Digbijoy

Shukla h"p://networktosucceed.in/

An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome Source Wikipedia

h"p://networktosucceed.in/

For an entrepreneur however trivial it may sound its extremely essenCal to translate his idea to paper as one of the rst criCcal steps towards building a comprehensive business plan & vision path for his venture. The journey from being a mere idea in ones head to paper is not an easy one, as it forces the entrepreneur to think with clarity, logic & see the opportunity in its totality. This exercise is not just a funding applicaCon but actually a vision document for your venture, several entrepreneurs having done this exercise saw for themselves the potenCal & the gaps in the opportunity that they wanted to pursue. Hence if you are serious about your idea & you feel you are on a big opportunity start puJng it to paper not for anyone else but yourself.
h"p://networktosucceed.in/

An idea is worth the paper its wri"en on, unless backed by a business. And a business usually is: Tied to Solving a Large Problem, which If Solved, would Result in Huge Value to Someone, who (collecCvely) Would be Willing to Pay a Large Sum for the Solu@on. Investors expect the bold quesCons in the statement above to be answered with crystal clarity. In addiCon, they like to have the following quesCons answered as well. Why hasnt the problem above been solved before? What makes you and your team experts at solving the problem? Why cant other companies solve the problem? Barrier to Entry: Why cant a company with $100M in capital solve the problem be"er than you? Investors invest in businesses that are innovaCve and teams that can execute well. If a large company like MicrosoV, Google, SAP, or Reliance can do what youre proposing, they have 100x more capital than you ever will to pull it o. Be prepared to answer why youre likely to succeed in spite of the compeCCon.
h"p://networktosucceed.in/

} } }

Are you really commi"ed to your idea? Do you have the courage to quit your cushy salaried job? Are you willing to put in whatever li"le capital you have, or can raise from friends and relaCves, Cghten your belt and somehow execute your idea?

DO YOU HAVE SKIN IN THE GAME????? } Once your concept is validated, investors come in with much greater condence and give you a much higher valuaCon than they would have at an earlier stage. In other words, you get to keep a larger share of your company for the same money
h"p://networktosucceed.in/

Self } Family & Friends } Seed/Angel } Venture Capital } P.E. } Debt Bank Loan
}

h"p://networktosucceed.in/

} }

Venture capital is a high risk, high reward business. Its the most expensive capital out there since the investor is beJng on a team with an idea, and not on a protable business. For a typical early stage startup, it costs 25-35% of the startup for $1-3 million of investment. ComparaCvely, a $2M debt at a 10-15% interest rate, costs $200-300k in interest yearly, much cheaper if you assume the startup will be worth $10M in 2 years. The challenge though, is most banks wont provide $2M of debt capital to a young entrepreneur.

h"p://networktosucceed.in/

} }

VCs are in the business of making money. A VC fund has limited partners (LPs), usually corporates or high net-worth individuals who give their money to the venture capital rm to invest on their behalf. The fund has team members (partners) who are responsible for invesCng from the fund. They usually pick sectors to invest in (soVware, Internet, healthcare, retail) depending on the experience of the team members. The experience ma"ers since the team member helps guide the company they invest in with their experience and connecCons.

h"p://networktosucceed.in/

Before trying to raise venture capital, decide what your business will look like in 3-5 years. VCs invest in businesses that are likely to become BIG companies in 3-5 years, when theyd like to get their returns. VC Money is RIGHT for your business if: You are trying to build a $20M business over 3-5 years and ideally a $100M business over 5-7 years Your business can go public or be acquired for a large amount You are comfortable with involvement from partners of the VC fund on strategic operaCons of your business Having a venture investment in your company means you are signing on to be a high growth company and will do the things necessary to grow quickly and build the talent base, processes, and infrastructure that is necessary to support a high growth business. This is usually good when all goes well, but during rough Cmes, its dicult to manage. The right venture investor can be VERY helpful to building your business. Their experience, advice, and connecCons have been invaluable. But its a li"le like marriage so choose your partner carefully; its pre"y hard to get your venture capitalists out of your company if you decide later that you dont like them.
h"p://networktosucceed.in/

A TEAM is of paramount importance to a technology startup. Without a team, theres a very small chance of raising venture nancing, unless youre a recognized name and have built successful businesses in the past. VCs look for a team of founders. The reasons are simple, but oVen not obvious. 1. A team is always be"er than an individual. A team will have be"er ideas, complimentary skills, and the ability to support one another during tough Cmes. 2. A team reduces the level of risk, especially a good founding team that compliments each other. Think of a team with a markeCng, engineering, and sales background, not necessarily 3 engineers J. 3. A team that has worked together for a period of Cme has worked out teething pains. Theyve learnt to work together and are likely to sCck together. VCs bet on a teams ability to solve the idenCed problem. Chances are the iniCal soluCon is partly wrong, and a good team will gure out whats wrong with it and x it.
h"p://networktosucceed.in/

Funding Institutions vs Business Life Cycle

Growth Challenges CAPEX Investor Pressure Change Management

IPO

M A T U R I T Y

Market Validation Customer Acquisition No or low Revenues Low or ive Cash Flow Operational Challenges Venture Capital Incubators Angels Faith Money

Working capital Bank loans Private equity

Late Stage

Time/Revenue
h"p://networktosucceed.in/

} }

What is the space

Their size The opportunity

Not telecom / entertainment

Who are the market leaders Market potenCal from external sources
Very, very briey

} } }

What is your product / service

Does it need seeding

How does it t in the landscape

h"p://networktosucceed.in/

Why is your product / service necessary

} } } }

Is it doing something Dierent / Dierently Is it need to have / nice to have Is there an IP What will the customer exactly get / see

What pain is it removing for the customer Is it adding a service which will enhance a product / service Is the process dierent increasing producCvity, reducing cost, etc. etc.

h"p://networktosucceed.in/

IdenCfy exactly who the customer is

Is it creaCng a new customer base Enhancing a customer base Is your target the real customer ?

What are the parameters of your customer?

Geography Age Urban / rural Etc etc.

h"p://networktosucceed.in/

Market size

A billion dollar market is not YOUR market size - what is your market potenCal 1% of USD 1500 bn market - ??

How has the market been validated by you? } Specic markets / geographies / segments which will be addressed
}

h"p://networktosucceed.in/

Who is your compeCCon?

Product / service Company Alternate process

Size up your compeCCon

SWOT of compeCCon Lessons learnt from compeCCon Trends in compeCCve companies

Never say None PotenCal buyers could conCnue without your product / service

h"p://networktosucceed.in/

ExisCng and future compeCCon

First mover advantage rarely sucient Needs more vision and could be
IP driven market entry strategy InnovaCve commercial model

Your vision for the venture

h"p://networktosucceed.in/

What are your dierenCals

What is your USP of your proposiCon Any validaCon of your product/service Pain point in compeCCon being addressed by you Product life cycle Specic market / selling modality Cost dierenCal

Is too common / too unique ?

h"p://networktosucceed.in/

} } } } } } } } } } }

Who are the audiences you are addressing with your idea? What pain points you are addressing for these audiences? What evidence do you have that these pain points are real? What are the current soluCon approaches? Whats lacking in these approaches? How is your soluCon approach be"er? How big is this dierence and what is it worth to customers? Whats in it for other stakeholders besides end-customers? Why hasnt someone else thought of your idea yet? Are you sure nobody has thought of your idea yet? What is proprietary about your idea?
h"p://networktosucceed.in/

How will you acquire customers Reect market realiCes Customer behavior Partnerships conict situaCons Demo / reference sites Current customers How did you acquire them Sales cycle Cme Why did they come to you vs compeCCon Why did they go to compeCCon vs you QuanCcaCon average revenue / client or target AcquisiCon Cost / client No of customers to break even

h"p://networktosucceed.in/

} }

Pricing model Vs cost Vs compeCCon Pilot Hybrid sales model RetenCon of customers Plan for retenCon of customers before acquiring them Average cost of generaCng business is 5 Cmes from new customers vs exisCng customer ! Customer / Order prole Are they one Cme / repeat orders SCckiness for customer Why did you lose customers AVer sales support strategy
h"p://networktosucceed.in/

How will you deliver Build yourself Technology used Service provider partnerships Branding AVer sales strategy Any relevant cerCcaCons Permissions reqd./ received

h"p://networktosucceed.in/

} }

Who is the team behind this venture Background and experience ContribuCon Cll date Brief Job role Gaps in team Time contribuCon Advisors Roles Non compete Team and Advisor CompensaCon Cash Equity ESOP Mentor Team expansion A"ract MoCvate h"p://networktosucceed.in/ Retain

} } } } } } } } } } } } }

Is the team leader strong and passionate? Will leader and team a"ract A players? Is the team appropriate for the stage of the company? Has the team worked together before? What are the teams values and what type of culture will they create? Is there a strong technical leader? Is there a strong markeCng leader? Does the team have deep domain or technical experCse? Does the team listen and take criCcism in a posiCve way? Does team have a good blend of thinkers and doers? If current plan doesnt work out, will team adapt? Will the founders give up control if that is what the venture demands? Passion, Integrity, Resourcefulness, Perseverance, Risk taking ability, Mental horsepower
h"p://networktosucceed.in/

} } }

Current / Projected for next 3 years Topline / bo"om line Headcount Projected When will it break even Protable businesses are more a"racCve Self investment & funding received Cll date Skin in the game Investment sought For what Where will it take your venture Next round requirement Cash ow based workings No debt reCrement ValuaCon expectaCon
h"p://networktosucceed.in/

Are they risks to your plan

No is not an opCon

What are the risks to your plan How will they be miCgated
Examples of early set backs and their handling is a good idea

h"p://networktosucceed.in/

Investors will moneCze their investment

How When What

Building an exit opCon is necessary for yourself, your team, and your investors

h"p://networktosucceed.in/

AlternaCve investment opCons

This space / sector is one of many

Angel invesCng is an alternate asset class

Your plans niches is just one of the many niches
Your plan is in compeCCon with another

Remember idea may be sold but investment may not happen

3BHK in Delhi vs 3BHK in Bangalore

h"p://networktosucceed.in/

} } } } } } } } } } } } } } }

Be brief and direct; get to the bo"om line quickly IdenCfy what the business is immediately Dene the customers quickly and the customer problem clearly Dene whats compelling and unique Describe how you will make money Provide a phased snapshot of your company 12, 24 and 36 months out Describe how you propose to take your product to market Make bo"om-up as well as top-down projecCons Know what 4 to 5 assumpCons your plan pivots on Discuss the key risk factors State how much money you will need and how you will use it State your possible exit strategies PresentaCon should be self explanatory there will be investors who may not be in the room Clarity in text / relevant graphs more important than pictures Blue sky points not relevant Investors are quite knowledgeable !
h"p://networktosucceed.in/

} } }

Put some of your skin in the game GeCng a high valua@on early can be fatal Size of the pie wins every @me over share of the pie

h"p://networktosucceed.in/

Very selective process One in hundred company completes the whole round Prelimi nary Evaluati on
Meet the entrepreneur Discuss the business opportunity Preliminary evaluation of the business and specific industry 1-2 weeks Detailed business due diligence, market estimations & analysis, references Meet the core team in multiple meetings and understand the business Entrepreneur presents to multiple partners 4-6 weeks
h"p://networktosucceed.in/

Business Due Diligence

Closure

Issue the Term Sheet Accounting due diligence Legal due diligence Definitive agreements 4-6 weeks

 Digbijoy Shukla h"p://networktosucceed.in digbijoy@networktosucceed.in h"p://twi"er.com/digbijoy

h"p://networktosucceed.in/