Does the founder have enough skin in the game to see this journey through for the next 5-10 years?Compatibility: Alignment of founder values with build3Commercial viability: Do people want this product, and will it be a big enough market?
“We strongly believe that it is the founder’s capability and resilience that will drive a startup. They need to be clear about a problem (always best if they have experienced the same) and passionate about solving it, clear about how they will solve and who it will serve,” says Alakshi.
Meetup at O-Shack at the build3 workspace
“We also involve industry experts to give us a holistic view of the business and conduct reference checks to understand the founders better. The final decision is taken by all three of us, as we synthesise the data gathered, our goals and take a call,” states Varun.
They’ve had to say no to a venture where the CTO was missing for a technology product startup. This was a red flag on the founder’s capability since the same core skill set that makes the startup was missing. “Another startup we had to say no to was a t-shirt startup as their process was not sustainable and the market size was not sizeable enough,” he recalls.
A recurring mantra at build3 is that they help set up systems and implement projects but refrain from doing the day-to-day operational tasks.
“We work with startups to provide them strategic support, build systems and only when required, act as a part-time team member assisting in activities like hiring or brainstorming on go-to-market strategies, etc. We aim to help startups reach ‘escape velocity’ i.e. be self-sufficient to scale up to a speed comfortable for them,” explains Abhimanyu.
“Operationally, we realise we are not experts of the product or service the startups are building. We do not believe in building dependencies. Hence, our program is designed for 12 months of hard touch engagement, post which we are always available to support our startups,” he adds.
Take the example of Ruby’s Coffee, which represents small farmers and sources high-quality organic coffee from the rolling hills of the Nilgiris. All their coffee is sourced at what they claim are fair prices and the entire supply chain is managed carefully in-house. Ruby’s Coffee also employs and trains baristas that are on par with international standards of training.
Ankur Dhawan, co-founder and CEO, says, “We started incubating with build3 in April 2021. When we came to build3, it was just an idea and three people (two now). They helped us realise the idea and put it into action. Now, we have two running outlets and set up for growth. They delivered on their promise of getting us to our first summit, which was helping us get our first commercial outlet started in Anjuna, Goa.”
Ruby’s Coffee was also given a space to start a coffee lab which is co-located with the build3 office. “It’s a point of sale and a space where we can learn and teach others about coffee. Here, we also run coffee education programmes with cafe owners. It’s a multi-functional space and our headquarters where we do quality assurance and run programmes to help people understand coffee better like cafes, baristas and other business owners,” says Ankur.
Alakshi Tomar at Ruby’s Coffee outlet in Goa
Initially, Ankur and his co-founder Nikhil came up with a very expensive, cash-flow heavy and capital-intensive business model. The idea was to start a cafe and they approached build3 in search of funding there because it was so expensive.
“Instead, they challenged our entire business model. They would give us funding, but we had to reexamine our business model and find ways of doing this cheaper. Our initial ask was north of Rs 3 crore. Instead, we got into our first space in Anjuna (Goa) for Rs 15 lakhs. It’s a very scalable model. We pivoted away from the cafe model and are now completely focused on making the best coffee possible. In our model, we essentially work with other businesses and run their coffee programmes for them. This allows other businesses to focus on their food while we zero in on coffee. We are not splitting our time trying to get the food, bakes or juices right,” he says.
What build3 essentially did for Ruby was challenge them and give them a space to explore and figure it out. “It was an amazing journey with build3. They also gave us a fantastic space to work from in Candolim. These are things that other incubators don’t give you,” he says.
Before build3, they had gone through the route of seeking out professional funds. “You get two minutes of their time and it feels like a ‘great achievement’. The world is not going to change if you’re part of those networks. Everything is going to remain the same because these people can only give two minutes of their time and want to be impressed immediately,” he says.
Finally, one of the things they are most proud of is their association with the coffee growers. “We are a company that is about the people behind the coffee. For us, the two superstars at Ruby’s are the coffee growers and the baristas. Internally, we are focussed on developing these two sets of people. The final output is phenomenal coffee. If you look after the coffee grower and barista, you’re going to end up getting an awesome coffee experience,” he adds.
Currently, build3 has six startups in its portfolio. They received about 40 applications in the last quarter and aim to onboard 1-2 startups every quarter. The reason they receive so many applications is because of the resources they have on offer.
The workspace at their pretty Candolim beach office is available to the founder to house up to five members of their team free of cost till they graduate. Besides a workspace, they also have a chance to meet and mingle with other founders as well as attend knowledge building, wellness, and networking sessions that Varun and his team organise regularly.
build3 community at the build3 beach villa
“At build3, we will contribute Rs 1 to 5 crore into the business based on a financial model developed mutually. This is done as a mix of equity and debt-based funding. The source of our funds is HNIs, corporates and through our syndicate program. Additional capital may become available through syndication with corporates, other angel investors or through VC’s/PE’s that we are well connected with,” explains Varun.
“We also have a mix of individual and institutional investors who have signed up for the syndicate program. They commit to financial investment (min Rs 3 lakh), time investment (5-8 hours/month) and provide founder-initiated support. We share deals with them as and when funds are required. These are deals where we are investing and building the startup,” he adds.
The company also has a curated list of vendors. Finding the right partners in a startup journey is tough. “Luckily we’ve done much of this work for the founder, saving them time. Finally, what founders usually have at the end of 12 months is an executable sustainable business model,” he says.
Find out more about build3 at www.build3.org and submit your startup application at https://www.build3.org/apply.
(Edited by Yoshita Rao; feature image: Abhimanyu Rathi, Alakshi Tomar and Varun Chawla at the build3 office)