Art of Fund                   RaisingVivek AgarwalFounder, Liqvid
The Steps•   Personal Decisions•   Business Plan•   Pitching to the Investors•   Negotiation & Closure
Answer this Question,    FIRST!
What do you want your pie to look like?                           Share of your pie                     1XYZ Unknown priva...
Lifestyle Business vs. CorporationLifestyle Business   Corporation• Be your own boss   • Founder, not boss     – Lone wolf...
Equity FinancingBusiness Stage       Stage 1         Stage 2        Stage 3        Stage 4           Stage 5    Type      ...
Types of Non- equity Funding•   Debt•   Convertible debt•   Subsidies / Grants !•   Customers•   Employees!!•   Suppliers
Business Plan• The problem you are solving – target  audience• How large is it?• How will you reach out?• Can you do it pr...
Ideas??
Watch the size            Must match your capability level                                 V/s• Smaller scope             ...
What is the modelInnovation          Efficiency
How much should you planReady. Aim. Fire.        FIRE. FIRE. FIRE                    OR
Pitching to the VCs• Identify the segment – Financial, strategic,  other• Typically behavior similar across financial  inv...
Equity Allocation• Service Providers    • Business Plan, space, HR, marketing, etc    • Cash v/s equity• Management Team  ...
Valuation Approaches• Rules-of-Thumb / Multiples• Discounted cash flow  - Weighed Average Cost of Capital (WACC)  - Capita...
Rules-Of-Thumb Procedures• Look at similar deals.• Look at ratios of similar public firms:  - Valuation / sales.  - Valuat...
Equity Allocation for Founders• Founders    • Based on experience / cash / proposed effort    • Vesting Schedule    • Deal...
Terms & ConditionsEquity Investments• Extent of Stake• Affirmative Rights• Liquidation preference• Control Issues –  – Ope...
But more than anything else…
It is the timing – raise money   when the market is ready
Thank YouVivek.agarwal@liqvid.com
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Art of fund raising

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Art of fund raising

  1. 1. Art of Fund RaisingVivek AgarwalFounder, Liqvid
  2. 2. The Steps• Personal Decisions• Business Plan• Pitching to the Investors• Negotiation & Closure
  3. 3. Answer this Question, FIRST!
  4. 4. What do you want your pie to look like? Share of your pie 1XYZ Unknown private Limited O You are the boss, owner, can pass R You are the founder, chiefit on to your children objective is the value creation.
  5. 5. Lifestyle Business vs. CorporationLifestyle Business Corporation• Be your own boss • Founder, not boss – Lone wolf – Team• Self funded • VC/Investors• Organic growth • Fund the plan• Slower growth • Rocket ship• Can re-invent • If a miss, typically themselves flame out• No planned exit • Exit strategy
  6. 6. Equity FinancingBusiness Stage Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Type Risk Seed Venture Private PublicSource of Own / family Family / VCs VCs / Private Public, MFs,funds friends / Equity Institutions AngelsPrime Creating / Creating a Establishing Scaling up the Established,Activity exploring an Prototype the model model scalable, profit idea Generating businessTypical Very low, sub Typically 20 Rs. 2 to 10 Depending on Depending onFunds 500,000 - 50 lacs crores the business the businessRequirement(indicative)
  7. 7. Types of Non- equity Funding• Debt• Convertible debt• Subsidies / Grants !• Customers• Employees!!• Suppliers
  8. 8. Business Plan• The problem you are solving – target audience• How large is it?• How will you reach out?• Can you do it profitably?• Scale & Exit
  9. 9. Ideas??
  10. 10. Watch the size Must match your capability level V/s• Smaller scope … with killer potential!• Too small for the “big guys” • Need time to acquire capability
  11. 11. What is the modelInnovation Efficiency
  12. 12. How much should you planReady. Aim. Fire. FIRE. FIRE. FIRE OR
  13. 13. Pitching to the VCs• Identify the segment – Financial, strategic, other• Typically behavior similar across financial investors• Fundable deals move fast• If negative response from first 3-4, regroup and evaluate.
  14. 14. Equity Allocation• Service Providers • Business Plan, space, HR, marketing, etc • Cash v/s equity• Management Team • Fixed v/s variable v/s no salary • Share of equity • ESOP plan • Option price
  15. 15. Valuation Approaches• Rules-of-Thumb / Multiples• Discounted cash flow - Weighed Average Cost of Capital (WACC) - Capital Cash Flows (CCF)• Scenario analysis• Decision tree analysis• Others
  16. 16. Rules-Of-Thumb Procedures• Look at similar deals.• Look at ratios of similar public firms: - Valuation / sales. - Valuation / profit (P/E). - Market value of equity/book value. - Use multiples to generate projected value.
  17. 17. Equity Allocation for Founders• Founders • Based on experience / cash / proposed effort • Vesting Schedule • Dealing with unequal distributions / perceptions • Get a formal agreement in Place • Deal with issues like Decision making process, responsibilities (operational / strategic), etc – these become very important as the business grows • Answer the question – “What if it does not work out?” » Vested / unvested shares » Put / Call option
  18. 18. Terms & ConditionsEquity Investments• Extent of Stake• Affirmative Rights• Liquidation preference• Control Issues – – Operational – Board – Shareholders
  19. 19. But more than anything else…
  20. 20. It is the timing – raise money when the market is ready
  21. 21. Thank YouVivek.agarwal@liqvid.com
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