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What do investors look for in a business v share

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Presentation used for my talk organized by Nurture Talent Academy (20th may 2011)

What do investors look for in a business v share

  1. 1. What do investors look for in anbusiness plan investment?The 10 golden rules20th May 2011Ankur Gulati, Draper Fisher Jurvetsonagulati@dfj.com | @vc_in_india | +91-80-67823900CONFIDENTIAL AND PROPRIETARYOPINIONS EXPRESSED IN THIS PRESENTATION ARE THAT OF THE AUTHOR AND NOT DFJ
  2. 2. Contents ▪ About DFJ ▪ The 10 golden rules ▪ QnA © Ankur Gulati, Draper Fisher Jurvetson | 1
  3. 3. Contents ▪ About DFJ ▪ The 10 golden rules that “usually” hold – 5 related to team, mindsets and culture – 5 related to business idea and market ▪ QnA © Ankur Gulati, Draper Fisher Jurvetson | 2
  4. 4. 1 Top-team is more important than the idea a.k.a. what use is a washing machine without electricity? IDEA Description ▪ Esp. in markets where the “devil is in execution” (e.g., India) ▪ Is an important valuation driver – contrary to what entrepreneurs might believeTEAM © Ankur Gulati, Draper Fisher Jurvetson | 3
  5. 5. 2 Know what you know and what you don’t know a.k.a. there’s no shame in flunking 1 out of 5 exams Description ▪ “Must-have” attitude for today’s entrepreneurs ▪ Will determine how founders are able to drive a firm in a rapidly changing environment ▪ Not every ball will be hit out of the park (unless you’re Chris Gayle), but investors want you to be able to adapt and give it your best shot © Ankur Gulati, Draper Fisher Jurvetson | 4
  6. 6. 3 Solve problems, don’t problem-solve a.k.a. just do it Description ▪ Rate of innovation is much faster today than it was before ▪ Need people who can solve problems (beg or borrow, no stealing) and get it done rather than strategize endlessly ▪ Especially true in peripheral functions – e.g., mid-level/low-level manager recruitment © Ankur Gulati, Draper Fisher Jurvetson | 5
  7. 7. 5 Metrics will deliver improvement insights a.k.a. “friend” the numbers Description ▪ While “analysis paralysis” is not productive, it is important to have a tab on key metrics for your business ▪ Perspectives matter. Look at the metrics from different perspectives. Insights will come jumping out. © Ankur Gulati, Draper Fisher Jurvetson | 6
  8. 8. 6 Aim to be a rock-star a.k.a. the tyranny of the in-betweens Investors Description Entrepreneurs ▪ Why do investors repeat the following rhetoric: “Think big”? ▪ In general, investor and entrepreneur incentives are not completely aligned, this is the tyranny of the in- betweens (or the #huh zone) ▪ All investments must pay a premium for the expected future “duds” in the portfolio # Fail # Huh? # Win © Ankur Gulati, Draper Fisher Jurvetson | 7
  9. 9. 7 Important to know what your success hinges on a.k.a. cut through the clutter Description ▪ A 5-7 year thought process is a must ▪ Priorities could and will change over time, but an “as-is” thesis of where you will be in 5 years’ time and how you will get there is important ▪ Key is to think “end- game” © Ankur Gulati, Draper Fisher Jurvetson | 8
  10. 10. 8 Focus is usually important but not always a.k.a. work consumer-back rather than investor-back Description ▪ Investors love focus – this is driven by “pattern recognition” but exceptions exist ▪ Chart your own course working backwards from the consumer. Don’t say something just to sell to the investor. © Ankur Gulati, Draper Fisher Jurvetson | 9
  11. 11. 9 Have a feel for on-the-ground challenges a.k.a. the same execution devil also resides in the details Description ▪ You’re selling. And so you need to convince. And so you need to know every single detail of the plan. ▪ You’re executing. And so you need to know every single detail of the plan. © Ankur Gulati, Draper Fisher Jurvetson | 10
  12. 12. 10 Don’t go by momentum a.k.a. even turkeys can fly in high winds* Description ▪ Look-alikes can work, but only in finite circumstances ▪ Momentum trading is ok, but carving out 5 years of your life based on momentum is a travesty *Credit for the line goes to Eugene Kleiner, KPCB © Ankur Gulati, Draper Fisher Jurvetson | 11
  13. 13. 11 Spend 20 % of your time building a phenomenal network a.k.a. “meet and greet” helps Bonus Rule! Description ▪ Building a great network helps. ▪ Invest time and energy to build and maintain ▪ Don’t burn any bridge! You never know where your next customer, investor, supplier will come from. © Ankur Gulati, Draper Fisher Jurvetson | 12
  14. 14. Contents ▪ About DFJ ▪ The 10 golden rules ▪ QnA © Ankur Gulati, Draper Fisher Jurvetson | 13
  15. 15. Thank you for your patience! Contact: Ankur Gulati, Draper Fisher Jurvetson Email: agulati@dfj.com Twitter: vc_in_india Phone: +91-80-67823900 © Ankur Gulati, Draper Fisher Jurvetson | 14

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