Tough times call for tougher measures! As Indian economy transitions from legacy to tech age, businesses including start-ups will face tough times on finance front. The presentation aims to help users understand the basics of managing their finances in difficult times and also on how to innovatively use financial engineering and intellect to tide over the rough weather.
• Bootstrapping – How to bootstrap your start-up
• Sources of Finance- Various sources of finances
• Managing your Company’s finances
• How to survive tough times
• Fundraising Trends
• Conclusion- Q&A
How to Bootstrap?
• Stick to a business domain you know and love.
• Start from own Home/Friends or relatives Home
• Try & manage as much work as possible amongst
• Find cost effective resources/interns
• Look for freebies , deals , free trials etc
• Plan and track your finances, avoid unnecessary
• Don’t waste time & money at conferences, seminars
unless your product is ready
How to Bootstrap? (2)
• Find team members to work for equity rather than cash.
• Build a plan around your budget, rather than around your
• Defer your urge to find office space until you have customers.
• Ask for advance on royalties and vendor deferred payments.
• Choose a business model to optimize your revenue flow and
• Moonlighting; and keep quiet about side project
Basic Financial Terms
• Profit & Loss A/c
• Balance Sheet
• Cash Flow Statement
• Business Plan
• Accounts Payable
• Accounts Receivable
• Direct Costs
• Indirect Costs
• Operating Margins
• Net profit
• Cash Burn Rate
• Debt Equity Ratio
• Current Ratio
• Debt Service Coverage
• Interest Coverage
Golden Financial Management Rules
• Never Invest your money without ensuring that assets
you acquire can generate a return which is at least
equal to the cost of your capital
• Invest your money in such a way that the assets will
generate an inflow of funds before liabilities demand
(*source: Romancing The Balance Sheet by Anil Lamba)
Go Back to Basics
• Generate Profit & not Sales
• Cut unnecessary expenses
• Pay minute attention to cash flows
• Manage Working Capital efficiently
• Don’t use short term funds for long term purposes
• Be wary of unsecured & high cost debts
• Negotiate credit terms with Vendors and Customers
• Look for Hidden sources of cash (especially for slightly
mature business) in your books
• Sell off unwanted assets to generate cash
• Explore advances from Customers
• Lay off people (if unavoidable) on best possible terms
Fund raise Questions
• How much funding should I raise?
• When should I raise money? At what stage should I
• How much equity should I give? At what terms?
• How should I value my company?
• How should I give equity when I am unable to value
Fund raise Questions (2)
• How should I reach out to investors?
• How many investors would I have to reach to find
• How long will this process take ?
• Should I appoint anyone for the process ?
• How much will the fund raising process cost
• What is the right structure/instrument
• Define your round – amount, tranche, dilution
• Structure a process – Project Plan and CRM
• Seeking advice – entrepreneurs, investors, mentors,
industry guys – ask for advice, you get money; ask
money, get advice
• Selecting a VC – Terms, Follow On, Strategic Support,
Brand Name, Time to money, Integrity/Competition,
• Finding a good CA/lawyer