The document discusses technical start-ups and their impact on a nation's economy. It defines start-ups as young companies just beginning to develop, usually small and financed by founders. It outlines the stages of start-ups from discovery to maturity. It also discusses common sources of start-up funding such as crowdfunding, angel investors, and venture capitalists. Examples are provided of successful Indian start-ups like Flipkart and WhatsApp. Overall, the document argues that start-ups can increase employment, wealth redistribution, and GDP through new products and services, as well as improve logistics systems in a country.

1. ECONOMICS PRESENTATION
ON
TECHNICAL START-UPS AND
A NATION’S ECONOMY
Made by:
AAYUSH KUMAR JAISWAL(13120001)
AKSHAT BHANDARI(13120003)
Submitted to:
Dr. Rachita Gulati

2. WHAT IS A START-UP?
“A startup is a young company that is just beginning to develop. Startups are
usually small and initially financed and operated by a handful of founders or one
individual.” -Investopedia
“A startup is a company working to solve a problem where the solution is not
obvious and success is not guaranteed.” -Neil Blumenthal

4. WHY IS IT BECOMING THE NEW COOL?
The URGE for creating something that’s not
obvious & providing a solution to a problem
designed as a scalable business model.
A business that is different from the clichéd ones.
AN IDEA IS WHAT IS NEEDED.
ENTREPRENEUERSHIP BEGINS AT HOME!

5. IN SIMPLE STEPS:

6. THE SsTdAGES
१. Discovery: Focus on validating whether they are solving a meaningful
problem and whether anybody would be interested in their solution.
२.Validation: Startups look to get early validation that people are interested
in their product through the exchange of money or attention.
३.Efficiency: Startups refine their business model and improve the efficiency of
their customer acquisition process. Startups should be able to efficiently
acquire customers in order to grow.
४.Scale: Aggressive growth and scaling up of business. Large investment deals
are made.
५.Sustaining: In a market full of competitors you need to develop and innovate
continuously. You have to be different a service.
६.Maturity: Proper exit-strategies and intelligent mergers/acquisitions have to
be made after the valuation of your companies' market value.

7. Source: www.wikipedia.org

8. FUNDING
1. • Friends and family(FFF) (Seed Stage)
2.
• Angel investment (1st stage, 2nd stage)
3.
• Crowd funding (Seed stage, 1st stage)
4.
• Venture Capitalists (3rd stage before IPO)

9. CROWDFUNDING
Crowdfunding is the practice of funding a project or venture by raising monetary
contributions from a large number of people via the internet.
Reward Based: pre-selling a product or service to launch a business concept.
Equity Based: selling equity in exchange of funding.
The highest reported crowdfunding project is Star Citizen, an online space combat
video game developed by Chris Roberts and Cloud Imperium Games, which—as of 10
March 2014—claimed to have raised USD$40 million.

10. ANGEL INVESTMENT
An Angel investor is an affluent individual who provides capital for a business
start-up usually in exchange for ownership equity in very early stages.
Angel investors are experienced entrepreneurs who are interested in investing for
reasons that go beyond monetary return. They mentor young entrepreneurs and
also provide important advice & contacts.
Angel Investors bear extremely high risks as they fund the seed stages.
They usually seek 10 or more times return on their investment in a period of 5-7
years.
In US, angel investors are responsible for funding over 67,000 startup ventures
annually and their capital also contributed to job growth by helping to finance
274,800 new jobs in 2012.

11. VENTURE CAPITALISTS
VC’s invest in startups after the 3rd stage when the potential of the company can be
identified much easily. It is a type of private equity.
VC’s are typically structured as partnerships. They have a say in the management of the
startup company. The funding lasts for a fixed period of 10 years.
Venture capitalists charge management fees and carried interest @ 2% and 20% p.a.
(referred to as a "two and 20" arrangement)
Venture capitalists invested some $29.1 billion in 3,752 deals in the U.S. through the fourth
quarter of 2011.
In India, the total amount of private equity and venture capital in India reached $7.5 billion
across 299 deals. Here, venture capital consists of investing in equity, quasi-equity, or
conditional loans.

12. OBSTACLES
卍. Extremely high risk of failure. ( 72% in India )
卍. Finding seed capital or angel investments.
卍. Failure or delay in obtaining the Intellectual property protection for the
business idea.
卍. Recently the patent assets of failed startup companies are being purchased
by what are derogatorily known as "Patent trolls" who then take the patents
from the companies and assert those patents against companies that might be
infringing the technology covered by the patent.

13. EXIT STRATEGY
Timing and means with which an investor (usually a venture capitalist)
cashes the investment in a startup venture or a buyout arrangement. It is
often planned with the management of the investee firm and commonly
occurs after an initial public offering (IPO) by the startup.

14. VALUATION OF A STARTUP
The biggest determinants of a startup’s value are:
The industry or sector in which a company plays. Software, IT & Biotechnology are the hot
fields in the current scenario.
Balance between demand and supply in the sector.
Size and time of recent exits of big shot companies.
Willingness of an investor to pay and the level of desperation of the entrepreneur.
Value and number of similar companies in the vicinity.
Number of investors chasing the same deal.

15. DIFFERENCE BETWEEN SCENARIO
IN INDIA & THE U.S.
“India is not a starter ecosystem, Indians are secondary adopters."
India-based startups receive a valuation of about $2.4 million (Rs 15 crore). For a startup
in Silicon Valley this number, termed as pre-money valuation, is almost double at $4.7
million.
Bangalore-based startups are valued higher than average, clocking valuations of about
$3.1 million, while those in New Delhi are valued at about $ 1.9 million.
Between 2012 and 2013, Silicon Valley saw 311 exits while India saw less than 50.
Lower the volume, lower the value.

16. CASE STUDIES
WHATSAPP
†As of September 2014, WhatsApp is the most popular messaging app with 600 million
users.
†Founded by Jan Koum & Brian Acton in 2009.
†Brian Acton persuaded five friends to invest $250,000 in seed funding.
†The app launched in November 2009 exclusively on the App Store for the iPhone.
The BlackBerry version arrived two months later.
†In December 2009 WhatsApp was updated to send photos. By early 2011, WhatsApp
was in the top 20 of all apps in the U.S. App Store.
†By February 2013, WhatsApp's user base had swelled to about 200 million active users
and its staff to 50. Sequoia Capital invested $50 million, valuing WhatsApp at $1.5 billion.
†With 65 million active users, accounting roughly about 10% of the total worldwide users,
India is the largest single country in terms of number of users.

17. † As of 22 April 2014, WhatsApp had over 500 million monthly active users, 700 million
photos and 100 million videos are shared each day, and the messaging system handles
more than 10 billion messages each day.
† WhatsApp added about 25 million new users every month or 833,000 active users per
day.
† On February 19, 2014, Facebook announced it would be acquiring WhatsApp for US$19
billion, in what will be its largest acquisition to date. The transaction is the largest purchase
of a company backed by venture capitalists ever.

18. Flipkart is an Indian electronic commerce company founded in 2007, by Sachin Bansal
and Binny Bansal.
The business was formally incorporated as a company in October 2008 as Flipkart Online
Services Pvt. Ltd. During its initial years, Flipkart focused only on books, and soon as it
expanded, it started offering other products like electronic goods, air
conditioners, stationery supplies and life style products.
Flipkart has later raised funding from venture capital funds Accel India (US$1 million in
2009) and Tiger Global (US$10 million in 2010 and US$20 million in June 2011). On 24
August 2012, Flipkart announced the completion of its 4th round of $150 million funding
from MIH (part of Naspers Group) and ICONIQ Capital.The company announced, on 10 July
2013, that it has raised an additional $200 million from existing investors.
In FY 2013–2014, Flipkart crossed the 5 billion (US$100 million) mark as Internet usage in
the country increased and people got accustomed to making purchases online

19. Acquisitions:
2010: WeRead, a social book discovery tool.
2011: Mime360, a digital content platform company
2011: Chakpak.com, a Bollywood news site that offers updates, news,
photos and videos. Flipkart acquired the rights to Chakpak's digital
catalogue which includes 40,000 filmographies, 10,000 movies and close to
50,000 ratings.
2012: Letsbuy.com, an Indian e-retailer in electronics. Flipkart has bought
the company for an estimated US$25 million. Letsbuy.com was closed
down and all traffic to Letsbuy have been diverted to Flipkart.
2014: Acquired Myntra.com in an estimated INR 2,000 crore deal.

20. KEY PLAYERS IN THE INDIAN MARKET
RECENT SUCCESS
E-Commerce Mobile Ads
$800m $1bn
PAST SUCCESS
Search engine
$720m
EMERGING PLAYERS
E-commerce
$200m
Travel $688m

21. CAUSES OF FAILURE IN
INDIA
1. Improper Management.
2. Failure in dividing roles and work appropriately.
3. Inability to understand failure.
4. Society does not approve as such kind of business is too risky.
5. Entrepreneurs trying to ape the grand success stories of the
west generally lose patience. It takes years of hard work.
6. Corruption in the society and lack of a healthy competitive
spirit. Business of rivals is often tried to be hampered.

22. THE EFFECT
 Increased employment opportunities.
Redistribution of wealth from bigger to smaller ventures.
 Increased creativity in the market.
Attract FDI from foreign VC’s and angels.
Increase GDP of the country as the services/products are home grown and
some ventures eventually become multi-million dollar companies.
Improve Logistics system of a country. Before the E-commerce boom in
2012, the logistics of India were downtrodden.

23. SOURCES WE ACKNOWLEDGE
 en.wikipedia.org
 www.investopedia.com
 The Economist
 www.businessdictionary.com
 Image idea from Sam Altman- “How to Start a Startup?”
Blog by Carlos Eduardo- ”How does an early investor value a startup?”
WORLD STARTUP REPORT- BOWEI GAI
THE ECONOMIC TIMES

24. For being patient enough to let us present!