startup pitch : an insider’s guide on what do vcs want?

Startup Pitch : An insider’s guide on

What do VCs want?

Shailesh Vickram Singh

e: svs@seedfund.int : @svickramw : fringenotes.in

1

Wednesday 18 July 12

What do VCs want?

• Magic potion?

• Some secret sauce?

Or it is like one of those unsolved mystery faced by mankind like What do woman want?

Wednesday 18 July 12

Is it a VC or ?

Contrary to popular belief and media descriptions, there are some empirical evidences of VCs being human (e.g. their constant checking of BB / FB / Twitter during a meeting)

Wednesday 18 July 12

So what’s diff ?

Follow basics rules related to presentations

Wednesday 18 July 12

Basics # 1 : Time

‣ 60 Minutes ~ Average meeting time schedule

‣ 15 minutes ~ Card exchange / Microsoft / Projector blues

‣ 20 Minutes ~ Constant interruptions / questions by VCs

‣ 5 minutes ~ Summarizing of discussion

Hence just 20 minutes for presentation

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Hence !

• 20 minutes ~ 15 / 25 slides at max with 1 min per slide on an average

• Limited number of slides doesn’t mean

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Overview

'!!!!!Company!Purpose!

!!!!!Why!Now?!2

1

The' Indian' retail' market:' 5th' largest' retail' des7na7on' globally,''es7mated'to'grow'from'the'US$'330'billion'in'2007'to'US$'420.'Modern'retail' to' increase' its'share' in'the'total'retail'market'to'22'%'by'2010.'7'billion'by'2010'and'US$'637'billion'by'2015''

•  ' ' India' tops' the' AT' Kearney's' annual' Global' Retail'Development' Index' (GRDI)' for' the' third' consecu7ve' year,'maintaining'its'posi7on'as'top.'• ' 'PWC'foresees'India'to'con7nue'as'the'top'sourcing'hubs'&'most'aYrac7ve'market'for'retail'investment'• ' ' Huge' opportunity' that' lies' ahead' with' about' 97%' of' the'country�s'retail'sector'unorganized'• ' 'More'than'75%'of'the'ac7ve'internet'users'are'working'and'are' expected' to' have' busy' lifestyles' with' less' 7me' to' visit'stores'for'their'shopping.'Rising'fuel'and'gasoline'prices'• ' 'None' to' –nil_' compe77on' in' e_commerce' and' telesales' in'these'domains'

World�s first and only portal focused on automating buying, delivering of individual daily

needs including grocery, processed food, pharmacy and health consultation supported by

telesales

410' 445' 483' 524' 568' 615'

860'

15' 22' 33' 50' 74' 110'215'

2008' 2009' 2010' 2011' 2012' 2013' 2018'Total'Retail' Organized''

85%' 80%' 80%'36%' 33%' 30%' 20%' 15%' 4%'

0%'20%'40%'60%'80%'100%'

USA'

Germany' UK

'Brazil'

Russia'

Indonesia'

China'

S.Korea'

India'

'Organised'Retail' Tradi7onal'

Regula7ons,!Investments!!&!constraints!!?!Indian!Retail!

India!an!ABrac7ve!Opportunity!for!Organized!Retail!

Source: E&Y Research, World Bank 2007, Technopak Analysis, Industry Estimates

Penetra'on)of)organized)retail)

!  Automa7c'FDI'approval'in'Real'Estate'!  Government'releasing'unused'land'for'Retail'''!  Foreign'retailers'managing'FDI'restric7ons'through'franchising,'�cash'and'carry�'stores'and'strategic'partnerships'

'!

Per'capita'income'(000�s'$)'' '44.7' '6.9' ''9.1' '1.9' '2.5' '20.0' '1.0'

Retail)market)in)India)

Low!penetra7on!at!present;!expected!to!grow!at!30%!CAGR!

'45.8' '40.1'

!  Majority''future'investments'in'hypermarkets'(33%)','supermarkets'(33%).'Top'8'ci7es'to'get'~48%'share'

!  Constraints'for'the'industry:'!  Availability'of'Human'Resources'!  Constant'innova7on'of'Supply'Chain'!  Mismatch'of'Retail'Space'demand'&'supply''

'!

22%'

12%'9%' 8%'

5%' 3%' 2%' 1%' 1%'0%'5%'10%'15%'20%'25%'

Footw

ear'

Clothing'

Books'&'Music'

Jewelry'&'

Durables'

Home'

Medical'Services'

Food'&'Grocery'

Health'&'beauty'

Organized)Retail)Penetra'on)across)Categories)Low!penetra7on!in!Food!&!Grocery!!segment!!Food!&!Grocery!acts!as!major!crowd!puller!

Unlimited data on limited Slides

Wednesday 18 July 12

Basics # 2 : Simplify

• Focus on key theme / message of your pitch

• Yes we know you are Dr Who but still Do NOT dump data without connecting stories

• Be relevant and focused

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Basics # 3 : If you got it, flaunt it

Poetry

• We are focussed on acquiring leadership in our chosen space with given blah .. blah blah

• Yada yada yada

Vs

Data / Metrics

• 100,000 downloads

• 10 Beta clients

• Product demo working

• data and data

Data/ Metrics get attention and keep discussion focussedWednesday 18 July 12

Beyond Basics: The key ingredients ?

Wednesday 18 July 12

# Your Big Idea

• Is it a good pain point?

• Your solution : better, faster , cheaper !!! How?

• Demonstrate your advantage in Metrics - better faster

VC s prefer clear definable advantages rather than leap of faith statement

Wednesday 18 July 12

# Market Opportunity• Is it scalable? 0, 10 or 1000 million opportunity

• Market estimation? (Calculate the TAM (top down), SAM (bottoms up)) ~ for a pizza player whole city can be market(TAM), however SAM will be neighbourhood

• Who are going be to your competitor

• Clear differentiation / winning strategy vis a vis competitor

VCs love large markets or scalable opportunities compared to super niche segments

Wednesday 18 July 12

# Validation?

• Concept or Prototype? - demo product or website done?

• Constraint analysis ( supply side or demand side?)

• Any trial or user validation? Growing like a weed?

Changamal & Sons Pizza in NOIDA : TAM ~ Whole DelhiSAM ~ size and reach of delivery team

Constraint ~ capacity of ovens / no of delivery bikes

Competition : In your vicinity / outsiders

Validation : already being served or still working out recipe

An idea with a demo is clear winner compared to a concept note

Wednesday 18 July 12

# Team

• Is right team with right skills in place - Nerds in a tech startup or suits with coding outsourced?

• any traces of entrepreneurship?

• Any signs of passions - or its yada yada excel sheet with dollops of what Mckinsey / Gartner or some other said

• Chemistry or marriage of convenience (team for deals)

VCs love passionate teams with strong convictions and core complimentary skills

Wednesday 18 July 12

Execution ! Execution & Execution

- Marketing budget vs Marketing innovations

- Google Adwords or word of mouth

- Core tech or elance / Odesk

- Insane consumer delight or also ran!

- Recruitment through network or executive search firm

# Execution

An Startup is all about execution - street fight than some fancy board room strategy - Show signs of execution capabilities

Wednesday 18 July 12

Is it a VC opportunity?

• Life Style business vs Scalable/ Exit-able business

• Tech for Tech sake or clear cut business opportunity ( Is it Higgin Boson or got pot of gold?)

• Any relevant stories in other market demonstrating value of the opportunity

• Grant or VC investible opportunity

• VCs investment is neither one night stand nor life time commitment. Its a medium term engagement with strong pre-nup which is expected to make both parties very rich (at least in theory)

VC investments are focussed for limited time period with exit in mind. Demonstrate clear cut exit options and NO buy backs

ideas don’t fly

Wednesday 18 July 12

This doesn’t impress me much !!

• We are being conservative with our nos

• We are looking for USD 5 / USD 10 million

• Couple of VCs are interested!!

• We are negotiating a large contract ..

• Chinese maths

• We do not need money right now, but ...

• Only exit option in consideration is share buy back

Wednesday 18 July 12

Perfection is achieved not when there is nothing to add, but when there is nothing left to take away

- Antoine de saint - Exupery

Wednesday 18 July 12

• Death by Power point

http://www.slideshare.net/thecroaker/death-by-powerpoint

• The 10/20/30 rule of power point

http://blog.guykawasaki.com/2005/12/the_102030_rule.html

• How to pitch to a VC

http://www.slideshare.net/dmc500hats/how-to-pitch-a-vc-aka-startup-viagra-how-to-give-a-vc-a-hardon

Further Reading!

Wednesday 18 July 12

Thank You

Shailesh Vickram Singh t ~ @svickram

w ~ fringenotes.in

Wednesday 18 July 12