Project on start ups. Meaning of Start up. Proceeding Mechanism, key points to be considered, essentials for a successful stat ups their valuations, Methods of Valuations, where does india stands, structure,successful start ups in India. New Start Ups in India. Private Equity, Venture Capitalist and Angel Investors. Problems faced by entrepreneurs while doing start ups. Problem solving. Future Prospects of new Indian Start ups including steps taken by Government of India. compensation given to private equity players. Made by Saurabh, Kunal, Dipti, Ravis- Students of INTERNATIONAL COLLEGE OF FINANCIAL PLANNING MBA in Financial Analysis. Submitted to Jatin Khemani.

1. Project on Start Ups in India
Presenter Names| Ravish, Saurabh , Kunal and Dipti

2. TEAM ROLES
INTRODUCTION
BY
RAVISH
VALUATONS
BY
KUNAL
FUTURISTICVIEW
BY
DIPTI
VENTURE CAPITALIST
BY
SAURABH

4. MEANING
▪ The act or process of starting up a new business can be called as
startup.
 We can also define startup as the initial or the early stage of the
life cycle of a business.

5. PROCEEDING MECHANISM

6. KEY POINTSTO BE CONSIDERED
FOCUS ON YOUR USERS,NOT POTENTIAL ACQUIRERS
AVOID DISTRACTIONS LIKE DAY JOBS,PROFITABLE SIDE-
PROJECTS,FUNDRAISING ETC.
DON’T LAUNCH A STARTUP RIGHT OUT OF SCHOOL

7. THREE ESSENTIALS FOR A SUCCESSFUL START UP
PASSIONATE AND
COMMITTED
ENTERPRENEUR
PROBLEMS TO BE
SOLVED
SUPPORT SYSTEM
PROVIDING THE KNOW-
HOW&FUNDS
REQUIRED

8. WHERE DOES INDIA STANDS
1. More than 3100 Startups are present in INDIA , 3rd largest base in the world.
2. 800+ starting up annually.
3. By 2020,there would be around 11500 startups present employing over 250 k
people.
4. Around 300 VCs and 225 Angel investment deals worth over USD 2 Billions.
5. Women entrepreneurs have raised from 6% in 2014 to 10% in 2015.

9. REVOLUTIONARY STARTUPS IN
INDIA

10. SHOPPING
DIGITAL
PAYMENTS
FOOD-
TECH
CAB
SERVICE

11.  INDUSTRY : STOCK BROKING.
 FOUNDED IN : 2010 BY NITHIN KAMATH, AWARDED AS EMERGING ENTERPRENUER BY CII
IN 2013.
 FIRST INDIAN FINANCIAL CO. WHICH DEBUTED DISCOUNT BROKING MODEL IN INDIA.
 HANDLES AVERAGE DAILY TURNOVER OF 5000-7500 CRORES IN EQUITIES & 600 CRORES IN
COMMODITIES.
 75000+ USERS OF THIS STARTUP.

12. INDIA’S START UPTREND
e-commerce
33%
B2B
24%
OTHER
13%
CONSUMER
INTERNET
12%
MOBILE APPS
10%
SAAS
8%

13. 0 100 200 300 400 500 600 700
AHEMEDABAD
KOLKATA
HYDERABAD
MUMBAI
PUNE
OTHER
CHENNAI
DELHI(NCR)
BANGLORE
591
237
203
151
149
62
136
83
31

14. TYPES OF INVESTORS
 ANGEL INVESTORS : Their role comes after Friends, Family and Fools.
Getting popular these days.
 VENTURE CAPITALIST : Invests at the seed stages. After a start up has
starting getting the expected sales i.e. the product or services are getting
accepted by the Public.
Very popular among the start ups.
 PRIVATE EQUITY: Are those who invest in a company which has a decent
run in the market or the industry and the business is making decent cash
flows or atleat are break evening and is not a loss making business despite
being in the business for some years.

15. VENTURE CAPITALISTS
 A venture capitalist is an investor who either provides capital
to startup ventures or supports small companies that wish to expand but do
not have access to equities markets.
 Venture capitalists are willing to invest in such companies because they can
earn a massive return on their investments if these companies are a success.
 Venture capitalists also experience major losses when their picks fail, but
these investors are typically wealthy enough that they can afford to take the
risks associated with funding young, unproven companies that appear to have
a great idea and a great management team.

16. STRUCTURE
 A Venture capital firm, along wealthy individuals, insurance
companies, pension funds, foundations, and corporate pension funds among
others pool money together into a fund to be controlled by a VC firm.
 All partners have part ownership over the fund, but it is the VC firm that
controls where the fund is invested, usually into businesses or ventures that
most banks or capital markets would consider too risky for investment.
 The Venture capital firm is the General Partner, while the pension funds,
insurance companies, etc. are Limited Partners.

17. Diagram of the structure of a generic venture capital fund

20. If VCs doesn’t like your Business Model, they will REJECT you.

21. POSITIONS IN AVC FIRM
GENERAL
PARTNERS
(GPs)
They run the Venture Capital firm and make the investment decisions on behalf of the fund. GPs typically put in
personal capital up to 1-2% of the VC Fund size to show their commitment to the LPs.
VENTURE PARTNERS Venture partners are expected to source potential investment opportunities ("bring in deals") and typically are
compensated only for those deals with which they are involved.
PRINCIPAL This is a mid-level investment professional position, and often considered a "partner-track" position. Principals will
have been promoted from a senior associate position or who have commensurate experience in another field, such
as investment banking, management consulting, or a market of particular interest to the strategy of the venture
capital firm.
ASSOCIATE This is typically the most junior apprentice position within a venture capital firm. After a few successful years, an
associate may move up to the "senior associate" position and potentially principal and beyond. Associates will often
have worked for 1–2 years in another field, such as investment banking or management consulting.
ENTREPRENEUR-
IN- RESIDENCE
Entrepreneurs-in-residence (EIRs) are experts in a particular domain and perform due diligence on potential deals.
EIRs are engaged by venture capital firms temporarily (six to 18 months) and are expected to develop and pitch
startup ideas to their host firm although neither party is bound to work with each other. Some EIRs move on to
executive positions within a portfolio company.

22. COMPENSATION
 Payment is made to the venture capital fund managers in the form of
management fees and carried interest.
 Depending on the firm, roughly 20% of the profits are paid to the company
managing the private equity fund while the rest goes to the limited partners
who invested into the fund.
 General partners are usually also due an additional 2% fee.

23. VALUATIONS

24. • What is a Valuation?
• Importance of Valuation
• Valuation of Startups and their Basic Methodologies

25. WHAT IS AVALUATION ?
 The process of determining the current worth of an asset or company. There
are many techniques that can be used to determine value, some are subjective
and others are objective.
 An analyst valuing a company may look at the company's management, the
composition of its capital structure, prospect of future earnings, and market
value of assets.
 SUBJECTIVE TECHNIQUE : Judging the contributions of a company's
management.
 OBJECTIVE TECHNIQUE : Calculating intrinsic value based on future
earnings.

26. IMPORTANCE OFVALUATION
 For an investor, a startup's valuation determines the eventual return on
investment. For example, if you invest in a startup at a $6m post before
Facebook buys the company for $12m, then you've doubled your money.
 For the founders, a startup's valuation determines how much of the company
the founders still own after accepting an investment. For example, if a
company raises $1m at a $6m pre, you own 6/7 (86% ) of the company.
 Investors and founders want to maximize their equity stakes, so investors want
lower valuations while founders want higher valuations.

27. VALUATION OF STARTUPS ANDTHEIR BASIC
METHODOLOGIES
Determining the value of a startup can be broken down into below mentioned 4
common methodologies for systematically deriving its worth.
 Cost-to-Duplicate
 Market Multiple
 Discounted Cash Flow (DCF)
 Valuation by Stage

28. COST-TO-DUPLICATE
 It involves calculating cost to build another company just like it from scratch.
 This approach will often look at the physical assets to determine their fair market value.
Example :
 The cost-to-duplicate a software business, for instance, might be figured as the total
cost of programming time that is gone into designing its software. For a high-
technology start-up, it could be the cost of research and development, patent
protection, prototype development.
Short Coming :
 Doesn't reflect the company's future potential for generating sales, profits and return on
investment.
 The cost-to-duplicate approach doesn't capture intangible assets like brand value.

29. MARKET MULTIPLE
 Venture capital investors like this approach, as it gives them a pretty good indication of what the
market is willing to pay for a company.
 Values the company against recent acquisitions of similar companies in the market.
 The value of startups often has to be determined based on revenue multiples.
Example :
 Let's say mobile application software firms are selling for five-times sales. We could use a five-
times multiple as the basis for valuing our mobile apps venture, while adjusting the multiple up
or down for different characteristics. If our mobile software company, say, were at an earlier
stage of development than other comparable businesses, it would probably fetch a lower multiple
than five, given that investors are taking on more risk.
Short Coming :
 It's not always easy to find companies that are close comparisons, especially in the star-up
market. Deal terms are often kept under wraps by unlisted companies – probably the closest
comparisons. While relative valuation is quick and easy to use, it can be a trap for investors

30. DISCOUNTED CASH FLOW (DCF)
 Discounted cash flow analysis represents an important valuation approach for those
startups that have yet to start generating earnings.
 It involves forecasting cash flow the company will produce in the future
 Then, using an expected rate of investment return, calculating how much that cash flow is
worth.
 A higher discount rate is typically applied to startups, as there is a higher risk that the
company will inevitably fail to generate sustainable cash flows.
Short Coming :
 It depends on the analyst's ability to forecast future market conditions. Becomes a
guessing game after a few years. Hence the DCF method can be difficult to apply to
real-life valuations.

31. VALUATION BY STAGE
 Also known as the “rule of thumb” where values are typically set by the investors,
depending on the venture's stage of commercial development
 Start-ups with nothing more than a business plan get the lowest valuations. As the
company develops, investors will be willing to put a higher value.
Example :
 The initial round of financing may be targeted towards providing wages for
employees to develop a product. Once the product is a success, a subsequent
round of funding is provided to market the invention.

32. ESTIMATED COMPANYVALUE STAGE OF DEVELOPMENT
$250,000 - $500,000 Has an exciting business idea or business plan
$500,000 - $1 million Has a strong management team in place to
execute on the plan
$1 million – $2 million Has a final product or technology prototype
$2 million – $5 million Has a final product or technology prototype
$5 million and up Has clear signs of revenue growth and
obvious pathway to profitability

33. CONCLUSION
 It is extremely hard to determine the accurate value of a company while it is in
its infancy stages as its success or failure remains uncertain.
 There's a saying that startup valuation is more of an art than a science.
There is a lot of truth to that.
 However, the approaches we've seen help to make the art a little more
scientific.

34. Future prospect
Future prospects

35. Indian e-Commerce:What does the future look like?
 E-Commerce is either the greatest sunrise sector in India or a completely dead one.
 Opinions on an e-Commerce startup can range from “The Amazon of India” to “Going bust by the
end of the quarter”.
 While there is no doubt that some players in the Indian e-Commerce scene are doing well, the
perception of the future of these e-Commerce start-ups remains sharply divided
 To understand what the future of E-Commerce in India can look like, lets peek into what’s
happening in other emerging markets around the world that are presumably ahead of the curve from
India :
 There are 200 million shoppers in china today and estimates to grow to 420 million by 2016.
Chinese market is acquiring through US IPO
India has only 10 million online shoppers right now.

36. INDIA-THEWORLD’S FASTEST GROWING START UP
 In recent years, the Indian startup ecosystem has really taken off and come into its
own
 The numbers are telling — from 3,100 start-ups in 2014 to a projection of more
than 11,500 by 2020, this is certainly not a passing trend. It’s a revolution. And
it’s going to change the way the markets are working today in India.

37. 10,000 cr START FUND AND MORE IN UNION
BEUDGET2014
 10,000 cr startup fund for new businesses
 National accelerators & incubators for start-ups to be setup
 Rs 100 Cr for Startup Village entrepreneurship for rural population
 Rs 200 Cr for scheduled caste entrepreneurs

38. Disruptive Startups
from India
Housing.co
m
They
recently acq
uired Delhi-
based Realty
Business
Intelligence f
or an
estimated
USD 2-4
million
=>
Redbus
RedBus, now
acquired by the
ibibo Group for
$138 Million.
Paytm
Boasting 80
million mobile
wallets and
more than 15
million orders
per month,
Paytm has
revolutionized
mobile
commerce in
India
InMobi
Securing a
coveted spot
in MIT
Technology
Review’s 50
most
disruptive
companies
of 2013.In
Indian
startup
InMobi is
the 4th
largest on
the entire
planet.
Ola
in April 2015 ,
announced
raising $400
million in its
series E round of
funding led by
DST Global with
participation
from GIC, Falcon
Edge Capital, and
existing investors
SoftBank Group,
Tiger Global,
Steadview
Capital and Accel
Partners US .Ola
plans to be in 200
cities by the end
of this year.

39. INTERNET START UPS MEET INTECH EVENTS
 Car IQ : “Makes cars smarter.” CarIQ was launched in 2012
 Sense Giz : Has a good pitch. Everyday, we spend about 55 minutes to look for things, which
is 5 days per year.
 EntribShopWorx : Making the shop floor smart for manufacturers.
 TeeWe: A simple concept not yet implemented in India: get all your content, from pictures to
movies, on your TV .
 LifePlot: The cheapest and most mobile electrocardiography diagnosis tool.

40. THANK YOU