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Activating Potential Strategic Partnerships

What lead is equal to a customer, potential strategic parnter is to an acquirer. Partnership thinking is very different from product thinking. These slides will come in handy for any startup (Indian) to understand the importance of this and build a habit around it

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Activating Potential Strategic Partnerships

  1. 1. Activating Potential Strategic Partners (PSP) Workshop
  2. 2. Agenda ● Section 1 - Startup outcomes ? ● Section 2 - Acquisition Case Studies ● Section 3 - Acquisition Process ○ How ‘Lead’ relates to a ‘Customer’, ‘PSP’ relates to ‘Acquirer’. ● Section 4 - Positioning and Preparation ● Section 5 - Narrative & Refinement ● Section 6 - Habit Next Steps
  3. 3. How many of you want to get an exit for yourself in the next 3 years?
  4. 4. Section 1 - Product startup outcomes
  5. 5. Financially 3 options Profitable IPO Acquired
  6. 6. Profitable product company? Then, setup an innovation labs for incubating the next product idea
  7. 7. Indian Tech/Product company IPO Source - *Few companies not listed in India 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year to IPO - 6 Year to IPO - 8 Year to IPO - 11 Year to IPO - 11 Year to IPO - 21 Year to IPO - 17 2007 Naukri Year to IPO - 11 Year to IPO - 10 NASDAQ Only 9 in last 10 years Found answer to product, distribution & monetization NASDAQ
  8. 8. Product acquisitions (as of Q4 2016) $4bn across 354 deals Source - iSPIRT Signalhill 2016 State of M&A of Technology Startups India Report Acquihire Avg is $300K
  9. 9. EXERCISE What is the best envisioned outcome for your startup & which year do you expect it ?
  10. 10. Mean time to IPO or Acquisition (US Data) From the time of first external investment, mean time of when M&A happens in 4.5 years Source -
  11. 11. Section 2 - Acquisition stories in India
  12. 12. Case 1 REMOVED in PUBLIC VERSION
  13. 13. Not raise more money than is needed, reduces exit options
  14. 14. People know people and they talk
  15. 15. Case 2 REMOVED in PUBLIC VERSION
  16. 16. Constantly meet people, don’t know which one will come handy
  17. 17. Before raising my round whether I am a hyper growth
  18. 18. Case 3 REMOVED in PUBLIC VERSION
  19. 19. Payday is when you sell your shares
  20. 20. Case 4 REMOVED in PUBLIC VERSION
  21. 21. Serendepity must be engineered
  22. 22. Section 3 - When thinking acquisition A framework/process
  23. 23. Acquisition can’t be left to chance Acquisition an important business process requires a plan. It is a complex sale process that has only one final buyer. Akin to more like selling a ‘piece of art’/’house’ than ‘ice cream’ that happens in product sale.. vs
  24. 24. Uniqueness of this process ● Buyer driven rather than seller driven. ○ It has to be buyers big idea. ● Value is in the eyes of beholder. ○ Different offering to different buyer, thus value different for each pairing ● Fragile - Can’t bind the buyer to a deal so must close deal quickly ● Price discovered via auction - Deal complexity means only one buyer is significant risk, an auction is must. ● A buyer is first a potential strategic partner (PSP). One of the PSP becomes a buyer.
  25. 25. From the eyes of a buyer ● Happen when buyer sees no other way to solve a problem ● Are directional ! ● Favour the perceived category leader ● Derive from personal relationships ● Are complex and require careful handling
  26. 26. Think before you fundraise ● Median price of a tech exit today in US is $15-25m (source - MergerStat Database) ● VC want 20% IRR -> 30X return from each investment. ● Unintentional Moonshot Expectation (Thumb rules) ○ Series A - 10X ○ Series B - 4-7x ○ Series C - 2-4x ● VC’s can potentially block exits via board seats, voting rights, preferential shares.
  27. 27. Position > Prepare > Cultivate PSP Relations > Co-create > Partner > Close Learn As ThoughtLeader
  28. 28. An M&A is the story of when fear meets greed on a treasure hunt voyage.
  29. 29. Startups are a small boat on a voyage, chasing a DREAM ISLAND Startup Dream Island
  30. 30. They pick a TAILWIND to help propel forward. else paddling on own, is a tough journey. Tailwind
  31. 31. Potential Strategic Partner are BIG TANKER SHIPs, have own ISLAND to chase irrespective of the TAILWIND Potential Strategic Partner
  32. 32. When Potential Strategic Partner gets excited with new one, they go after this...
  33. 33. Other Startups and Players Once destination & direction get aligned startup comes under the radar
  34. 34. Lead to possible discussion on how the small boat’s engine can fit in the PSP to reach the island faster
  35. 35. Indian Startups don’t come on a global STRATEGIC RADAR, even if chasing the same DREAM ISLAND
  36. 36. As Indian startup what should you do ?
  37. 37. Know your PLAYGROUND
  38. 38. Without an AIRGAME, Any Sales will feel like Sisyphus
  39. 39. GROUNDGAME - Co-create a future together
  40. 40. Have right Story, make sure being understood ?
  41. 41. ● Know your PLAYGROUND ● Come in the radar - AIRGAME ● Habit of building relationships - GROUNDGAME ● Have a tailored NARRATIVE
  42. 42. Section 5 - Positioning & Preparing
  43. 43. 1 2 3 4 Who are top 5 companies that can help you grow your market ? What category would you describe yourself in ? Who are top 5 players in that category ? Draft a one Pager for each of them on their size of revenue, business units they have, which business unit would fit in, past partnership/acquisition they have done, org structure Know your Playground
  44. 44. 1 2 3 4 What conferences that your PSP partner speak or attend at ? Who are co-chair or the organizer that you will have to speak to ? Who are the top 5 journalist , analyst that write about trends in your category ? Who is the Gartner equivalent (Industry Influencer) in your Industry ? 5 What the are the top 5 research reports or online articles do your PSP read ? Airgame What is your position vis-a-vis them in the category ?6
  45. 45. 1 2 3 4 What is the name of the SVP of the business unit in each of 5 companies that you identified Draw org chat of those in that organization, who does the corporate development report to ? Who has the most dominant role in the company - product manager, head of sales, head of marketing Who in your current network can help you introduce to any of the person in that organization 5 What is your initial introduction line to reach out to him/her ? Groundgame
  46. 46. EXERCISE
  47. 47. Section 5 - Narrative
  48. 48. EXERCISE
  49. 49. 1 2 3 4 What is your mission ? (The dream Island that whole world is after) What tailwinds are helping you ? (The big trends in your space) What makes you real and is unique about your engine ? (Differentiation - a large player may envy) How are you going to grow to big a titanic on your own ? (value is created, invokes fear) 5 What makes you best suited to reach the mission faster than others ? (invokes greed) Narrative must include
  50. 50. #1. Name a Big, Relevant Change in the World #2. Show There’ll Be Winners and Losers #3. Tease the Promised Land #5. Present Evidence that You Can Make the Story Come True Narrative Structure Source - Zuora Deck
  51. 51. EXERCISE
  52. 52. Entrepreneur Investor Partners Other Stakeholders Decision Maker Message Loss Ratio at Every Stage Keep Message Simple, Short and to Top 1% ? Does it pass the chinese whisper test
  53. 53. Section 5 - The Habit
  54. 54. Its a funnel, needs a process and a habit Time Seeding Tending
  55. 55. Need a support group, gym Interested in regular syncups ? Mentor that can coach your pitch, & be a deal Buddy To Signup for PSP Cohort ● Get (non founder) board member consent & endorsement. Board member to take responsibility on behalf of company to followup ● Commit to doing 6 weeks syncup meeting. ● $5K-$10K spend over the year, ○ $2K/month of PR (discounted and pooled) primarily for global PR, (min 3 months). Directly to paid to PulpPR (PR firm of StartupBridge India)
  56. 56. Thank You