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Business Plan &

Pitching to investors

For ISB Class of 2016

Sep 9, 2015
Jagannath, Ashish
Private & Confidential

About Ventureast

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Ventureast Family of Funds

One of the earliest VC Funds in India (1995)


3 generations of successful early stage funds
Currently two active funds with $200M AUM fully invested
Proactive Fund (Chennai): Technology
Life Fund (Hyderabad): Life Sciences, CleanTech, Agri
11 member investment team
Symbiotic relationship with ISB
Several alumni as team members
Invested in start-ups by ISB alumni

Look forward to strengthening this association further!!


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Some of our investee companies . . .

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Ventureast Plaza

A Scaffolding for the Innovative Enterprise


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Vision

To be the coveted micro-ecosystem


where futuristic Indian Corporations
take their first steps

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Phase I plan
Co-working Space

We invite you to start-up with us!!!


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Why Business Plan?

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Investors invest in businesses


NOT in
products / ideas / platforms / concepts

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Investors judge a business based on how


the entrepreneur presents it

They dont know your business


You have to tell them

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So what do you need to be prepared with?


Business Plan
Pitch Deck
Elevator Pitch

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Some definitions

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Business Plan
A detailed document ppreferably typewritten, 3040 page long covering all aspects of the business
Foundational document like a project report
Write this in your own words
Forces you to think through every aspect of your
business (the risks, the issues . . . )
Dont send this to investors at this stage!!!

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Pitch Deck
Provides a visual representation of your business
10-15 ppt slides
Summary from the business plan that you can talk
through
Usually the first source of info for an investor
should excite him sufficiently to get you a hearing
Keep it simple, clutter-free & effective

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Elevator Pitch
Elevator Pitch is a succinct overview of the business
what you want to do and how
You should be able to make a favourable first
impression in ONE minute
You should be able to summarise your business in 3
sentences!!!

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So why is your pitch so important?

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During last 2 years Ventureast received


~350 business proposals
We reviewed ~50 of them in detail
We invested in 4 of them

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The big question

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Does your business have the potential to


provide 10x ROI to the investor?

In what timeframe?
What are the risks?

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Pitch Deck key ingredients


(and typical questions you will face)

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Before you approach . . .


Find out what the investor wants
The Funds focus areas
Investment sweet spots
Current list of investments
The teams credentials
.....

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Investment Hypothesis (one slide)


A one line statement of your business
This should highlight your big vision & how you
propose to achieve it
Is this exciting enough?

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Executive Summary (one slide)


One slide summary of the proposal
Many investors make their call based on this slide
This determines if they are at the edge of their seat
or doze off for the rest of the presentation

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Market opportunity (max 2 slides)


What is the customers pain point (unmet need) that
you are addressing?
How is it being addressed now? Why is it sub-optimal
as per you?
How big is this opportunity? Some numbers /charts
giving the Total Addressable Market (TAM)
Who are the target customers and how do you reach
them?
Top-down & bottom-up analysis
What are your key assumptions?
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Your solution (max 2 slides)


How do you propose to address the customers
problem?
Details of your solution the product, technology
(IP), uniqueness, differentiation
Is your product/solution simple, easy-to-use, foolproof . .?
Is it economical, faster, better? By how much?
Do you have a prototype? Has the solution been used
in a real life setting?

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Your business model (max 2 slides)


How do you make money?
Your sourcing, manufacturing, distribution channels?
Do you already have sales/commercial traction? (That
makes a big difference)
Do you have a simple, sticky revenue model?
Does your model create entry barriers for potential
competitors?
What are the risks? What can go wrong in this
model?

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Your competitors (one slide)


Who are your competitors?
Why is your solution/business model better?
How are you unique? Differentiated?
Would customers pay you a premium over your
competitors?
You can use a simple 2x2 matrix to visually show your
competitive positioning

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Your team (one slide)


The second most important aspect of your proposal
Who are core team members? How did they come
together? Who is the Leader?
What are their skills/experiences? Execution
capability?
Any previous entrepreneurial stints? Success/failure?
Investors are judging
passion of the team
cohesion among team members
complementary skill sets

Does this team have IT to scale the business up to exit?


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Financials (max 2 slides)


Revenue & profit projections
Are they scaling fast enough? How big can it grow in
5 years? Revenue/EBIDTA . . .
What are the assumptions?
Can you achieve them? What is the low-case
scenario?
How does LTV compare with CAC?
What is the unit-level profitability?
How much money do you need to raise to reach the
projected position?
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Funding requirement (one slide)


How much do you need? HAVE YOU INVESTED YOUR
OWN MONEY?
How long will that sustain you? (What is the burn?)
Are there previous investors? Are they investing?
Key terms of investment valuation, instrument,
tranching . . .
What is the fund utilisation plan? What are the key
milestones you can achieve with this funding?
When do you need to raise funds again?

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Exit strategy (one slide)


The most important slide for investors!!!
What kinds of exit are possible? Over what timelines?
Strategic acquisition? Financial investor? IPO?
Why will anyone acquire your business? What is the
strategic fit?
Are there comparable market transactions?

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Concluding Summary (one slide)


Give a summary of the proposal you may repeat
the Executive Summary points
Tell why this is a great investment opportunity for
the investors
Agree on next steps!!!

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Summary of the 15 slide Pitch Deck


Investment Hypothesis (1)
Executive Summary (1)
Market Opportunity (2)
The solution (2)
Business model (2)
Competition (1)
Team (1)
Financials (2)
Funding requirement (1)
Exit strategy (1)
Executive Summary (1)
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Some soft aspects


Traits investors are looking for!!!
Passion & Commitment
A flexible & realistic business plan & ability to make
the business plan work
Willingness to adapt to changing market conditions
Ability to swim against the tide
Willingness to listen & learn
Be honest investors usually figure out the truth
anyway

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Investors are not solely evaluating your


companys story.They are also evaluating
your ability to convey that story
- Bill Gurley, Benchmark Capital

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ACT-II

Who?
How?
How much?

What for?

Where?
With whom?
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Whom to approach
What Stage are you at?

Indian Venture Capital and Private Equity Report 2014, IVCA Private & Confidential

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Whom to approach

Indian Venture Capital and Private Equity Report 2014, IVCA Private & Confidential

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Whom to approach

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How much money to raise


A tad more than enough!

YAAY!!

Enough to do what?
Set milestones that means something to your future investor
Milestones should prove something important
Proof of market

Filing of Patent

- Certain number of unique customers/


repeat customers

Proof of Product
- Completion of Beta testing

In-licensing of Technology
Expansion of Team

- Completion of Animal testing


- Generation of bench mark revenue

Geographic Expansion

- Achieving EBTIDA margin benchmarks


- Operating Cash break even

Inorganic Growth

PROOF OF PUDDING

UMM.. NAY

Proof of Business model

Optimize between dilution risk and underfunding


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Have enough runway.


Its not called VALLEY of DEATH for Nothing!!!

Tomgunguz.com/seed/follow-on-rates

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Where are you located?


Entrepreneurial ecosystems also have

HOTSPOTS
Classic example Silicon Valley
Whos the chicken , who the egg?
Its gravitation.
Mass on one side attracts mass from

the other side


2009 US Data on % VC funded deals by Geography

Pays to be in the zone of such


gravitational pull
Venture Capital and Private Equity, 2nd Ed., Metrcik, Yasuda

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Where are you located?


India Data 2012 to 2015
East
North
South
West*

No. of Deals %
2%
24%
40%
34%

VCs located %
1%
18%
26%
56%

*Bombay is HQ to large financial institution who in effect have pan- India reach, perhaps leading to a confounding effect in West Zone

Ventureast Portfolio Geographic Spread


Hyderabad 30%!
South India 50%!!

Ventureintellignce.com Deal Dashborad

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Sector focus matters!


VCs add more than just Capital
Better probability of success
Better probability of failing fast

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How to Approach
Professional Network
Alumni Network
Business Network
Institute Entrepreneurship cells

Intermediary Investment Banker


Personal Contact
Family
Friends Friend

Industry Events
Cold Call/Walk in
Email on <<submit_your_plan@vcfund.com>>

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How to Approach

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Wary of Type-II Error

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Team Pedigree
VCs are not seers (wed love to be though

There is limited proof of excellence at the time of investment


We look for proxies that indicate probability of future success
Like it or not tags act as such proxies
Academic affiliations (Good News ?

Professional affiliations

Previous startups
MOST SOUGHT AFTER PEDIGREE EVER?
Successfully exited previous start up

Natural gravitation towards probability of higher success


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Some wisdom . . .
Statements by entrepreneurs after a failure!!!

Business, much like life, is not a movie and not


everyone gets to have a story book ending
(GigaOm)

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Some wisdom . . .
Statements by entrepreneurs after a failure!!!

What I didnt understand was, you charge not


for how much work it is for you. You charge how
much the service is worth (Bitshuva)

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Some wisdom . . .
Statements by entrepreneurs after a failure!!!

This turns out to be the original sin of Dinnr


there never was an opportunity. And whatever
we did later to try to breathe life into it
(iterating on the website, different marketing
tactics) was akin to giving aspirin to a deathbed
patient (Dinnr)

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Thank You
Happy to hear from you,

Happy to help
Write to Ashish:
ashish_jagyasi2015@pgp.isb.edu

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