Getting angel/VC funding

for your venture________________________________________________

Prajakt Raut - founder

Prajakt Raut – founder Applyifi.com

• Previously the Asia Director of TiE (2004 – 2007) – helped overseaas investors connect

with startups in India

• Was head of operations of the Indian Angel Network, one of the largest angel investor

groups in the world

• Deep experience and connects in the Indian entrepreneurial eco-system

• Personal goal is to encourage and assist a 100,000 people to become entrepreneurs

• Founder of The Hub for Startups – a well-respected blog for startups

• Started a printing business at when he was 17, and later was founding member of a

CRM solutions company

• Prajakt has spent over 10 years in the advertising industry with agencies like Grey,

Capital and DMB&B

• Co-founded Orange Cross, a healthcare services company

About Applyifi______________________________________________________

Applyifi helps startups create an elegant,

comprehensive online pitch deck.

Investors can filter deals using our

36 point scorecard that evaluates

applicants on key criteria to assess the

opportunity

www.applyifi.com

3 key messages_______________________________________________________________________

__

1. Multiple funding options exist

2. Different types of investors invest at

different stages of a venture

3. Building a great business is not the

same as having a great idea or a great

product or a great service

Several options to fund your

1. Crowd-funding

2. Small-ticket

co-investments

3. Donors

4. Strategic

stakeholders

5. Foundations

6. Industry associations

Hobby/Passion Business

1. Debt

2. Bootstrapping

3. Strategic investors

4. Customers

5. Risk capital – angel

investors, VCs

Make a business plan

irrespective of what

option you choose

Today we are focusing on

business plans that are

relevant for investors

A Business Plan is

a useless product

But it is a

priceless process

Working on a

Business Plan is like

planning a journey

Developing a business plan

o Start with a ‘story’ - ‘See the film in your mind’

o Work out rough milestones and goals

o Think deeply of how you will implement it

o Work out the different kinds of costs… and revenues

o Start working in the excel sheet – assumptions are

critical

o Work on multiple ‘scenarios’

o Finally, articulate it into the ‘presentations’

What should a business plan cover?

1. Concept overview - problem - solution

2. Team

3. What is the size of the opportunity

4. What is the value proposition/positioning

5. Business model & Business Case

6. Competitive landscape

7. Operations plan overview

8. Risk factors

9. Funding needs and use of funds

10. Exit potential

Angel Investors &

VCs ‘buy’ shares in

your ‘company’.

1

But no one makes

money by buying

shares.

You make money only if you

sell the shares at a higher

price than you bought it at.

Angel investors and

VCs seek 10x +

return on their

investments_______________________________________________________________________________

______

Concept of valuation

2

Different stages of

entrepreneurship carry

different kinds of risks.

And different investors invest at

different stages.

3

Stage

Scale

Different stages of the venture carry different risks

Risks at early stage

• Concept risk

• Execution risk

• Scale-up risk

Risks at early stage

• Concept risk

• Execution risk

• Scale-up risk

Risks at growth stage

• Execution risk

• Scale-up risk

Risks at early stage

• Concept risk

• Execution risk

• Scale-up risk

Risks at growth stage

• Execution risk

• Scale-up risk

Risks at mature stage

• Scale-up risk

Risks at early stage

• Concept risk

• Execution risk

• Scale-up risk

Risks at growth stage

• Execution risk

• Scale-up risk

Risks at mature stage

• Scale-up risk

• Proving concept

• Jugaad

• Flexibility

• Fine-tuning offering

• Processes

• Focus

• Operational efficiencies

• Increasing profitability

• New markets/new

capabilities/new concepts

Angel Investors/Seed Stage

Funds

Venture Capitalists

Private Equity Funds

Accelerators/Angel Investors/

Seed StageEarly- stage VCs VCs / PEs

Investor

types

Stage of

investmen

t

Concept Risk Stage Early, Early-

Growth Stage

Growth Stage

• Rs.25 lacs to Rs. 5 cr

• Sweet spot – INR 1cr –

3cr. For investors

• Rs.20 – 50 lacs for

accelerators

• Rs.2 cr - Rs.50 cr

• Typically between

Rs.10 cr – Rs.25 cr

• Rs.50 cr +Typical

investmen

t size

Discovering

what works

Replicating at scale what

worked in a pilot.

What VCs look for is

evidence that something

worked AND knowledge of

what worked AND that it is

replicable.

4

What angel investors look

for is a set of practical

assumptions and a plan to

test those assumptions.

What do investors

look for in ventures

they invest in?

Key criteria for investors

1. Is the market large?

2. Does the venture have a reasonably strong

chance of being a dominant player?

3. Is the business case strong and will

investors get an exit?

4. Is this the team that I can bet on?

Your focus should be to

convince investors that

your startup is a good

investment opportunity

Investors look for competent and

committed teams

- Passion and deep interest in the domain

- Deep understanding of the dynamics of

the business around the concept

- Willingness and competence to

implement the concept (not just ideate) –

experience is hugely valued, if not

mandated

Investors look for plans with practical

milestones

But large aspirations

Investors look for teams

with focus in the initial

phase

Even when entrepreneurs have identified

multiple opportunities with the concept

Investors look for a

strong implementation

plan“According to Gartner, the market will be USD 20 bn in 2020”

is not a reason to invest

How you will get the first 1000 users or first 2-

3 partnerships / enterprise customers is.

Investors seek teams

that have a clearly

identified immediate

goals and tasks

What do you need to do to launch?

What are you going to test?

Investors seek a plan that clearly

outlines how much funding is

required, where it will be used and

what it can achieve

You should seek from angel/early investors only as

much as you require, to go till you can attract VCs

In rare cases, the initial funding is sufficient enough

to take the startup to sustainability

Finally, investors

look for teams they

can trustBe honest about risks & challenges, be open

about limitations and weaknesses

When you tell them where you need help, they

will be able to provide inputs

In Summary

• Investors invest in a solid business that

addresses a large market

• Investors invest in high-quality teams with

large aspirations

• Investors invest in clearly defined plans

with practical milestones

Make the investor go back feeling “What a great

concept. I think the market is large and the team

will deliver.”

If you liked what you

heard, tell others.

If you did not like it, tell

me.

About me • Prajakt Raut – entrepreneur and

entrepreneurship evangelist

• Founder of The Hub for Startups and

Applyifi.com

• I blog on www.thehubforstartups.com

• Twitter: @prajaktraut

• Mail: prajakt.raut@applyifi.com