VC 3.0


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The Venture Capital model is old (circa 1960's), broken and losing its relevance. While VC's seek innovation its time they reinvent their own model inside-out.
IncuCapital is taking a fresh approach to Venture+Capital. Afterall, was it not about building great companies??

Published in: Economy & Finance, Business
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  • Very relevant to today's world where on one end economy recovery is slow and on the other, many good ideas die down for want of monetary and advisory assistance.
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VC 3.0

  1. 1. Why a VC 3.0 model ??Challenges of the Classic VC Model• They don’t see the same picture – VCs do not have goals that are aligned with the goals of the company founders• Its a probability game – Founders would prefer reasonable success with high probability – while VCs are looking for fantastic hit-it-out-of-the-ballpark success with low probability• Buying Time and Experience – Going so fast that they didnt have time to learn how to spend money copyright @ IncuCapital 2
  2. 2. Why a VC 3.0 model ??Challenges of the Classic VC Model• Too busy for a treasure hunt – Classic VC myopia of feeling like they just dont have time to get to know entrepreneurs that arent ready to pitch yet• Risky De-risking Strategy – The best way to de-risk from early stage risks is to diversify• A model long dead – Because the current VC business models are vintage (circa 1960’s) … the list is long & continues….. copyright @ IncuCapital 3
  3. 3. The Narrow Bell Curve of the current VC industry
  4. 4. The Narrow Bell Curve of the current VC industry Current VC industry.. and it should not be a surprise if they all behave the same … & hence the same results…
  5. 5. So what is VC 3.0?
  6. 6. Not just a simple innovation but a DISRUPTIVE copyright @ IncuCapital leap
  7. 7. Evolution of VC Model Count = 001 VC 1.0 VC 1.4 VC 2.0 VC 3.0 VC 1.1Some VC’s trying to innovate the model. But only incrementally.Maybe that’ll form VC 2.0 Model.The current problems needed a radically different approach… a fresh perspective. copyright @ IncuCapital
  8. 8. What’s the Answer then?
  9. 9. The AnswerA collaborative and hybrid model• Bring down the early stage risk – Know the entrepreneurs before investment – Internalize the business model & opportunity• Invest only if you have conviction – Move away from the probability of success model – Move away from ‘Spray and Pray’ – Every company should be built to last• Build the company with long term vision – Have incentives aligned with the entrepreneur – Work closely with the entrepreneur copyright @ IncuCapital 10
  10. 10. The AnswerA collaborative and hybrid model• Small is beautiful – Have smaller funds and ticket size – Optimize the fund usage• Invest Flexibly – Invest with flexibility of managing long and short term investments – Custom Investment s: Build co-investment and part-exit models for individual LP’s copyright @ IncuCapital 11
  11. 11. The CompanyThe 001 of VC 3.0• IncuCapital is a Venture Capital firm – Fresh new approach to Venture Capital – Focus on creating great Ventures and not Capital – Has young committed team that works hands-on• Business Model – Hybrid Business Model: Incubation + Funding – Work with companies/entrepreneurs at the earliest stage – Co-build the whole concept/model before funding• Target higher success rate – Target more success rate – Target higher RoI copyright @ IncuCapital 12
  12. 12. FocusCore focus areas• IncuCapital focuses on early stage startups• We are basically sector agnostic – We’re happy to launch companies that are category creators – We only commit ourselves to something that we can believe in and envision with entrepreneurs• Other characteristics – India based/focused businesses – Strong entrepreneurial team – Strong revenue stream copyright @ IncuCapital 13
  13. 13. The InvestorWhy should you invest through us?• Proprietary Pipeline – We co-build companies and do not fight for the same deals• Deep Engagement – Our Venture Partners work alongside the management team building the company bit-by-bit• Prudent Investments – No herd mentality or me too investments – We avoid any space where ‘every body is investing’ copyright @ IncuCapital 14
  14. 14. The InvestorWhy should you invest through us?• Diversified Risk through co-investment – We generally look for multiple investment partners – And wherever possible at least one strategic investment partner• Better Liquidity – Since there are multiple investors, exits are easier to handle individually• Rational Expectations – of growth, value creation and returns – We would not kill the goose to get the golden egg!• Superior Returns – Stronger companies, super value, superior returns copyright @ IncuCapital 15
  15. 15. The InvesteeWhat do we look for in our companies• Exciting business models – Product/Service that are a category creators with great customer response. – Disruptive Product/Service which can alter existing value chain – Breakthrough ideas with great growth potential• Clear revenue opportunities with scalability – High free cash flow characteristics with revenue targets within a few months of investment• Strong and competent team – Skill set to back their claims – Passion with a proof of concept and some market validation copyright @ IncuCapital 16
  16. 16. The InvesteeWhat do we look for in our companies• Use of Funds – Capital mainly used for ‘building’ (Products, Services, Team) – Market expansion and scaling up• Consolidation of opportunity – Through cost reduction, revenue increases – Synergy with any existing portfolio company /IPR• Potential exit routes and alignment copyright @ IncuCapital 17
  17. 17. The larger EcosystemA pie in the sky IncuCapital is working its bit to develop some larger infrastructure for the success of early stage ecosystem• Private Placement Platform for Unlisted companies – Working with a major stock exchange promoter to create a platform for early stage investments and exits – Solving the systemic problem of increasing the investment pool and exit opportunities for exciting unlisted companies• Launchpad – A Student Entrepreneurship Initiative – A 1.5 year long multi BSchool Entrepreneurship Development Program to build enterprises of tomorrow – Helps us build our own proprietary pipeline – Develops companies with our own DNA passed on copyright @ IncuCapital 18
  18. 18. You!How can we collaborate to build the ecosystem together We are doing our bit in building exciting companies. Tell us how we can work with you to do it better. copyright @ IncuCapital 19
  19. 19. Thank copyright @ IncuCapital 20