Reservoir Investment
Managers (India) LLP
Demystifying Funding for Startups
Private & Confidential
The Equity Funding Ecosystem
Private & Confidential 2
Angel Investor – 1- 3 Cr
Friends , Family and Fools – 1-50 Lakhs
Ven...
Three 3 rules of fund raising
•
“Investors are humans”
•
“Raise money when you can”
•
“Golden Rule : One who has the gold ...
Friends, Family and Fools
•
The first investors
•
Often, the least rewarded
•
Very little value add
•
Investment solely on...
Angel Investors
•
Comes in all size and shapes
•
HNIs typically successful entrepreneurs
•
Typical ticket size – 20L – 50L...
How to approach Angels?
•
Linkedin
•
Angel networks
•
References
•
VCs
•
Online platforms like Angel List
•
Senior Managem...
Good Angel investor?
•
Business Development
– Opens doors in terms of connects
– Advice on sales strategy
– Imparts credib...
Caution !!!
•
Color of money
•
Investors looking to extract their pound of
flesh
•
Too intrusive
•
Only advice
•
Talks in ...
Angel Investment Terms
•
Valuation -> not more than 20%
•
Convertible notes
•
Board seat
•
Liquidation preference
•
Anti-d...
Venture Capital
•
Mutual funds for unlisted entities
•
Ticket size – 15 – 25 Cr
•
Typically series A / B stage
•
Instituti...
Should you take VC money?
•
Pressure to scale
•
Willingness to exit
•
Give up some control
•
Process orientation
•
All abo...
What do VCs want?
•
Large market > 1000 crs
•
Sustainable entry barriers
•
Scalability
•
Potential to exit lucratively
•
G...
Characteristics of a good VC
•
Punctual
•
Definite , Quick yes / no
•
Feedback
•
Relationship oriented
•
Willing to get ha...
How to approach VCs
•
Reference
•
Reference
•
Reference
Private & Confidential 14
The VC investment process
•
Consultant / iBanker?
•
Reference
•
IM / Teaser
•
Call / first round meeting
•
Later, 2-3 roun...
VC investment terms
•
Valuation – 10% - 30%
•
Board seat
•
Liquidation preference
•
Anti-dilution, pre-emptive rights
•
Ex...
When should you approach VC ?
•
Customer Validation
– 5-10 paying customers in B2B
– 500- 1000 paying customers in B2C
•
L...
Caution !!!
•
Investor track record
•
Lack of confidentiality
•
Know it all attitude
•
Too much data
•
Hard negotiator
•
L...
Value Add from VC
•
Recruitment
•
Business Development
•
Exits
•
Fund raising
•
PR
•
Strategy ???
Private & Confidential 19
Post Investment relationship
•
Partners
•
Honesty / Transparency
•
Regular updates
•
Introduction to industry leaders
•
Co...
Questions
Private & Confidential 21
Private & Confidential 22
End of Presentation
Upcoming SlideShare
Loading in...5
×

Demystifying Funding for Startups- Abishek Surendran

422

Published on

“Demystifying Funding for Startups” was an excellent session that sketched the basics of early stage funding. Picking the right “color of money” is important - an investor’s attitude, risk appetite, knowledge,
and networks, amongst others, add value to the Startup. Likewise, picking the “wrong” investor could
deplete valuable focus, time, energy and resources – a misstep Startups should avoid. To keep this session
aimed towards early-stage Startups, the focus rested on FFF (Friends, Family & Fools), Angel and VC fund
classes, and how they differ in terms of goals, demands and time-frames.

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
422
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
15
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide
  • <number>
  • <number>
  • Demystifying Funding for Startups- Abishek Surendran

    1. 1. Reservoir Investment Managers (India) LLP Demystifying Funding for Startups Private & Confidential
    2. 2. The Equity Funding Ecosystem Private & Confidential 2 Angel Investor – 1- 3 Cr Friends , Family and Fools – 1-50 Lakhs Venture Capital – 3 – 100 Cr Growth Capital / Private Equity – 50 Cr – 500 Cr Hedge Funds – > 100 Cr Mutual Funds - -> 100 Cr FirmMaturity Relationship
    3. 3. Three 3 rules of fund raising • “Investors are humans” • “Raise money when you can” • “Golden Rule : One who has the gold makes the rules” Private & Confidential 3
    4. 4. Friends, Family and Fools • The first investors • Often, the least rewarded • Very little value add • Investment solely on face value • The quickest • Real test of an Entrepreneur Private & Confidential 4
    5. 5. Angel Investors • Comes in all size and shapes • HNIs typically successful entrepreneurs • Typical ticket size – 20L – 50L • Value add depends on background • Make decisions much quicker • Invests typically as a consortium • Unlikely to invest in further rounds • Works full time at other firmsPrivate & Confidential 5
    6. 6. How to approach Angels? • Linkedin • Angel networks • References • VCs • Online platforms like Angel List • Senior Management • Alumni • Accelerators Private & Confidential 6
    7. 7. Good Angel investor? • Business Development – Opens doors in terms of connects – Advice on sales strategy – Imparts credibility • Helps in hiring • Allows entrepreneur to execute his visions • Willing to stay for the long haul - > 4 yrs • Executive coachPrivate & Confidential 7
    8. 8. Caution !!! • Color of money • Investors looking to extract their pound of flesh • Too intrusive • Only advice • Talks in air -> Name dropping • Lack of time • Number focusedPrivate & Confidential 8
    9. 9. Angel Investment Terms • Valuation -> not more than 20% • Convertible notes • Board seat • Liquidation preference • Anti-dilution • Tag along • Promoter lock in Private & Confidential 9
    10. 10. Venture Capital • Mutual funds for unlisted entities • Ticket size – 15 – 25 Cr • Typically series A / B stage • Institutional funds • Dedicated teams • Due Diligence • Must Exit in 5 yrs • Long decision process – ~ 6 monthsPrivate & Confidential 10
    11. 11. Should you take VC money? • Pressure to scale • Willingness to exit • Give up some control • Process orientation • All about revenue growth • Value oriented • Prestige • Ability to raise debtPrivate & Confidential 11
    12. 12. What do VCs want? • Large market > 1000 crs • Sustainable entry barriers • Scalability • Potential to exit lucratively • Great teams • Positive Customer validation • Asset light • Technology firmsPrivate & Confidential 12
    13. 13. Characteristics of a good VC • Punctual • Definite , Quick yes / no • Feedback • Relationship oriented • Willing to get hand dirty • Knows when to intervene • Sounding board for entrepreneurs • Helps in next round financingPrivate & Confidential 13
    14. 14. How to approach VCs • Reference • Reference • Reference Private & Confidential 14
    15. 15. The VC investment process • Consultant / iBanker? • Reference • IM / Teaser • Call / first round meeting • Later, 2-3 rounds of meeting with other partners • Investment committee meeting • Termsheet Private & Confidential 15
    16. 16. VC investment terms • Valuation – 10% - 30% • Board seat • Liquidation preference • Anti-dilution, pre-emptive rights • Exits • Std Drag along, tag along, ROFR/ROFO • Promoter lock in • CPs Private & Confidential 16
    17. 17. When should you approach VC ? • Customer Validation – 5-10 paying customers in B2B – 500- 1000 paying customers in B2C • LTV > CAC • Gross Profit > 50% • Key positive events • Churn < 10% • Month on Month growth rate > 20%Private & Confidential 17
    18. 18. Caution !!! • Investor track record • Lack of confidentiality • Know it all attitude • Too much data • Hard negotiator • Lack of credible feedback • Too long to make decisions Private & Confidential 18
    19. 19. Value Add from VC • Recruitment • Business Development • Exits • Fund raising • PR • Strategy ??? Private & Confidential 19
    20. 20. Post Investment relationship • Partners • Honesty / Transparency • Regular updates • Introduction to industry leaders • Corporate strategy • Defensive Private & Confidential 20
    21. 21. Questions Private & Confidential 21
    22. 22. Private & Confidential 22
    23. 23. End of Presentation
    1. A particular slide catching your eye?

      Clipping is a handy way to collect important slides you want to go back to later.

    ×