IVCJ Conference for
Private Equity for IT & ITES
Early Stage Financing
29th April 2009, Taj Lands End, Mumbai
Atul Khekade
Director – Netz Capital

Company Stages
Idea $10K - $50k
Business Plan Seed/Pre-Early
Team
Working Model 0.5% $2M - $5M
VC
Operations
PE IPO
Exit >$5M
Acquisition

Fund Structure
Idea
•Scalability
•Portability
•Interface
•Operational Efficiency
•Market Size
•Biggest Competitor
Team Technology Infrastructure Early Promotion
<$5K <$10K <$10K <$5K
<$30K
•Early Customers
•Self Sustaining Operations - $1M Revenues
•Gearing up for Next Round

Fund raising Challenges
(In recession time)
• Scalability
• Operational Efficiency/Low fixed costs
• Revised Exit Strategy/Profit making as first priority
• Recession Proof Check
• Serves a very basic need at ½ x price
• Serves emerging/recession free markets Additional
Evaluation
• Long term viable and economic model
Criteria
• VC/PE Limitations
• Scarcity of Capital
• Bad M&A and IPO market
• Painful Term Sheet, giving away majority control

Strategy: Winning or Surviving?
In tough times
• Highest quality, fair price • Fair quality, ½ x price
• Fixed cash outflow model • Negative cash outflow model
• Self funded Growth • Partnerships/Franchising
• Budget as per market price • Bootstrapping / Re-inventing
the budget
• Advertising • Public Relations
• Find Employees • Find/Nurture Entrepreneurs
• Sales start after operations • Sales first

Moving to the next round of Capital
• Is it absolutely necessary?
• A successful company is the one that makes more profits – not the
one that raises more capital.
• Thought about raising capital from customers?
– Long term commitments
– Pre launch sales
– Clearer revenue picture of the future.
Raised $100M as Tata raised $5
Raised $6.2M deposits from million on nano
from 125,000 customers forms
wiki users

Seeding the Leader
LEADER
Process
Consistency
Business Model
Vision
Early
Role Model
Customers
Organized
Sales Process
Media
Presentation
Friendliness
Skills

Growth - A reality?
• Recession – Greatest Opportunity to rise
• Opportunity for cheaper alternatives of existing products
Real Estate Automotive Travel Food Energy Entertainment
Cost effective •Second hand •Full service Franchising Green Energy •Cheaper
housing cars to low frill sources theatres
airlines
•Electric cars •Movie rentals
•Airlines to
•Car Rentals trains

Exit Strategy
• Profit Making as soon as possible
• Surviving till the markets recover
– Undervalued M&A
– Undervalued acquisition bids

Valuation
• “It is better to own 10% of a $100 million company than
owning 80% of a $5 million company”
• Company’s leader deserves controlling interest
• Valuation Criteria
– Revenue
– Competitor’s revenue
– Early entrant? Or crowded space?
– Early customers
– Market size

Thank You
• Atul Khekade
• Info @ netzcapital.com
• +91 98203 72810