Know more about fund raising and the key parameters that an investors takes into consideration while investing his money and time into a business or entrepreneur as explained by Paula Mariwala - Partner Seed Fund

1. Decoding Early Stage Investment
Introduction to Fund Raising
 What is Angel - VC funding?
 What do investors look for?
 What gets funded
 What does not get funded?

2. Start Up Financing
Why do you require
funding?

3. Start Up Financing
Potential Sources of Funding :
 Personal funds
 Friends and
Family
 Angel
 Institutional
 Strategic
 Government
 Public
 Internal Accruals

4. Start Up Financing
 Equity Capital :
 Money for owning a slice of the company
 Ownership depends on the “valuation” of the company
 Founding team will have to welcome other “partner”
 Equity partner can add and/or subtract value
 Management, strategic plan may be impacted
 New shareholder may have his own demands for
quick scale up, exit, etc.

5. Equity Funding :
Private Equity & Venture Capital
“Private Equity” means capital to companies not
quoted on a stock market ,in exchange for an
equity participation.
“Venture Capital” (VC) is a sub-class of Private Equity
characterized by investments made for the purpose
of developing, launching, and expanding new
products or service offerings.

6. Stages of Investment

7. Start Up Financing :
Capital Lifecycle
Seed (< $ 1 mil) Early Stages ($1 - 10 mil) Expansion/ ($ 10+ mil)
development
Angels Incubators Accelerators Venture Capital Private Equity &
Merchant Banks

8. Fund Raising Pattern – Life Cycle of a Startup
Source : Angel Resource Institute

9. How VC’s work
Investor
Investor
Investor
VC
fund
Investor
Startup
Startup
Startup

10. What VCs do ...
 Sift through thousands of (good and bad) investment
propositions
 Identify a few valid initiatives and finance them
 Support, Mentor the entrepreneurs -
 Financial advice
 Building Teams
 Connecting with customers
 Strategic Direction
 Focus on Milestones

11. Decoding the Investment
Criteria at VC Funds

12. The IDEA
Unique
Feasible Innovative
Are you solving an important problem in a unique manner?

13. The SECTOR
Large Market
with Growth
Potential
What is your
differentiator
Crowded
space?
Can you be the market leader?

14. The TEAM
Experience and
Background
Demonstrated
Ability to
Execute
Loyalty and
Commitment to
the Idea
Team Structure
and Dynamics
Motivated and Passionate Risk Takers.

15. FUNDING
Amount of
Funding
$$$
Valuation
and
Equity
Share
Use of
Funds
Does your financial model justify the amount of funding
asked?

16. The BUSINESS
Is there currently traction?
Strong Revenue model in Place
Accurate Assessment of
Technology and Future challenges
Is there a potential profitable exit for the
VC???

17. Why are early stage VC’s
Different?
Bet on people not trends
Looking for a winner
But not afraid of failure
Fantastic coaches and mentors
Nurturing, Caring but Focused on Milestones

18. The VC Math
Always looking
for a 10X return!
VC is fundamentally an institutionalized form of finding
outliers!

19. Why 10x?
The “Portfolio Effect”
 Out of Ten Start-ups Funded
 2 successes at 10x or better
 5 ‘OK’ returns at 2x to 5x
 3 write-offs, total loss of invested
money

20. Assessing Portfolio Risk

21. Anatomy of a “great” Start Up
VC
 Bets on people not trends
 Driven by the big idea
 Looking for a ‘Winner’
 Not afraid of failure
 Understand how to manage a portfolio of risk
 Serves as a fantastic coach
 Does her best work outside of the board room
 Not waiting for validation from other VCs

22. Most Appreciated VC Contributions
 Financial Advice
 Corporate Strategy & Direction
 Sounding board for ideas
 Challenging status quo
 Contacts or market information
 Management recruitment
 Money !!!!
Source: “The Economic Impact
of Venture Capital in Europe”
(EVCA and Coopers & Lybrand)

23. What to look for in a VC
 People you LIKE !
 Trustworthy & Collaborative
 Can bring value, not money only !
 Do not have to be experts in the sector but have
to understand the business.
 Good network of contacts.
 Ask for references

24. Our Formula :
It’s the Chemistry and not just the math that adds up to
SUCCESS
 Doing a startup isn't easy.
 Funding one isn't, either.
 The VC – Entrepreneur relationship isn't
simple. There'll be good times, bad times and
incredibly horrible times.
 Do we like each other and can we still be
friends at the end of it all?
 For us, this chemistry is a big deal.
 A smile is the best yield curve

25. What’s HOT
 Ecommerce
 Mobile VAS/Apps
 Social Media
 Transportation
 Hospitality
 Data Analytics
 Healthcare
 Health, Nutrition,
Fitness
 Dating
 Social Media
 Online Education
 Cleantech
 Technology enabled
consumer businesses

26. What doesn’t get funded
 “Me Too” idea
 Poor Business
model
 Long gestation
 Esoteric, R&D
driven plans
 Huge marketing
spends
 Niche “Lifestyle
Businesses”
 Too many angels,
cross holdings
 $$$$ for the
promoters
 “Arrogant” Teams

27. What VCs are Not Good at
• Long term research investments
• Sustainability
• Evolutionary development
• Asset maximization
• Billion $ capital requirements

28. The Start Up MYTH
+ +
=

29. THANK YOU