DISCUSSION ON ENTREPRENEURSHIP AND RAISING VENTURE CAPITAL

Aayush Jain Principal, Unicorn India Ventures

THE CONTENTS OF THIS DOCUMENT ARE CONFIDENTIAL AND PURELY REPRESENTS THE PRESENTER’S OPINION BASED ON HIS EXPERIENCES AND VIEWPOINT. THESE MUST NOT BE CONSIDERED AS GUIDELINES FOR STARTING UP A VENTURE AS STANDARD.

DISCUSSION POINTS

DISCUSSIO

N PO

INTS

1.   Starting up your venture

2.   Building up your venture

3.   Financing your venture

4.   Putting your business on paper

5.   What do investor typically look for

6.   Best practices while raising funds (Do’s)

7.   Mistakes entrepreneurs make while raising funds (Don'ts)

STARTING UP YOUR VENTURE

STAR

TING UP YO

UR VEN

TURE

•  Starting up is not an easy journey. Important to have/find answers for the following prior to taking the plunge:

•  Is this the right time in my life? Evaluate risks. •  Am I truly passionate and driven to follow the entrepreneurial journey? Entrepreneurship is

not for everybody. •  Do I really have a great idea that solves a problem or creates superior efficiency (for

people or enterprises)? •  Do I have the right domain knowledge required to build this venture? •  Do I need a partner/co-founder to execute this? If yes, do I have the right match in mind?

•  Spend time in doing in-depth market research. •  Identify and evaluate the market opportunity [Size and growth rates] •  Learnings from global markets in similar segments •  Know the domestic market really well and your competition even better! •  Avoid being blinded by the passion for your dream sector; there needs to be a gap in the

market

•  Entrepreneurship can be lonely journey. •  Good to have a partner (co-founder) that compliments you in skillset, domain knowledge

and attitude •  Spend enough time brainstorming with the potential partner •  Make sure you both are truly aligned in terms of the vision (critical!)

BUILDING UP YOUR VENTURE

BUILD

ING UP YO

UR VEN

TURE

•  Define the problem statement and start building your product •  Don’t strategize now! Start building your offering (be it a tech product, manufacturing

unit or a service)

•  Come up with a prototype; Test and learn; Take feedback

•  Do a pilot run; re-evaluate your strategy and thought-process if required

•  Build a team (your family from now on!) •  Hopefully you have zeroed down on the right co-founder by now; Broadly divide tasks

and start executing

•  Evaluate if you need team members (tech, sales, operations)

•  Onboard people who have an entrepreneurial spirit and believe in your vision

•  Be frugal: Look for multitaskers, consider interns!

•  Focus on driving sales •  Always remember a business can sustain only if it generates money! Have a clearly

laid out revenue model.

•  Evaluate what marketing strategy works best for your business

•  Digital marketing, blogs, word-of-mouth, events, cold-calling, fleet-on-street and whatever else it takes to get your first customer

•  Get more customers and try to constantly better their experience

FINANCING YOUR VENTURE

FIN

ANCIN

G YOUR V

ENTUR

E •  Evaluate if you need external funding or not

•  Not every business needs external funding!

•  Evaluate your financial risk appetite and set aside a corpus for investment

•  Make a rough business plan with well through through and realistic costing for at-least 12 months (depending upon the nature of the business)

•  Evaluate external financing options: •  When and how much to raise?

•  Consider debt vs. equity financing. Don't just raise VC money because it's cool!

•  Raise debt if you can. Its cheaper!

•  For equity (VC) financing •  Prepare a deck and financial roadmap (continued on next slide)

•  Deck: ideally 10 slides; max 15

•  Roadmap for 12-36 months; where 12-18 months should be realistic, defensible and well thought through (this depends on the stage of your business)

PUTTING YOUR BUSINESS ON PAPER

PUTTIN

G YOUR B

USINESS O

N PAPER

•  Make an Investment Deck. Below is my ideal structure: 1.  Intro & Problem Statement 

2.  How you solve this pain-point 

3.  Market opportunity 

4.  Introduce your product/service offering 

5.  Product details (photos, videos, links, demo, trials dependign upon the nature of business)

6.  Business/Revenue Model (subscription fees, commissions, product sales) 

7.  Story so far: Journey since inception (key milestones achieved) 

8.  Roadmap/strategy going forward - key milestones targeted (includes clients, revenue, product, operations, team and financial) 

9.  Founding team (Bios, roles, domain)

10.  Your ask? (Funding, mentorship, advisory)

•  Financial plan. Numbers talk! •  Realistically formulate all revenue workings and corresponding costs

•  12-36 months plan depending upon the stage of business

•  If raising growth or late stage capital, then need 5 year business plan

WHAT DO INVESTORS TYPICALLY LOOK FOR?

WH

AT DO IN

VESTOR

S TYPICALLY LOO

K FOR?

Every investor has their own investment philosophy. But some common attributes from my experience are:

1.   Founding team: Complimenting skillset, domain expertise and outlook b/w the co-founders is liked by most investors

2.   Product ready: Very few investors fund ideas or mere presentations! Demonstrate your product or service.

3.   Momentum: Show your market traction till date; sales, clients acquired or in discussion stage

4.   Large and growing market opportunity: Investor typically shy away from products that are not scalable

5.   Competitive edge: As mentioned before, know your competition! Your venture needs to have a clear differentiator or a competitive edge over your competitors

BEST PRACTICES WHILE RAISING FUNDS (DO’S)

BEST P

RACTICES W

HILE R

AISING F

UND

S (DO’S)

ü  Try to approach through a referral (use your network!) ü  Prepare a 1 min, 5 mins, 15 mins and 30 mins pitch for your venture

(depending upon the time you are given) ü  Ideally have separate decks for presenting in person and sending over

an email ü  Know your funding requirements and be realistic about the same ü  Ask questions to the VC! Don’t just provide info; Get into a dialogue with

the VC ü  Research well about the investor before pitching! Know their investment

philosophy and sector preference ü  Understand what you expect from the investor (just money, value-add,

mentorship, support in building your business) ü  Find an investor who can add value to your business and understands

your vision

ü  Follow up and update them on your progress. Get them involved into your business.

ü  Remember fund raising is not a decision across a coffee table!

MISTAKES ENTREPRENEURS MAKE (DON’T’S)

MISTAKES E

NTR

EPREN

EURS M

AKE (DO

N’T’S) •  Talk to every investor possible. But DON’T pitch to the wrong investor!

•  Don’t approach the wrong investor at the wrong time

•  Get over the fact that raising VC money is cool!

•  Not customizing your pitch as per the investor philosophy

•  There’s a thin line between hustling and harassing!

•  Losing relationship with investors; Even if the investor is not interested, maintain and develop a relation

•  Not seeking advice and feedback from investors

•  Remodeling your business model purely basis investor perception and suggestion! He may not be the right investor for your venture.

•  Being fanatic about your plan and not flexible enough to move on

•  Not being coachable; Most investor are ex-entrepreneurs and may have good advice for your venture

QUESTIONS.