Funding for Startups


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Types of Funding for Startups and various risk involved with that. A workout session by Mohsin Khan, General Partner, Utthistha during NPC Hyd, 3rd Apr.

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Funding for Startups

  1. 1. By: Mr. Mohsin Khan Utthishta Yekum Fund Funding for startups 1 Arise Advance Ascend
  2. 2. 1. Stages of startup funding 2. Risks associated with startups 3. Investor lens/scorecard 4. Case study 5. Conclusion/takeaways 2Transcend Excel Glorify Agenda
  3. 3. Time RevenuesofCompany First check investors Venture capitalists Funding stages of a Startup Angel investors Spur Stimulate Intensify
  4. 4. The top three risks that startups face are as follows: – Team / Founder’s Risk – Technology / Technical Risk – Market / Customer Risk 4Emerge Swell Move Up Risks associated with Startups
  5. 5. • Chemistry between team members • Have they worked together before or not • Passion to work for the long haul • Complementary skills. Eg. One techie, one sales, etc.. Or same skills all techies.. 5Aggrandize Glorify Soar High Team / Founder’s Risk
  6. 6. 6Ascend Outshine Go Places Technology Risk • Technology on which the start-up is based will it work or fail • Differences in tech resources needed for different startups. Eg. Software can be tested using just open source / free platforms. Any other technologies require resources to create first prototype
  7. 7. • The most important or critical risks for a startup. • Will customers adopt or use the product / service or not • Will customers pay for the product / service or not • In the end if they are no paying customers there is no startup 7Stimulate Incite Stir Up Market / Customer Risk
  8. 8. • Team • Market size • Customer segmentation • Competitive positioning • Customer acquisition process • Scalability(Technology based) • Internal systems and processes • Differentiator(Secret sauce) • Budget management • Revenue & Profit • Exit & Return 8Arise Prevail Transcend Investors score card
  9. 9. Case Study 9Spur Stimulate Intensify
  10. 10. 10Arise Wake Up Rise Up How to use the Score card? • Think like investors • Audience is divided into three groups- First check, Angels, VC’s. • Read the case study and use parameters of scorecard to score (1 – 5) the startup in the case study • Justify your score. Why 1 (low) - 5 (high) ? • Use the questions and pointers to gain deeper details about the startup against each parameter
  11. 11. Evaluation Criteria Answer the questions? Team •Is the team aligned with the business plan? •Team experience in the sector. Market Size •How big is the market size and how many customers do you have? •How large is the focused customer segment market? Customer segmentation •Where are the customers? Identify the segments? •What is the loyalty or retention level? Competitive positioning •How are they placed on the competitive map? Customer acquisition process Time and money taken to acquire a customer? Cost of customer acquisition (COCA) vs life time value (LTV) Scalability(Technology based) •Scalability of your business based on technology and not human resources. Internal systems & processes •Is technology used to scale systems with growth? •How is the customer feedback loop closed? Differentiator (Secret sauce) •USP, key differentiators, Uniqueness of the technology Budget management •Burn rate and survival time. Deviations and dependencies with the current budget. Revenue & Profit •Average price, Average customer, Ticket size, Monthly and annual revenues, Break-even time, Cost margins, EBITDA Exit & Return •Potential ROI & Exit Strategy 11 Investor Score card
  12. 12. 12Outshine Outstrip Outperform Key Takeaways • If you want to raise money learn to Think like investors • Startups need to prove traction and product prototype. This requires you to show that there are reasonable number of people willing to pay for and use your product. • Then prove to yourself if the existing model is scalable through technology and not people, if not rework on it. • After scalability, test your sustainability by evaluating competition and internal systems and processes.
  13. 13. 13 Key Takeaways (Cotnd…) • To sustain note your differentiators, customer profile and acquisition aspects. • Customer acquisition metrics (COCA) vs Life time value (LTV). LTV > COCA (preferably 3 times) • Then do the number crunching for budget and revenue management. • Circle back to the stage of your company and value it with the evolution and changes. • We repeat, think like an investor because you are truly investing your time and effort into it. You are a shareholder of your idea end of the day. Evolve Emerge Enlarge
  14. 14. 14 14 Arise Advance Ascend