What Funds…….? I have opportunity what next……..! Ahh money By  Dhanunjaya   Gadiyaram
How to Approach Investors <ul><li>Research potential investors </li></ul><ul><li>Only approach appropriate investors </li>...
How to Approach Investors <ul><li>Ask potential investors about their investment style and expectations </li></ul><ul><li>...
Investment Opportunity <ul><li>Investors looking at all stages and sizes of companies </li></ul><ul><li>Deals are few and ...
Typical New Venture Funding Sources <ul><li>Who are they? </li></ul><ul><li>What drives their investment decision? </li></...
Typical New Venture Funding Sources <ul><li>Research Institutions </li></ul><ul><li>Self-financed </li></ul><ul><li>Angel ...
Research Institutions <ul><li>Who are they? </li></ul><ul><ul><li>Universities </li></ul></ul><ul><ul><li>Private laborato...
Research Institutions <ul><li>What do they expect to get? </li></ul><ul><ul><li>The intellectual property that results fro...
Self-financed <ul><li>From where? </li></ul><ul><ul><li>Family </li></ul></ul><ul><ul><li>Friends </li></ul></ul><ul><ul><...
Self-financed <ul><li>What do they expect to get? </li></ul><ul><ul><li>Their original investment returned </li></ul></ul>...
Angel Investors <ul><li>Who are they? </li></ul><ul><ul><li>Wealthy individuals </li></ul></ul><ul><ul><li>Often successfu...
Angel Investors <ul><li>What do they expect to get? </li></ul><ul><ul><li>Equity </li></ul></ul><ul><ul><li>A large return...
Professional Investors <ul><li>They Include: Venture Capitalists, Private Equity, Public Equity, Banks </li></ul><ul><li>W...
Desirable Investment Opportunities <ul><li>Demonstrable need for business, product, service and defensible market position...
Desirable Investment Opportunities <ul><li>When companies want to: </li></ul><ul><ul><li>purchase new plant and equipment ...
Desirable Investment Opportunities <ul><li>When owners want/need to: </li></ul><ul><ul><li>raise capital for new investmen...
Venture Capital Investors <ul><li>Who are they? </li></ul><ul><ul><li>Professionally managed investment vehicles </li></ul...
Venture Capital Investors <ul><li>What do they expect to get? </li></ul><ul><ul><li>Equity </li></ul></ul><ul><ul><li>Sign...
What is a Venture Capitalist? <ul><li>Investment fund for private equity </li></ul><ul><ul><li>Such as large pension funds...
Think Big – Venture Capital <ul><li>Why do VC’s look for big opportunities to offset large risk. </li></ul><ul><ul><li>40%...
What Do VCs Offer? <ul><li>Investment money from pension funds or university endowments </li></ul><ul><li>Suitable managem...
Private Equity Investors <ul><li>Who are they? </li></ul><ul><ul><li>Professionally managed investment vehicles </li></ul>...
Private Equity Investors <ul><li>What do they expect to get? </li></ul><ul><ul><li>Equity </li></ul></ul><ul><ul><li>Signi...
Public Equity Investors <ul><li>Who are they? </li></ul><ul><ul><li>Retail investors </li></ul></ul><ul><ul><ul><li>Indivi...
Public Equity Investors <ul><li>What do they expect to get? </li></ul><ul><ul><li>Shares </li></ul></ul><ul><ul><ul><li>Us...
Banks <ul><li>Who are they? </li></ul><ul><ul><li>Lending institutions </li></ul></ul><ul><li>What drives their investment...
Banks <ul><li>What do they expect to get? </li></ul><ul><ul><li>Their original loan returned </li></ul></ul><ul><ul><li>In...
Funds often are applied to different purposes Source Purpose Research Institutions Basic research, inventions Self-Finance...
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What Funds

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You have idea & opporunity to start business .....what next .....! its money

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What Funds

  1. 1. What Funds…….? I have opportunity what next……..! Ahh money By Dhanunjaya Gadiyaram
  2. 2. How to Approach Investors <ul><li>Research potential investors </li></ul><ul><li>Only approach appropriate investors </li></ul><ul><li>Prepare a very good Business Plan </li></ul><ul><li>Prepare and rehearse a very good presentation (no set standard: 30 seconds / 40-45 mins) </li></ul><ul><li>Be clear about what you need (how much, when, what for) and have some idea about what you’re prepared to offer (% of equity) </li></ul><ul><li>Progress your venture as much as you can on your own before approaching investors </li></ul>
  3. 3. How to Approach Investors <ul><li>Ask potential investors about their investment style and expectations </li></ul><ul><li>Spend time with investor’s other investee partners / companies </li></ul><ul><li>Negotiate hard </li></ul><ul><li>Ensure your interests are aligned with those of your investor. Agree a written business plan </li></ul><ul><li>Hire professional help </li></ul>
  4. 4. Investment Opportunity <ul><li>Investors looking at all stages and sizes of companies </li></ul><ul><li>Deals are few and far between </li></ul><ul><ul><li>problems with investors capabilities (e.g., access / protection) </li></ul></ul><ul><ul><li>problems with investee capabilities (e.g., accountability / transparency) </li></ul></ul><ul><li>Everything takes a (very) long time </li></ul><ul><li>Exits unclear </li></ul>
  5. 5. Typical New Venture Funding Sources <ul><li>Who are they? </li></ul><ul><li>What drives their investment decision? </li></ul><ul><li>What do they expect to get? </li></ul><ul><li>Where does their money come from? </li></ul>
  6. 6. Typical New Venture Funding Sources <ul><li>Research Institutions </li></ul><ul><li>Self-financed </li></ul><ul><li>Angel Investors </li></ul><ul><li>Venture Capitalists </li></ul><ul><li>Private Equity </li></ul><ul><li>Public Equity </li></ul><ul><li>Banks </li></ul>
  7. 7. Research Institutions <ul><li>Who are they? </li></ul><ul><ul><li>Universities </li></ul></ul><ul><ul><li>Private laboratories </li></ul></ul><ul><ul><li>Government agencies </li></ul></ul><ul><li>What drives their investment decision? </li></ul><ul><ul><li>The desire to enhance the body of knowledge in a specific area of interest through research </li></ul></ul>
  8. 8. Research Institutions <ul><li>What do they expect to get? </li></ul><ul><ul><li>The intellectual property that results from the research </li></ul></ul><ul><ul><ul><li>Patents </li></ul></ul></ul><ul><ul><ul><li>Rights in property or process, even if not patented </li></ul></ul></ul><ul><li>Where does their money come from? </li></ul><ul><ul><li>Endowments (sometimes with spending conditions) </li></ul></ul><ul><ul><li>Grants </li></ul></ul><ul><ul><li>General funding from government </li></ul></ul><ul><ul><li>Student tuition </li></ul></ul>
  9. 9. Self-financed <ul><li>From where? </li></ul><ul><ul><li>Family </li></ul></ul><ul><ul><li>Friends </li></ul></ul><ul><ul><li>The entrepreneur </li></ul></ul><ul><li>What drives their investment decision? </li></ul><ul><ul><li>Based on a belief in, or relationship with, the entrepreneur </li></ul></ul>
  10. 10. Self-financed <ul><li>What do they expect to get? </li></ul><ul><ul><li>Their original investment returned </li></ul></ul><ul><ul><li>Maybe interest </li></ul></ul><ul><ul><li>Less often equity </li></ul></ul><ul><li>Where does their money come from? </li></ul><ul><ul><li>Usually funded from personal savings or new borrowings (mortgage on real estate) </li></ul></ul>
  11. 11. Angel Investors <ul><li>Who are they? </li></ul><ul><ul><li>Wealthy individuals </li></ul></ul><ul><ul><li>Often successful entrepreneurs </li></ul></ul><ul><li>What drives their investment decision? </li></ul><ul><ul><li>A belief that the entrepreneur has done the homework </li></ul></ul><ul><ul><li>A belief that the idea holds great upside potential </li></ul></ul>
  12. 12. Angel Investors <ul><li>What do they expect to get? </li></ul><ul><ul><li>Equity </li></ul></ul><ul><ul><li>A large return on their investment (> 30% ) </li></ul></ul><ul><li>Where does their money come from? </li></ul><ul><ul><li>Usually funded from personal savings </li></ul></ul>
  13. 13. Professional Investors <ul><li>They Include: Venture Capitalists, Private Equity, Public Equity, Banks </li></ul><ul><li>What are they looking for (maturity): </li></ul><ul><ul><ul><li>Significant shareholder value growth (“$”) for expansion capital or reliable cash earnings </li></ul></ul></ul><ul><ul><ul><li>Consideration of: transparency, honesty, creativity, responsibility, accountability, teamwork, etc. </li></ul></ul></ul><ul><ul><ul><li>Appropriate industry, investment size, stage of company development – can vary depending on risk tolerance and desired ROI. </li></ul></ul></ul>
  14. 14. Desirable Investment Opportunities <ul><li>Demonstrable need for business, product, service and defensible market position </li></ul><ul><li>Track record of execution capability </li></ul><ul><li>Clearly defined business plan </li></ul><ul><li>Appropriate equity participation </li></ul><ul><li>Board representation, perhaps appointment of CFO </li></ul><ul><li>Visible exit strategy </li></ul>
  15. 15. Desirable Investment Opportunities <ul><li>When companies want to: </li></ul><ul><ul><li>purchase new plant and equipment to expand capacity </li></ul></ul><ul><ul><li>purchase new plant and equipment to enter new business line </li></ul></ul><ul><ul><li>acquire competitor, customer or supplier </li></ul></ul><ul><ul><li>raise new working capital </li></ul></ul>
  16. 16. Desirable Investment Opportunities <ul><li>When owners want/need to: </li></ul><ul><ul><li>raise capital for new investments </li></ul></ul><ul><ul><li>raise capital to restructure </li></ul></ul>
  17. 17. Venture Capital Investors <ul><li>Who are they? </li></ul><ul><ul><li>Professionally managed investment vehicles </li></ul></ul><ul><ul><li>Usually in the form of a limited partnership </li></ul></ul><ul><li>What drives their investment decision? </li></ul><ul><ul><li>A belief that the entrepreneur is very capable </li></ul></ul><ul><ul><ul><li>Management team </li></ul></ul></ul><ul><ul><ul><li>Business model </li></ul></ul></ul><ul><ul><li>A belief that the idea and market conditions allow for significant revenue and profit growth </li></ul></ul>
  18. 18. Venture Capital Investors <ul><li>What do they expect to get? </li></ul><ul><ul><li>Equity </li></ul></ul><ul><ul><li>Significant return on investment (~ 30% CAR) </li></ul></ul><ul><ul><li>A clearly pre-defined exit for 5 – 7 years later </li></ul></ul><ul><li>Where does their money come from? </li></ul><ul><ul><li>Pension funds </li></ul></ul><ul><ul><li>Wealthy individuals </li></ul></ul>
  19. 19. What is a Venture Capitalist? <ul><li>Investment fund for private equity </li></ul><ul><ul><li>Such as large pension funds that have long-term investment horizons </li></ul></ul><ul><ul><li>Typically a VC fund lasts 10-12 years, before it is closed out </li></ul></ul><ul><li>Looking for larger returns than offered by world-wide stock and bond markets </li></ul><ul><ul><li>Require fast growth </li></ul></ul><ul><ul><li>Require large market opportunities </li></ul></ul><ul><ul><li>Rewards must outweigh risks </li></ul></ul><ul><ul><li>VCs may reject 99% of all proposals. </li></ul></ul>
  20. 20. Think Big – Venture Capital <ul><li>Why do VC’s look for big opportunities to offset large risk. </li></ul><ul><ul><li>40% will fail. </li></ul></ul><ul><ul><li>30% will become “living dead.” </li></ul></ul><ul><ul><li>30% will become successes. </li></ul></ul><ul><ul><li>Most important: The failures almost always happen more quickly than the success! </li></ul></ul><ul><li>VC determine their exit strategy before they invest: </li></ul><ul><ul><li>Public offering </li></ul></ul><ul><ul><li>Sale to a strategic partner </li></ul></ul>
  21. 21. What Do VCs Offer? <ul><li>Investment money from pension funds or university endowments </li></ul><ul><li>Suitable management or technical expertise </li></ul><ul><li>Help finding strategic partners or customers </li></ul><ul><li>Strategy planning </li></ul><ul><li>In return: a large percentage of ownership, plus seats on the board </li></ul>
  22. 22. Private Equity Investors <ul><li>Who are they? </li></ul><ul><ul><li>Professionally managed investment vehicles </li></ul></ul><ul><ul><li>Can be in the form of a limited partnership, also mutual funds </li></ul></ul><ul><li>What drives their investment decision? </li></ul><ul><ul><li>Track record of the business </li></ul></ul><ul><ul><li>A belief that market conditions allow for expansion of the business </li></ul></ul>
  23. 23. Private Equity Investors <ul><li>What do they expect to get? </li></ul><ul><ul><li>Equity </li></ul></ul><ul><ul><li>Significant return on investment (up to 30% CAR) </li></ul></ul><ul><ul><li>May or may not seek a pre-defined exit </li></ul></ul><ul><li>Where does their money come from? </li></ul><ul><ul><li>Pension funds </li></ul></ul><ul><ul><li>Insurance companies </li></ul></ul><ul><ul><li>Mutual funds </li></ul></ul><ul><ul><li>University endowment funds </li></ul></ul>
  24. 24. Public Equity Investors <ul><li>Who are they? </li></ul><ul><ul><li>Retail investors </li></ul></ul><ul><ul><ul><li>Individuals </li></ul></ul></ul><ul><ul><li>Institutional investors </li></ul></ul><ul><ul><ul><li>Pension funds, mutual funds, corporations </li></ul></ul></ul><ul><li>What drives their investment decision? </li></ul><ul><ul><li>Retail investors </li></ul></ul><ul><ul><ul><li>Emotion, hot tips, their own analysis </li></ul></ul></ul><ul><ul><li>Institutional investors </li></ul></ul><ul><ul><ul><li>Investment policy </li></ul></ul></ul>
  25. 25. Public Equity Investors <ul><li>What do they expect to get? </li></ul><ul><ul><li>Shares </li></ul></ul><ul><ul><ul><li>Usually no role in management of the business </li></ul></ul></ul><ul><ul><li>Return on investment </li></ul></ul><ul><li>Where does their money come from? </li></ul><ul><ul><li>Retail investors </li></ul></ul><ul><ul><ul><li>Personal savings or borrowings (mortgage on real estate, or margin on brokerage account) </li></ul></ul></ul><ul><ul><li>Institutional investors </li></ul></ul><ul><ul><ul><li>Pension contributions, insurance premiums, etc. </li></ul></ul></ul>
  26. 26. Banks <ul><li>Who are they? </li></ul><ul><ul><li>Lending institutions </li></ul></ul><ul><li>What drives their investment decision? </li></ul><ul><ul><li>The creditworthiness of the borrower </li></ul></ul><ul><ul><ul><li>Ability of the business to service the loan (make payments of interest & principal) </li></ul></ul></ul><ul><ul><ul><li>Collateral (can be supplied by a third party) </li></ul></ul></ul>
  27. 27. Banks <ul><li>What do they expect to get? </li></ul><ul><ul><li>Their original loan returned </li></ul></ul><ul><ul><li>Interest </li></ul></ul><ul><li>Where does their money come from? </li></ul><ul><ul><li>Depositors </li></ul></ul>
  28. 28. Funds often are applied to different purposes Source Purpose Research Institutions Basic research, inventions Self-Financed Initial start-up funds Angel Investors Initial start-up funds Venture Capitalists Just after start-up Private Equity Longer-term growth of an established company Public Equity Capital investment requirements of an established company, exit for VCs Banks Financing for most operating needs
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