Aditya kheitan
HUM 14
Avoid these and
your venture is
sure to receive
that investment it
so desperately
needs.
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“Imagine a situation where you
are at the door of your VC firm
, on the threshold of the first
meeting with a prospective
investor . If the deal falls
through , your venture could
receive the backing it needs to
secure its position in the
market there will be no looking
back then. While you wait at
the reception , your eyes fall
on a poster on the wall ‘the
rules we play by’ .we tell you
what could be at that poster”
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1)KEEP THINGS SIMPLE:
VC investors are busy person.
They don’t have time to sift
through your lengthy business
plans .
Make your points with clarity ,
brevity and confidence.
Tell in brief what your company
is out to do and how it intends
to cover the gap in the market.
Highlight your main points ,This
is important to break the deal.
Prepare a good ppt to present.
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“ It is always best to send a
sharp presentation
comprising not more then 15
slides and a single page
summary . If you send me a 4
MB files , I may never find
time to download it . In a
concise presentation , tell me
what your business is about in
Sasha Mirchandani, the first slid itself . Don’t
Managing Director , put too many photos or crowd
Blue run ventures and
co-founder of , the slides with too much text
Mumbai Angels says- .keep it simple.”
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2) NEVER COLD CALL , GO THROUGH A
GOOD REFERENCE:
The idea of simply picking up
the phone and calling aVC is
not great.
Go your way through a good
reference , this will make your
task much simpler and
smoother.
A reference from your own
industry could tell VC about
your potential and where you
stand in term of past
performance
Like how gud is your team etc
Basically it lends credibilitry to
the whole approach.
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Niren Shah , Managing Director
. Norwest Venture Partners says
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3) DON’T WALK ALONE , BUILD A
GOOD TEAM
The importance of a good
team can’t be emphasized
enough.
Good team matters a lot to
a company .
If the team members
heading the various core
functions can visualize the
future of the company and
work cohesively toward
achieving it ,
This will increase chances
of VC to believe in your
company too.
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says Mirchandani
“I would like to see the team structure
and who’s on it right there on the
second slide following the business
idea one the first one .It is a crucial
factor. ”
“Do you have the necessary
skill sets to complement
Explains Shah each other ? That is more
important Question .”
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4) DON’T MESS UP THE MATH:
The business idea you are out to sell
should have a clear monetization model .
In the early stages of the business
lifecycle ,the risk associated with the
venture is generally very high as a result of
which the VC expects a high rate of return.
To convince VC that your venture can take
flight successfully , you need to have well
charted revenue flows, a bank of current/
potential customers.
Make ways to scale the business in a non-
linear way .
Their should be a definet businesss plane.
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Take an example-
Let us take an example of Facebook to understand this-
At one point in its business lifecycle , the base of facebook users grew
exponentially to 100 million user , yet the company was servicing
them with a mere 100 employees . If this
growth was linear , face book
may had to hire 100 million to
serve its growing customer
base : liner growth affects over
head costs and returns long run
and may not suit to the taste of
VCs , who are increasingly crashing
the investment lifecycle
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5) LET THE PRODUCT NOT BE ONLY AN
IDEA, GET A PROTOTYPE:
Few VC’s are interested in investing
in concept-stage companies.
You may have a great idea , a
concept you can clearly visualize in
your mind ,also make VC to
visualize it
Make a tangible prototype to show
VC
Properly explain how it works and
give them reasons to feel exited
about your product
If it is a service show them a small
demo of it if they were your
customer
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Says shah
“ The days of man with
plan (on paper) are largely
over . If you are an internet
company , you better have
a functional website with
some customers already on
it . Following the recession
of the past two years .VCs
are not encouraging
fresher's without any
domain experience or
expertise”
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6) DON’T FORGET TO SKETCH YOUR EXIT
OPTIONS:
No VC invests in a company for fore ever .
They are in the game for any where
between five to seven years.
Show them how your company will scale
and what exit option is there for him.
Create a large picture of your business such
as , well it scale enough to be acquired by a
bigger player?, Where u get PE funding?
Sometime it become difficult for an
entrepreneur to come to terms with exit
point bcoz it could also mean loss of control
at an individual level for him as the original
owner of the business
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7 ) DON’T MISS THE(RE)SEARCH BUTTON:
Different VC firms deal with
different areas of investment;
Some give preference to each
ventures while others are more
generic.
Do some research to figure out
who are the VCs most likely to
support your business,
What are the kind of deals they
do, the stage and size of deals
they do etc.
This will help you to fix your
deal.
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“Don’t be lazy about
Sasha Mirchandani, the background
Managing Director , Blue check’ calibrate the
run ventures and co-founder fund. It will make
of , Mumbai Angels says- your task that much
easier,”
It is important to
Niren Shah , Managing
Director . Norwest Venture understand what the VC
Partners says partner is looking for and
how they work. Decipher
the chemistry as the deal is
not a one-way street; it
often works like a
marriage.”
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8) DON’T LEAVE THE LEGAL
LOOPHOLE UNPLUGGED:
Most VC deals involve standard
investment policies with terms like veto
rights, preference shares and tag-along
rights finding in the deal agreement.
It maybe a good idea to appoint a
lawyer to negotiate on your behalf
instead of the team simply relying on
term sheets (a document outlining the
material terms and conditions of the
business agreement) to close the deal.
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Says Shah,“Don’t be
bogged down by these
terms. They are included
to protect the rights of
the VC and are a
standard norm which is
followed by the most,”
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9)DON’T LET THE PERFORMANCE
STAGGED
While you are raising funds for the
company, don’t let the performance
suffer because of this. Fund raising
could take days or even months in
certain instances-but you cannot
ignore core operations because of
it.
It may be too risky to let the
performance dip at an early stage;
It’s a bad sign if you are claiming a
high growth potential and showing
otherwise.
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asserts
Mirchandani
“The VC is just assuming
that you are performing as
you have claimed-don’t tell
me later that ‘I was off the
ball due to fundraising; no
V C is going to buy that
kind of excuse,”
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10)DON’T BE TOO CONSERVATIVE OR
OPTIMISTIC:
When presenting your
business plan, you need to walk
a fine line between thinking
too small and flying too high.
Your vision should be clear.
Reason why you adopted this .
Many business man start with
very aggressiveness but are
unable to maintain till the last.
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“I see too many
entrepreneurs thinking says Mirchandani
too small. You must
explore the possibilities
of growth fully,”
Keep the projections realistic
though,” cautions Shah.
Aggressive business owners
who think they can achieve the
impossible, don’t end up
Explains Shah always as favorites. “If no one
else is doing what you are out
to do, there may be a reason
for it,”
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11)DON’T FOCUS ONLY ON TECHNOLOGY
The technology backing
your company may be
unique, it may be the
lifetime of your operations,
yet it is not everything.
A business today operates
in a dynamic global
environment and strategy,
Today’s business requiring
a constant study of the
market, evolving customer
needs and the moves of the
competition .
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“Your technology may be the
best in the world but the
business cannot operate in
isolation. There are many
dynamics affecting the business
on a day-to-day level, talk about
those too. Throw light on both
the customers and competitor,”
says Mirchandani.
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12) NEVER LET THE PASSION BURN OUT
The business idea that is
your baby will always be
close to your heart.
The prospect of someone
else rejecting that idea and
not identifying with your
vision can surely be putting
off.
But don’t get dishearted.
You may have to go through
a series of naysayers before
getting the final VC nod
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.
The passion to realize the
dream should never die. A
VC is just a financer in the
process , weather they say
yes or no , you would any
ways go a head and
implement your plan,”
Concludes Shah
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This makes it clear that a blend of
persistence, patience and performance
could land you that dream VC deal .
Knock the door of the next VC with
these rules in mind and the game should
be fun .
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This is a Copyright Of HUM
