I want / NEED  Funding  &  Improving my VALUATION Anjana Vivek www.venturebean.com [email_address]
www. venture bean .com <ul><li>Just because you are not  eligible for a loan, it does not mean you should automatically se...
WHO COULD BE POTENTIAL INVESTORS <ul><li>Angel…. </li></ul><ul><ul><li>Family/friends/fools (3Fs) or Other? </li></ul></ul...
CHECK OUT … INVESTMENT FLAVOURS <ul><li>Indian / International </li></ul><ul><li>Individual / Group / Corporate… </li></ul...
QUALITY / QUANTITY <ul><li>In the initial stages, there is a low QUANTITY of </li></ul><ul><ul><li>Revenue </li></ul></ul>...
QUALITY / QUANTITY <ul><li>Can you improve QUALITY of parameters to increase attractiveness of company, for example: </li>...
I NEED XXX Rs/ m USD.. <ul><li>What could be a realistic valuation?  </li></ul><ul><li>If I cannot get the valuation I wan...
I NEED XXX Rs/ m USD.. <ul><li>Work to improve/create valuation over time </li></ul><ul><ul><li>Valuation increases geomet...
I NEED XXX Rs/ m USD.. <ul><li>Prepare your Business Plan per your requirement, i.e financials, word document, presentatio...
www. venture bean .com <ul><li>A Business Plan is a Communication Tool </li></ul>  BUSINESS PLANS
BEFORE YOU START <ul><li>Take time out to  think … </li></ul><ul><li>WHAT  is the purpose of the business plan   </li></ul...
BEFORE YOU START <ul><li>Take time out to  think … </li></ul><ul><li>WHAT  are the strengths… that you bring to this busin...
A  BUSINESS PLAN  COMMUNICATES… <ul><ul><li>Many times, a reader’s  perception  of your business/idea will be based on the...
LOGICAL  STRUCTURE <ul><ul><li>The plan must have structure and include: </li></ul></ul><ul><ul><li>Business / idea </li><...
BUSINESS PLAN SET   … could contain <ul><li>Word document (15 – 25 pages) </li></ul><ul><li>Presentation deck (15 – 20 sli...
BUSINESS PLAN SET <ul><li>The set should be  </li></ul><ul><li>Self speaking: ie with limited clarification required (incl...
PREDICTIONS <ul><li>There should be a  believable  story about the future performance of the company. For eg. </li></ul><u...
PREDICTIONS … hmmm.. <ul><li>Many uncertainties exist, including that of  </li></ul><ul><ul><li>Revenue streams </li></ul>...
PREDICTIONS … hmmm.. <ul><li>Some uncertainties may be thought through and reflected using tools: </li></ul><ul><ul><li>Sc...
FORECAST FINANCIALS <ul><li>Capture business strategy and model into a set of financial statements </li></ul><ul><li>In sh...
FORECAST FINANCIALS <ul><li>Consistency checks </li></ul><ul><ul><li>Check out key ratios and for internal consistency </l...
THANK YOU www. venture bean .com <ul><li>We provide advisory services to corporates, VCs, entrepreneurs, early stage ventu...
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I Want / Need Funding

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Who may invest in me; How do I increase business value; And some tips and tools for the business plan and forecast

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I Want / Need Funding

  1. 1. I want / NEED Funding & Improving my VALUATION Anjana Vivek www.venturebean.com [email_address]
  2. 2. www. venture bean .com <ul><li>Just because you are not eligible for a loan, it does not mean you should automatically seek VC funding </li></ul><ul><li>If it was only about funding, all companies funded would be doing well and all those without funding would be floundering </li></ul>I want/NEED funding
  3. 3. WHO COULD BE POTENTIAL INVESTORS <ul><li>Angel…. </li></ul><ul><ul><li>Family/friends/fools (3Fs) or Other? </li></ul></ul><ul><ul><li>Debt / Equity / Mix </li></ul></ul><ul><li>VC </li></ul><ul><ul><li>Early stage/seed or later stage </li></ul></ul><ul><ul><li>Equity / convertible </li></ul></ul><ul><li>Corporate </li></ul><ul><ul><li>Strategic </li></ul></ul><ul><ul><li>Financial </li></ul></ul>www. venture bean .com
  4. 4. CHECK OUT … INVESTMENT FLAVOURS <ul><li>Indian / International </li></ul><ul><li>Individual / Group / Corporate… </li></ul><ul><li>Legal / tax implications / any pitfalls.. </li></ul><ul><li>Sweat equity / in kind as contrasted to in cash </li></ul>www. venture bean .com
  5. 5. QUALITY / QUANTITY <ul><li>In the initial stages, there is a low QUANTITY of </li></ul><ul><ul><li>Revenue </li></ul></ul><ul><ul><li>Employees </li></ul></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Cashflow </li></ul></ul><ul><ul><li>Repeat business </li></ul></ul><ul><ul><li>Marquee clients </li></ul></ul><ul><li>How about QUALITY of the above? </li></ul>www. venture bean .com
  6. 6. QUALITY / QUANTITY <ul><li>Can you improve QUALITY of parameters to increase attractiveness of company, for example: </li></ul><ul><ul><li>Repeat customers </li></ul></ul><ul><ul><li>Higher priced projects/products </li></ul></ul><ul><ul><li>Well known individuals as advisors/mentors </li></ul></ul><ul><li>This will help you get improved multiples for your valuation </li></ul><ul><li>… hmmm..coming to valuation.. </li></ul>www. venture bean .com
  7. 7. I NEED XXX Rs/ m USD.. <ul><li>What could be a realistic valuation? </li></ul><ul><li>If I cannot get the valuation I want.. Then what next </li></ul><ul><ul><li>Review investor category </li></ul></ul><ul><ul><li>- 3 F’s (family/friends/fools) </li></ul></ul><ul><ul><li>- Other external angel investors / HNIs </li></ul></ul><ul><ul><li>- Venture Capital Funds </li></ul></ul><ul><ul><li>Check alternate scenarios </li></ul></ul><ul><ul><li>i.e Plan A vs Plan B vs. Plan C </li></ul></ul><ul><ul><li>Review business model, eg. Hire seniors based on flexi-pay, hire vs. buying, service + product… </li></ul></ul>www. venture bean .com
  8. 8. I NEED XXX Rs/ m USD.. <ul><li>Work to improve/create valuation over time </li></ul><ul><ul><li>Valuation increases geometrically with milestones </li></ul></ul><ul><ul><li>Valuation based on intangibles, of team (experience, qualification, past history of success as entrepreneur or employee), IP, quality of revenue etc.. </li></ul></ul><ul><ul><li>Try to pin down the value drivers...such as brand customers, increased paying customers.. </li></ul></ul>www. venture bean .com
  9. 9. I NEED XXX Rs/ m USD.. <ul><li>Prepare your Business Plan per your requirement, i.e financials, word document, presentation etc. to be customized for investor </li></ul><ul><li>Clean up records and presentations for due diligence to minimize value loss </li></ul><ul><ul><li>List pipeline of customers for the next year in detail, for eg. categories could be A,B,C,D; A indicating guaranteed with contracts, B pipeline - almost certain, C pipeline - initial, D yet to be targeted, etc.. </li></ul></ul>www. venture bean .com
  10. 10. www. venture bean .com <ul><li>A Business Plan is a Communication Tool </li></ul> BUSINESS PLANS
  11. 11. BEFORE YOU START <ul><li>Take time out to think … </li></ul><ul><li>WHAT is the purpose of the business plan </li></ul><ul><ul><li>Is it for internal use </li></ul></ul><ul><ul><li>Is it for investors (VC/bank/angel investor) </li></ul></ul><ul><ul><li>For other purpose (incubation) </li></ul></ul>www. venture bean .com
  12. 12. BEFORE YOU START <ul><li>Take time out to think … </li></ul><ul><li>WHAT are the strengths… that you bring to this business </li></ul><ul><li>WHAT are the constraints… that you have to either </li></ul><ul><ul><li>Address or </li></ul></ul><ul><ul><li>Accept (and work keeping this in mind) </li></ul></ul>www. venture bean .com
  13. 13. A BUSINESS PLAN COMMUNICATES… <ul><ul><li>Many times, a reader’s perception of your business/idea will be based on the business plan you prepare </li></ul></ul><ul><li>Substance and form matter, more so, when hundreds of plans are reviewed </li></ul><ul><li>Different persons will look for different things, a banker will check if a loan can be repaid, the VC will look for value multiples on exit </li></ul>www. venture bean .com
  14. 14. LOGICAL STRUCTURE <ul><ul><li>The plan must have structure and include: </li></ul></ul><ul><ul><li>Business / idea </li></ul></ul><ul><ul><li>People behind idea/project </li></ul></ul><ul><ul><li>Market size expected </li></ul></ul><ul><ul><li>Marketing strategy </li></ul></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>Financials </li></ul></ul><ul><ul><li>Other information to make it complete </li></ul></ul>www. venture bean .com
  15. 15. BUSINESS PLAN SET … could contain <ul><li>Word document (15 – 25 pages) </li></ul><ul><li>Presentation deck (15 – 20 slides) </li></ul><ul><li>Spreadsheet with financials (Balance Sheet, Profit and Loss Account, Cash Flow; 3-5 years) </li></ul><ul><li>You may like to keep in hand a separate executive summary or summary business plan as an initial teaser document (3-10 pages) </li></ul>www. venture bean .com
  16. 16. BUSINESS PLAN SET <ul><li>The set should be </li></ul><ul><li>Self speaking: ie with limited clarification required (including with regard to abbreviations & technical terms) </li></ul><ul><li>Reader friendly: key information that you want to convey should not be hidden amongst too much details </li></ul><ul><li>Do not think only of what you want to share , rather think about what your potential reader may want to know </li></ul>www. venture bean .com
  17. 17. PREDICTIONS <ul><li>There should be a believable story about the future performance of the company. For eg. </li></ul><ul><ul><li>“ Sales is expected to grow at more than average industry expected rate of growth in this services company. This is because of the quality of the management team, the investors and the past track record of the company in getting and retaining customers. </li></ul></ul><ul><ul><li>This is visible in the billing rates per hour which are higher than industry average” </li></ul></ul>www. venture bean .com
  18. 18. PREDICTIONS … hmmm.. <ul><li>Many uncertainties exist, including that of </li></ul><ul><ul><li>Revenue streams </li></ul></ul><ul><ul><li>Costs, capital and revenue in nature </li></ul></ul><ul><ul><li>Capital inflow at different times </li></ul></ul><ul><ul><li>Resource constraints </li></ul></ul><ul><ul><li>Can you leave it by saying . .. </li></ul></ul><ul><ul><ul><li>“ What will be will be.. The future’s not ours to see?” </li></ul></ul></ul>www. venture bean .com
  19. 19. PREDICTIONS … hmmm.. <ul><li>Some uncertainties may be thought through and reflected using tools: </li></ul><ul><ul><li>Scenario analysis: Best/expected/worst case </li></ul></ul><ul><ul><li>Sensitivity analysis: Changes in some key parameters, such as raw material cost increasing by 10% </li></ul></ul><ul><li>Some other techniques: </li></ul><ul><ul><li>Start with what you know rather than what you do not, not everything is unknown… </li></ul></ul><ul><ul><li>Start with the immediate future, gradually building upto the medium term… </li></ul></ul>www. venture bean .com
  20. 20. FORECAST FINANCIALS <ul><li>Capture business strategy and model into a set of financial statements </li></ul><ul><li>In short term calculate detailed numbers, in long term summarize trends expected </li></ul><ul><li>The forecast must stand up to scrutiny and must be internally consistent </li></ul>www. venture bean .com
  21. 21. FORECAST FINANCIALS <ul><li>Consistency checks </li></ul><ul><ul><li>Check out key ratios and for internal consistency </li></ul></ul><ul><ul><li>Benchmark against industry parameters </li></ul></ul><ul><li>Cash flow and liquidity </li></ul><ul><ul><li>How will company raise funds </li></ul></ul><ul><ul><li>How will funds be utilised </li></ul></ul><ul><li>Recheck final numbers; verify that they do reflect the overall business model and plan </li></ul>www. venture bean .com
  22. 22. THANK YOU www. venture bean .com <ul><li>We provide advisory services to corporates, VCs, entrepreneurs, early stage ventures in </li></ul><ul><ul><li>Business model, plan and forecast review </li></ul></ul><ul><ul><li>Deal/VC funding, negotiation and valuation advisory </li></ul></ul><ul><ul><li>Funding strategy and value creation plan </li></ul></ul><ul><li>We follow a network model, founded by a Chartered Accountant, former: faculty at IIMB, VP at Ernst &Young, COO at IIMB entrepreneurship centre </li></ul><ul><ul><li>Class notes and reading material at www.slideshare.net/anjanavivek </li></ul></ul>

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